New Crop Costing (2023)
In the continued pursuit of trying to make sense of it all: Here are a few thoughts on 2023 pricing based on Agri-food Outlook / SaskAg Crop Planning forecasts
The January 20 Canada: Outlook for Principal Field Crops forecasts an yield increase of about 16% due to better growing conditions. While fuel, labour, seed, and crop protection remain expensive, the increase in borrowing will add the biggest burden to producers. SaskAg: Crop Production Guide adds about $100/acre (30%) in its report due to the cost of increased borrowing. Talking to producers they feel it will be a more modest impact of 6%. Costs will therefore decrease by 16% due to better yields, and increase by 6% due to higher borrowing costs.
2023 average prices should be reduced by about 10% to reflect lower costs of producers and steady supply and demand.
Destination markets are once again waking up to the fact that deep price reductions will be less likely this fall and are more willing to take on production contracts this week. It appears the market will have to continue to accept producers are still in control for another year. Betting against them will again create unnecessary risk.
Below are the current ranges we have seen in 2022-2023 crop year: Growers have been steady sellers around the median prices. Below has mostly turned off the supply. Above these values has tended to ‘over-bull’ the producers and given the same result.
Large Green Lentils(2022): Canada bids $42-$56 cwt, Median price $50, 2023 Prices should trade around a pivot point of $45
Medium Green Lentils (2022): USA bids $28-$36 cwt, Median price $34 USD, 2023 Prices should trade around a pivot point of $30
Small Green Lentils (2022): Market has been more hot and cold than MGL and LGL. Range $46-$52 with the median price at $48. 2023 bids should trade around a pivot point of $43 in 2023
Whole Green Peas (2022): Canada Bids $12-$15, Median price $13, 2023 prices will be more dependent on feed values, With these markets remaining firm WGP should be $12 FOB farm in 2023
Canary Seeds (2022): Erratic demand made trades difficult in 2022. Farmers felt most comfortable around $40, with the range between 36-42. I expect it to be difficult to buy from farmers below $36 into 2023 crop year.
Red and yellow peas are trading in boatload volumes and are difficult to predict.
Following the same model, producers appear to be aggressive sellers around 34 cents, making 31 a trigger point in 2023. Yellow peas at $13 should produce sellers around 11.75 in the fall.
DGN 02/25/2023
