Organic grains under pressure heading into spring

Photo: File

By Phil Franz-Warkentin 
OrganicBiz staff

Winnipeg, Feb. 24 – Organic feed grain bids continue to hold a sizeable premium to the conventional sector, but the looming ‘second-harvest’ in Western Canada is keeping values under pressure as Mother Nature showed no favourites this past fall.

Top end organic feed wheat, barley, and pea bids have lost roughly 50 cents to a dollar per bushel over the past month, according to prices compiled across the Prairies. Those losses were roughly in line with what was seen in the conventional feed grain market.

Tristan Gill, feed grain trader with Westaqua Commodity Group in Vancouver, said the downtrend in organic feed grains was tied to a number of factors. Good domestic feed grain supplies, together with steady corn imports from Turkey and India were weighing on prices. Some organic milling wheat was also said to be entering the feed market.

Ample supply of pretty much everything is pressuring everything... – Scott Shiels

In addition, a sizeable number of acres were left unharvested this past fall due to unfavourable conditions at the time. Farmers will soon be looking to take some of that grain off while fields are still frozen.

“When the spring thrash happens, all the grain that’s left in the field will come off. It will be in godawful condition, so it will go for a dirt cheap price,” said Gill.

Milling wheat

While feed grains may be under pressure, milling quality wheat is holding reasonably steady despite a lack of significant demand.

“There are fewer people looking for spring wheat right now,” said Jason Braelt, grain buyer with RW Organics in Saskatchewan.

Basic milling quality organic spring wheat is trading in the $15 to $17 per bushel area in Western Canada, which is in line with January levels.

Braelt said prices work out to about two-and-a-half times the current bids in the conventional sector, which should look good to growers. However, he didn’t think the premium was enough to draw in much more interest this spring.

“Everybody is thinking ‘over 20 bucks,’” said Braelt. He added that five years ago organic growers were usually happy to be seeing prices double the conventional market, but now that they’ve seen organic prices at triple the level of conventional they want to see those levels all the time.

“It’s great to get, but it can’t last,” said Braelt. He also noted that a rising interest in growing organic crops came as a bit of a mixed blessing from a pricing standpoint, as more growers and the resulting increased supplies will limit the organic premium.

While not as prevalent in organics compared to the conventional side, fusarium was still a major problem with Canada’s grain crops in 2016. Braelt said they were usually able to blend off any fusarium, but noted there were some samples that couldn’t even be used for feed.

Oats

Oats generally fare better in the face of fusarium, and that is likely drawing more interest into planting oats this spring, despite prices that are well off the year-ago levels. Braelt noted that organic oats were contracted for about $7.50 per bushel a year ago. That compares with current old and new crop pricing opportunities in the $5.50 to $5.75 per bushel area.

“Ample supply of pretty much everything is pressuring everything … especially on the oats side,” said Scott Shiels, grain procurement merchant with Grain Millers Canada, noting that his company was already covered out until March 2018.

Shiels said the disease pressures in wheat and barley was bringing more interest into organic oats, both from established organic growers and new entrants to the market.

“Oats is a staple crop on the organic side. It’s one of the crops guys look to when they’re transitioning in. It’s easy to grow, is a good competitor, and you get a good start,” said Shiels.

Pulses

Looking at the major pulse crops, top end organic pea and lentil bids edged lower over the month, but interest in still strong in growing pulses heading into the spring.

Jayson Plamondon, of Rein Agri Food in Saskatchewan, said the end user demand for organic pulses, especially within North America, was still good. In addition, there were very few wrecks on the organic side that would discourage acres this spring. As a result, he said farmers were actively securing seed for the new growing season.

From a more general standpoint, Plamondon said the growing interest in organic foods from the consumer side was also helping bring in more organic producers.