Quality premiums, discounts to widen in organic crops post-harvest

One oat miller in Saskatchewan said organic oat yields and quality have been good in spite of bad weather. Photo: GFM/File

By Phil Franz-Warkentin
Glacier FarmMedia – MarketsFarm

Large quality spreads will likely lead to wide ranging premiums and discounts for Canada’s organic crops marketed this winter, although current pricing opportunities remain relatively thin as end users wait to get a better sense on the specs of what was harvested.

“A majority of the organic pulses are off and in the bins,” said Wes Reid, purchasing manager with W.A. Grain and Pulse Solutions in Innisfail, Alta. He said quality of the pulses was decent overall, as most of the peas and lentils were harvested before adverse weather slowed operations.

However, early grain samples are highly variable, with some good quality and more grading feed.

The harvest isn’t over and we’re seeing a lot of quality issues. – Jason Charles

“I think we’ll see decent premiums for wheat above 13 (per cent protein),” said Reid adding that “anything below that will price out quite a bit less.” He said buyers likely won’t be rejected high protein wheat this year, even if it had a bit of frost on it.

“The harvest isn’t over and we’re seeing a lot of quality issues,” said Jason Charles, Minneapolis-based director of organic marketing with Pipeline Foods. He expected the increased availability of organic feed grains this year will limit activity, as end users will have little reason to bid up the market.

Competition from corn will also limit the organic feed wheat and barley markets, according to Charles. He said Canadian organic feed wheat bids would need to fall to the C$6.50 to C$7.00 per bushel area in order to compete with U.S. corn. “We have a ways to go, but I don’t think we’ll get there,” said Charles, noting that current prices were closer to C$8.50 per bushel or more.

As a result, Charles expected Canadian farmers would bin their feed grain and hold out for better prices down the road. “We might have 25,000 to 30,000 tonnes of feed wheat in Western Canada today, but the market doesn’t exist for more than 20 per cent of that,” he added.

While supplies of higher quality grain may be tighter this year, “we had quite a bit of good old crop heading into this year,” said Charles. He said millers and processors were well covered through the first quarter of 2020, which will limit price moves for the time being, with little possibility of any gains until the second quarter.

“Normally it’s a pretty active time of year, but it just doesn’t seem to be that way this year,” added Scott Shiels, of Grain Millers Inc. in Yorkton, Sask.

There are not a lot of bids… and if you want to sell a bit of grain today you could be in a bit of a pickle. – Scott Shiels

Grain Millers’ specializes in oat milling, and “organic oat acreage was good and the yields were quite good,” according to Shiels. He said the oats held up well through the bad weather and quality was okay overall.

However, “everything else seems really quiet,” said Shiels adding “there are not a lot of bids… and if you want to sell a bit of grain today you could be in a bit of a pickle.”

“The flax market is flat and not a lot of activity is happening, the wheat market is pretty quiet. The barley market is pretty quiet,” said Shiels.

“Sales are just terrible,” added Reid, noting that it was very hard to find buyers for many commodities right now.

Shiels recommend sending samples away and getting tests done so you know what you have to market. Buyers also want to see what the quality is before stepping out and buying.