We’ve focused a lot lately on what is going on in the protein sector, which hasn’t have a lot of positives as of late. But on the crop side of the fence — oilseeds, coarse grains, pulses — overall, the markets for many crops grown in Western Canada have not been hit as hard by the COVID-19 pandemic.
The one exception is the corn market, with everything that is going on with low ethanol and fuel demand, and the Russia-Saudi Arabia oil spat.
Chuck Penner, of LeftField Commodity Research, says despite the heavy pressure on the corn market, there have actually been some positives that have come out of the pandemic.
Lentils have really taken off lately — red lentil prices jumped from 22 cents two weeks ago, hitting 30 cents in some cases. Large green lentils saw the same type of move — a 30 per cent jump, and Penner says this is related to COVID-19.
“For some crops, it really hasn’t had much of an impact, but for pulses, and especially lentils and dry beans as well, it really has had a strong impact for triggering heavy buying. Whether this is something that is justified or not, whether it is hoarding, or there is actually increased use, is hard to pin down. But for lentils, we’ve seen a real flurry, and supplies aren’t actually that heavy. And now there’s this realization that ‘uh oh,’ there may not be as many out there as our conventional wisdom, or whatever you want to call it, has lead us to believe.”
Penner says field peas are seeing a similar sort of story, but not to the same extent as lentils, with prices reaching $7.50/bu, and heading towards $8/bu.
“That’s a really nice selling point. Earlier in the year if you would’ve asked farmers what their targets were, they would’ve put them in quite a bit lower than that. But normal behaviour that we of course see is that once prices start going up, targets start going up as well,” he notes. “The nice thing we are seeing is that it’s not just the (old) stock prices, it’s the new crop prices as well moving higher.”
When it comes to canola, a lot of people just assume the markets aren’t great. But when you actually take a look at the price, it is rather surprising, with new crop canola still trading above $475/MT heading into the Easter weekend.
“We’re seeing some interesting things in the canola market. Part of it is that canola has largely avoided some of the bigger weakness that is showing up in the soy market. Canola has the added demand from Europe this year, and there is always that niggling doubt in the back of your mind: what if China at some point in the next year, comes back and starts buying through the major companies?” he questions. “Even towards the 2019 marketing year, we were starting to hear companies lowering their basis levels. We’re in this situation again, where there is this mindset that we have absolutely massive canola stocks, which is actually not the case. It’s certainly not heavy anymore.”
Check out the full conversation between Chuck Penner and RealAgriculture founder Shaun Haney: