Market Commentaries

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Each month, we reach out to the industry’s leading organic grain buyers for insights on the markets. Hit the ground running when it’s time to harvest your crops!

November Market Commentaries

Grain Millers

How are the feed shortages from a late harvest impacting organic grain farmers?

Due to the relatively small organic feed market, we really haven’t experienced any impact due to the late harvest. There was actually quite a large carryover of organic feed barley, and that seems to have kept the prices very stable. Once harvest is complete, a large amount of the later harvested organic cereal grains will most likely not make the milling grade, and that will work to keep feed grain prices down.

How is the trade war between China and the US impacting Canadian organic grains?

We really have not experienced any kind of impact from the trade war between China and the US, as far as organic grain pricing goes. The majority of the impact appears to be in the soybean and canola markets, so minimal in the organic industry. We could see some impact on the small amount of organic soybeans grown up here in Canada, but it would be minimal.

What role does the Canadian dollar have in organic grain exports and prices?

Currency exchange is always a factor in the import/export of anything, but is especially important in the grain industry. Canada exports the majority of our organic grains and grain products to the US, and that will continue as long as the US dollar remains strong. If there were to be a turnaround in the dollar values, we could see the US looking at more overseas imports, and most likely a drop in organic grain prices.

Organic Trade Solutions and Farmer Direct Organic Foods

How are the feed shortages from a late harvest impacting organic grain farmers?

There is lots of feed corn in the US from domestic production and offshore imports and there is significant carry over barely in the bins in western Canada. So we aren’t seeing any feed shortages. For western Canadian livestock producers looking for locally sourced organic grain, a late harvest could be an issue.

How is the trade war between China and the US impacting Canadian organic grains?

Is the increase in demand we’re experiencing in specialty grains, like hemp, beans and peas due to tariffs on Chinese competition? Or is the increase in demand due to actual increase in consumer demand for organic foods or both. The markets we sell to explicitly don’t purchase Chinese organic grains due to fraud and quality concerns. The market is still moving through old crop hemp and flax so I don’t think we’ll have an indication if the trade war is affecting demand of Canadian origin organic grains for a few months.

What role does the Canadian dollar have in organic grain exports and prices?

The Canadian dollar plays a significant role in the stability or volatility of organic grain exports and prices. The buyers must manage this risk but essentially the farm-gate prices paid to Canadian farmers will follow US farmer prices. So for example this year OTS contracted new crop organic large green lentils at $0.90Canadian/lb which mirrors the price to US farmers of $0.67 to $0.69US/lb. To manage or eliminate exchange rate risk we contract with some of our Canadian grower in USD. This year it worked out for the farmers who contracted in USD as they contracted at a high point in Canadian dollar strength when $0.72US/lb equaled $0.90Canadian/lb. That same $0.72US/lb contract is now worth $0.93/lb Canadian.  Since the largest market for western Canadian organic grains is the USA and US based food manufacturers also source the same grains from US farmers, the prices buyers pay tend to be equivalent when the exchange rate is factored in.

Field Farms Marketing Ltd.

How are the feed shortages from a late harvest impacting organic grain farmers?

This harvest season has shown a solid and good quality grain and oilseed crop. The high quality of these crops has resulted in a larger than average portion going into the food market rather than the feed market. This could perhaps lead to a temporary shortage in feed grade grains and oilseeds as farmers understandably choose to sell them into the food market. Should farmers notice a glut in the food grade market within Canada, some may choose to store their products waiting for the right price or look abroad to market their high quality product. However, this does not appear to have any significant or negative impact on organic grain farmers.

How is the trade war between China and the US impacting Canadian organic grains?

The heated trade rhetoric and action between China and the US have pushed businesses in both countries towards different markets. Due to the tumultuous and unpredictable nature of the trade war, Chinese purchases of Canadian organic grains have slowed to match the confusion caused by the rocky trade situation. Further, Chinese manufacturers cannot guarantee that their US customers will be able to purchase Chinese origin goods in the long term forecast.

To add to this shift in demand, ocean freight expenses have increased across the board. One key reason for this is the impending tariffs on Chinese goods due to take effect on January 1st. The already busy pre-holiday freight season is being accelerated by the rush to ship goods before the tariffs are implemented.

What role does the Canadian dollar have in organic grain exports and prices?

A weaker dollar increases interest from US buyers in purchasing Canadian grains due to the higher buying power of the US dollar. Regarding prices, as the demand for Canadian organic grains increases, prices will rise to accommodate the demand in US markets. However, a weaker Canadian dollar can increase the cost of farming inputs and farming equipment.

Should the Canadian dollar make substantial gains against the US dollar, a limited demand for Canadian grain could follow in favour of cheaper grains from other countries.

While the Canadian dollar performance against the US dollar is the most important, we should be keen to note that Canadian-US dollar performance is not the only measure of how Canadian grains will measure in the global market.

October Market Commentaries

Grain Millers

What impact are NAFTA negotiations having on organic grain marketing, exporting, and/or pricing?

As far as the NAFTA negotiations, or lack thereof, go, we initially were concerned about potential restrictions on shipping, and what it could do to sales into the US. However, we really have not seen any sort of delays on shipping, or orders coming to us from across the border. If anything, sales may have even increased some, which is always a good thing.

What impact is the Fall weather having on the grain quality and volume this year?

Up until now, the quality and yields of the earlier harvested crops have been way better than expected! With the dry conditions this year, we were expecting lower yields and light test weights, but so far, yields have been surprisingly good, and the weights have been above our spec for the most part. Some of the later harvested crop could have some quality issues due to mildew and sprouting, but fortunately the weather has remained cool, and that will help curb some of that quality loss.

With other regions having completed harvest, what impact does that having on the pricing for prairie regions that have not harvested yet?

We really haven’t seen any pricing change through harvest, and that is usually the case. There are always areas that get done ahead of the rest, and whether or not their crop is good, most buyers sit on the sidelines during harvest and don’t get too aggressive until the whole crop is in the bin.

W.A. Grain and Pulse Solutions

What impact are NAFTA negotiations having on organic grain marketing, exporting, and/or pricing?

We have not felt much impact on the NAFTA negotiations.  There were some concessions on wheat grading, but the effects should be minor.  However, the trade war between US and China is looking to be a lot more complicated than expected.  Both sides do not seem to be letting up and this is causing slight hesitations in the market place.  We are watching closely to see what level of tariffs will be placed on Chinese products entering back into the US.

What impact is the Fall weather having on the grain quality and volume this year?

The fall weather has been wreaking havoc on a lot of the farmers in the prairies.  The rain, snow, and frost has caused some producers to sit on the sidelines for over 3 weeks. This has caused a lot crops to be completely wiped out or downgraded to feed quality.  There are lots of delays in combining and getting product into the bin.

With other regions having completed harvest, what impact does that have on the pricing for prairie regions that have not harvested yet?

Due to the these weather conditions, there will be some shortages in the market as Alberta and Saskatchewan were hit hard.  Currently we have seen very little price spikes but that might change in the future.  Larger crops being harvested in the US could offset any potential rise in prices for Canadian producers.

Organic Trade Solutions and Farmer Direct Organic Foods

What impact are NAFTA negotiations having on organic grain marketing, exporting, and/or pricing?

The continuing NAFTA negotiations and the failure to reach a deal has tempered the Canadian dollar in the midst of increasing oil prices.

The Canadian dollar traditionally rises as the price of oil rises making our organic exports to the US more expensive.  Because of NAFTA uncertainty there has been no downward pressure on farm-gate prices due to an appreciating (relative to the USD) Canadian dollar. Exports have not been affected although some buyers are preferring USA domestic organic production because of the uncertainty of a trade war and how this will affect US/Canada trade in agricultural products. As stated above NAFTA uncertainty has ironically kept prices stable.

What impact is the Fall weather having on the grain quality and volume this year?

It’s difficult to determine this, until the harvest is either off or deemed to damaged for food markets. Many of the pulse crops have been harvested but the cereals and oilseeds could be negatively affected.

With other regions having completed harvest, what impact does that have on the pricing for prairie regions that have not harvested yet?

Apparently the great plains had a decent harvest, so this will affect wheat prices most significantly. Despite difficulties with harvest weather, buyers aren’t jumping to lock in good quality harvested wheat at decent prices…at least not yet.

Hemp Production Services

What impact are NAFTA negotiations having on organic grain marketing, exporting, and/or pricing?

The NAFTA negotiations and now renamed USMCA agreement has no effect on marketing hemp between Canada and the US.  At this point, the growing of hemp in the US remains illegal federally. The exception is for those states that are participating in the research pilot program which currently includes about 30 states. More important in the future will be the 2018 US Farm Bill which, if passed, includes the Hemp Farming Act. Under this Act, hemp will no longer be a controlled substance and the sale of CBD will be legalized in all 50 states.

Hemp Production Services is working with some Canadian organic hemp growers to extract CBD. It is expected the new Farm Bill will both improve market demand and access of CBD, but also open up the organic production of hemp and CBD extraction in the US. How this will affect the overall market is not clear at this time.

What impact is the Fall weather having on the grain quality and volume this year?

The cool and wet fall has created a number of challenges in the hemp harvest across the prairies. Although some growers were able to get their harvest off before the weather turned, other growers are struggling to get the crop in, dealing with snow and wet conditions. Grain quality has not been affected yet as the temperatures have been low enough to prevent sprouting. If temperatures would rise with continued wet conditions, hemp seeds would begin to sprout in the head.

With the freezing temperatures, the hemp plant has matured quickly making the seed more susceptible to shelling. If wind speeds pick up, severe shelling could occur if growers are not able to bring in their crop quickly. Hopefully the last of the crop can be brought in by mid October if conditions improve.

August Market Commentaries

Grain Millers

Who are the major competitors for Prairie Organic Grain products at the moment? Why do buyers purchase from them?

We mainly see competition for our Prairie Organic Grain products coming from overseas into the North American feed market, primarily from eastern Europe. Buyers generally are purchasing from them because of the low prices and large volumes that are available. However, recent incidents of potential organic fraud coming from certain overseas nations has our domestic feed market reconsidering many of their options.

What, if anything, do we need to do to get our products into some of those markets?

For us, growing the organic acreage in Canada is our best method of trying to help ensure that domestic markets do not need to look overseas for supply, but it definitely will take time to get to that level.

W.A. Grain and Pulse Solutions

Who are the major competitors for Prairie Organic Grain products at the moment? Why do buyers purchase from them?

We have many major competitors for each commodity. Each geographic region posses some sort of challenge and threat. There are times logistical costs are one major barrier to entry from one province to another, excluding any geo politics or lower cost producing countries. Buyers mainly purchase from other countries because of pricing, quality and trust. Certain commodities from other countries are not seen as risk for violating organic standards, while some countries are not even considered regardless of how economical it is.

What, if anything, do we need to do to get our products into some of those markets?

We need to improve our infrastructure to increase our competitiveness. We need to have a functioning rail system that works for everyone and to get the rail cars moving.

July Market Commentaries

Grain Millers

Did the US trade embargoes have any effect on the prairie organic markets?

We have not experienced any price changes due to the US trade embargoes, and likely will not in the short term. Longer term, however, could be a different story if they do put significant tariffs on finished grain products going into the US as a large amount of our milled oat products head south of the border.

Were prairie organic markets affected when Japan and Korea stopped importing wheat after GMO plants were found?

We didn’t see anything really change in our wheat pricing, but we are only a small player in that market, and our products stay pretty much in North America. We had anticipated a possible surge in demand for organic wheats from those Asian countries after this discovery, but to date, we have not seen it.

W.A. Grain and Pulse Solutions

Did the US trade embargoes have any effect on the prairie organic grain markets?

We have not felt the effects of the US trade embargo. A lot of the products that we process and trade were not on the list of commodities facing tariffs. However, we are watching closely on whether the list expands into the segments that we mainly focus on.

Were prairie organic markets affected when Japan and Korea stopped importing wheat after GMO plants were found?

Although we are not active in the organic wheat market, we like to keep our ears to the ground by actively talking to producers in Western Canada. We did not come across any producers or hear of any that were affected the wheat ban from Korea and Japan. Luckily the ban was relatively short and Canada will resume wheat shipments to those countries.

Mercaris

Did the US trade embargoes have any effect on the prairie organic markets?

So far, from the US perspective the answer appears to be no. The organic wheat prices are either holding steady, or showing some decline which has been mostly in-line with supply pressure from the winter wheat harvest. US durum wheat imports from Canada have remained below their 2017 levels since March. However, imports of organic corn and barley have remained quite strong. One could make the argument that the building trade tension between the US and China could lead to a decrease in US organic soybean imports from Argentina as China increases it take of Argentina’s soybean supply. Such a situation would create an opportunity for Canadian organic meal and oilseed producers to satisfy the resulting gap in demand. However, organic beans fetch a significant price premium over conventional, which should limit China’s interest in them. The bigger Argentina related risk is weather, and the impact that their drought is having on their 2018 crop. As of now, the US is still very reliant on organic grain imports, which keeps US organic agriculture trade running in the opposite direction of the mounting trade obstacles.

Field Farms Marketing

Were prairie organic markets affected when Japan and Korea stopped importing wheat after GMO plants were found?

The Japanese and South Korean markets were prompt to stop all imports of Canadian wheat earlier this year after finding traces of genetically modified traits in some of the wheat that was delivered. If these GMO traits in Canadian wheat are proven to be widespread, this could be a major challenge for producers with cross-pollination making it very difficult to eliminate the strain. It would be particularly catastrophic for the organic producers – who are well aware of the zero tolerance towards GMO’s – to be able to market their yields; creating additional hurdles such as new testing, new contractual guidelines on quality, and new rules to permit Canadian wheat imports. For the time being we are happy to report that the wheat imported into Japan appears to have been an isolated incident, with Japan and South Korea lifting its temporary suspension of Canadian wheat.

June Market Commentaries

Grain Millers

Now that seeding is complete, what should farmers be thinking about in terms of marketing? Is there anything they should be strategically planning for?

Now that seeding is complete, the primary thought usually runs to getting the bins empty and ready to refill at harvest. It can be a very tough time to find lucrative markets, because most buyers are full for the summer, or very close to it. Also, most buyers are looking to have their bins as empty as possible at this time of year to accommodate the harvest delivery contracts that they have signed earlier. Our recommendation is to strive to have most of the grain that you are needing to sell marketed prior to seeding, to avoid the usually depressed post-seeding market. 

What are some things that producers should be thinking of/doing to prepare for harvest?

To prepare for harvest, one of the most important things that farmers can do is properly prepare their storage. This means cleaning out bins, sweeping, checking for any leaks or water seepage, and if necessary, spreading some Diatomaceous Earth around the perimeter of the bin. This will help prevent rusty grain beetles and other stored grain insects from finding a home in your grain.

What are some post-harvest things that can affect the quality of crops, and how would you suggest farmers deal with those issues?

During harvest, and post harvest, producers need to be taking good samples, and checking quality and moisture as frequently as needed. One of the easiest things to overlook is stored grain moisture, and how quickly that can turn into a quality issue, potentially taking your grain out of the milling market, and putting into the much less lucrative feed market. Keeping accurate samples and getting grain dried down into good storable condition is imperative. Having good storage is key to ensuring the quality of your grain remains saleable and opens doors to many marketing opportunities.

Field Farms Marketing

Now that seeding is complete, what should farmers be thinking about in terms of marketing? Is there anything they should be strategically planning for?

Now that seeding is complete, farmers should be thinking about their marketing strategy: food vs the feed market. By devising a strategy that can assess market conditions, prices, and costs-to-carry; producers will be better positioned to unload their products for an optimal return. We believe that producers ‘should’ take this time to reflect on previous crop seasons – what was sold into the food market and what percentage of the overall crop was sold into the feed market. Rotating with feed crops, such as peas and oats is a good strategy to replenish the soils. Finally, it is important to sell crops in segments: some at harvest, mid-season, and before the new crop year. This strategy helps dilute market risk and regulate cash flow.

What are some things that producers should be thinking of/doing to prepare for harvest?

While in preparation for harvest, farmers should be communicating with their local bulk carriers to identify cost-saving modes of transportation to bring product to market efficiently. Also, knowing the closest rail-site for loading can help better market the farmers’ product and may help the farmer add value by transferring these savings to the total sale price.

What are some post-harvest things that can affect the quality of crops, and how would you suggest farmers deal with those issues?

Moisture migration and insect infestation are two leading factors that impact the quality of the crops and can be minimized through several stored-grain management techniques. Aerating the crops is the most effective way to maintain optimal temperature and moisture levels and prevent spoilage from mold pockets. In efforts to control insect infestation, farmers should add diatomaceous earth to the stored-grain while it is being rotated to desiccate any insects while they feed.

W.A. Grain and Pulse Solutions

Now that seeding is complete, what should farmers be thinking about in terms of marketing? Is there anything they should be strategically planning for?

We believe the best marketing tactic for any producer is to produce a great crop. If the crop easily makes specification, there will be no shortage of buyers wanting their product.  Producers should be consistently monitoring progress and managing their weeds as necessary.  Always keep an ear to the market and where it’s heading but most of the marketing decisions should be made before seeding.  Always talk to your buyers before beginning to get a feel on where demand is.

What are some things that producers should be thinking of/doing to prepare for harvest?

We feel that most producers, before preparing for harvest, must be aware of the serious nature of earth tagging. For the most part, these issues can be avoided if they are aware of the situation beforehand. We suggest producers ensure best farming practices to minimize this problem.

Kamut

Our take away from what we have heard this spring is that while there are export opportunities. The export market faces so many unknown variables thanks to the US pulling out of international trade agreements and threatening and initiating tariffs, that it is difficult to predict the export and domestic markets. Storage variables may come into play, both having enough on farm storage and suffering loss due to an extended storage period for organic grains.

May Market Commentaries

Grain Millers

What trends are you currently seeing in the organic grain market?

One of the trends we are seeing in the organic market these days would be the shift back in acres from more specialty crops like peas, lentils, and mustards, to more traditional crops such as oats, wheat, and barley. Producers have realized that the consistency just isn’t there with production of the specialty crops, so they have reduced acreage of those and gone back to easier crops to grow and market.

Are there any specific crops you’re seeing more production of? How is that affecting markets?

We have seen a significant increase in wheat and barley production, and that has driven prices lower through this spring, and looking ahead into next year. We have also realized an increase in oat production, but demand has been doing a nice job of keeping up with the increase in supply, leaving prices stable going into next year.

What changes or events in the global marketplace are affecting Canadian prairie markets? Which crops are affected and why?

We have been experiencing a large amount of organic feed products being imported into the US, and that seems to have put some serious pressure on our domestic feed markets, both down south, and here in Canada. This has mostly hurt barley pricing, but other feed grains such as wheat and oats have had a hard time staying at decent levels back to the producer.

Organic Trade Solutions

What trends are you currently seeing in the organic grain market? 

Organics grain follows a lot of trends in the natural products industry. For example, Dairy alternatives like oat, hemp, pea, coconut and almond drinks are hot as consumers move away from unhealthy sugary drinks like pop. It also reflects the decreasing market share for fluid milk. Grab and Go convenience foods that are healthy are also selling very well as families are becoming smaller and the percentage of single people as part of the population is at all time highs. Plant based proteins like pea and hemp are also popular, especially pea protein given it’s lower price point than hemp.

Are there any specific crops you’re seeing more production of? How is that affecting markets? 

There appears to be a lot of acreage that is transitioning to organic. This may put significant short-term pressure on the supply side as Canadian and US farmers must also contend with organic imports and an apparent high level of fraud from the imported grain. The positive side is that the market is growing, yet there is still significant over production of oats and perhaps even hard spring wheat.

What changes or events in the global marketplace are affecting Canadian prairie markets? Which crops are affected and why? 

The feed barley market into the US has all but collapsed for Canadian farmers as corn imported from the former Soviet Bloc is flooding US feed markets. Eastern Europe is now producing organic hemp which could affect hemp markets.

W.A. Grain

What trends are you currently seeing in the organic grain market?

With the rising trend of organics, we’ve been seeing producers utilize better technology and farming practices for soil management.  There have also been producers in the prairies begin to experiment with regenerative farming practices.

Are there any specific crops you’re seeing more production of? How is that affecting markets?

There has been strong interest in organic peas from the Western Canada region.  We’ve seen acres grow substantially in comparison to the last few years.  Producers who would have never considered a pulse crop are now adding it into their rotation.  The strong demand for Canadian yellow and green peas in Asia have led to a rise in production, along with increased prices.

What changes or events in the global marketplace area affecting Canadian prairie markets? Which crops are affected and why? 

Last year there were strong demand for organic French green lentils.  This caused a huge shortfall due to the lack of supply and poor crop year in other producing countries.

Kamut

What trends are you currently seeing in the organic grain market?

We see a lot of large questions about the organic grain market. We are a small producer who has historically had a confident market presence in Europe. We are seeing an interruption caused by some non-tariff trade barriers. We are focusing our efforts on the North American specialty/artisan users market to cope.

Are there any specific crops you’re seeing more production of? How is that affecting markets?

We are cutting back on acres. We are in the position of having too much grain at the moment, and cutting prices.

What changes or events in the global marketplace are affecting Canadian prairie markets? Which crops are affected and why?

There seems to be large questions driven by the chaotic nature of the US export market. I have talked to customers who market pulses and grains who have been affected by non-tariff trade barriers along with the erratic and unpredictable forces of the current export market.

Hemp Production Services

The organic hemp grain market in 2018 underwent a price correction as other countries entered the marketplace in response to high market prices. Beginning in 2017, lower priced organic hemp grain coming in from China and Europe disrupted the US market, forcing prices down. The new reality is that organic hemp grain is now a competitive global commodity.

In response to this market shift, 2018 Canadian contract prices were reduced so that high quality Canadian organic hemp grain could be competitive in the global market. This decline was important as more regions of the world are increasing organic hemp grain production. With improved genetics and robust agronomy support, returns to Canadian organic growers can still be strong even at lower pricing.

Global demand for organic hemp grain has increased significantly, and this trend is expected to continue in the future. This is good news for Canadian growers who collectively have many years of experience to draw from and access to an established processing infrastructure.

Another possible income stream from hemp production in 2018 is the extraction of CBD from the chaff. Hemp Production Services is investing in technologies and partnerships to streamline this parallel market into the current production system.

Hemp Production Services is interested in increasing the number of Canadian organic hemp producers to meet market demand. If carefully planned, this crop can be a valuable addition in an organic crop rotation. Field days will be organized this summer to learn more about the organic hemp market and management strategies on organic farms.

Mercaris

What trends are you currently seeing in the organic grain market?

For US markets, right now there are two factors worth keeping an eye on. The first is foreign trade. As has been highly publicized, the US organic sector is seeing the flow of organic imports slow over the 2017/18 marketing year. This has been coupled with price support for organic feed grade corn spot trades, and subsequently feed-grade organic wheat, with prices in both markets averaging more than $1/bu above year ago prices during the first quarter of 2018. Over April 2018, the delivered organic feed-grade corn price averaged $10.48/bu, up $1.34/bu from April 2017. Additionally, the premium over last year appears to be stable for the time being, with quotes of fourth quarter organic grain delivery mostly even with current spot price quotes.

The second is the impact of weather on spring planting. US organic spring wheat planting is particularly far behind this year. Planting progress across the top-ten US organic spring wheat producing states averaged 54% complete the week of May 14 2018, 23% behind the pace of planting in 2017. Organic corn and soybean planting was also behind schedule the week of May 14, primarily held back by delayed planting in the two largest organic corn and soybean states, Iowa and Minnesota.

Are there any specific crops you’re seeing more production of? How is that affecting markets?

In the US we fully expect to see more organic corn and soybean acres harvest this fall as domestic organic livestock producers have cut their reliance on imports in exchange for more focus on domestic supplies. Wheat holds the potential to throw a curveball, as Mercaris estimates organic wheat yields fell 17% y/y in 2017 due to drought conditions in the northern plains. Recent history has witnessed organic wheat acres expand right along with corn and soybean acres. If US organic wheat acres expand by the same magnitude that they have over the past two years, and wheat yields recover to historically average levels, then the market may find a lot more wheat available for spot transactions following harvest.