Episode Transcript
[00:00:21] Speaker A: Hey, folks, welcome back to the what the Futures podcast, episode number 20. Already cruising right along. Of course, each and every episode is now recorded in the UPL studio, and we're going to hear a lot more from those folks over the next weeks and months. Of course, this is the show where we break down complex market trends into simple, actionable advice. It's your quick guide to better farming decisions. That's the name of the game here, folks, trying to help you guys make better decisions. Of course. I'm your host, Ryan Denis. I've spent my career working side by side with farmers across the prairie provinces as a grain marketing coach, advisor analyst. I've basically enjoyed my time working with farms and helping them make better crop marketing decisions, and I'm now taking that on the road here with the podcast. So I hope you enjoy this episode is actually going to be an episode where I'm a little quieter. You're not used to that of me being a little quieter, but I've got some great guests joining me. I've got James Mitchell, of course. He's the CEO of the Crop Management Network group, and he's going to join me to talk about what's going on with fertilizer prices heading into spring. Okay, he's got some key things that I want you to pay attention to. And if you haven't committed to your fertilizer for 2024 for this spring, you know what? Just pause the show and go and make that phone call, okay? You don't even have to listen to what he has to say. Just go and make that phone call, then come back, start up the podcast again and get going. There's not a lot of good news when it comes to price drop until we get to the summer. Okay. I also have Chuck Penner with left field commodities. He's a favorite of listeners of the podcast. We haven't chatted with Chuck for quite some time, so we have an in depth special today. In depth. We're going to talk about the yellow pea market. We're going to talk about India and what's going on with their harvest, canadian acreage estimates as well. And of course, let's talk about the canola Futures rally with Chuck. So we'll do that. Of course, we'll get to our regular segments, including the popular mailbag segment, which is brought to you by pioneer seeds. And I'll wrap up the episode with a healthy serving of veggies because, of course, it's the right thing to do. All righty. Now, I'm going to keep my stuff short. Okay, folks, so we got some great content here coming up. All right, I want to interrupt the episode for just a second for a word from our sponsor, John Deere. You know, out here in western Canada, we see a lot of different crop conditions. Fortunately, our friends at John Deere have a whole new lineup that can handle any crop in any condition. There's three new high horsepower nine rx tractors. There's a new high tech s seven and x nine combines. There's even a new C series air cart. Check them out for yourself at John Deere, CA and see what's coming our way. This was. I took a drive yesterday. Our one year old, he needed that second nap and sometimes it's just easy to throw him in the car. And I saw the new John Deere dealership in Fort Saskatchewan. I didn't even realize that they were putting up a new store there, but it looked fantastic from the highway. All right, folks, let's get after it. Let's start, of course, with our positive moments, my positive moments of the week. So I've got three quick ones. So number one. So my daughter Willa, she got her first bike this week. Okay, we've had some nice weather. It's snowing outside at the moment, but we'll take it. We'll take the precipitation, but she got her first bike. So training wheels. It's a frozen branded bike. It's fantastic. The whole experience of teaching her how to ride her bike is just so much fun. And so that's my first positive moment of the week. The second one, the wife and I, we went out on another date. The babysitter is back in the fold here at our house. So we actually got to go out on another date last weekend. And if you have the opportunity, we went to a turkish bathhouse spa experience.
It was awesome. I felt completely rejuvenated after that turkish bath experience. And I don't know, folks, if you have an opportunity to check that out. Of course, this one was in Edmonton. It was fantastic. I had a really nice time. And then my last one, we'll turn it back to farming here for a second. But it's snowing outside my window at the moment. We saw big precipitation events in central and portions of southern Alberta as well. And we're starting to see them a little more consistently. So that's awesome. It's good. We need much more of that. The crop doesn't get made with precipitation in March, but it certainly helps. So that I'm also going to throw in here. We've had an opportunity now to sell canola at a profit for a new crop. So I'll blend those two together. For my third positive moment of the week. All right, folks, let's get after it now with James Mitchell, CEO of the Crop Management Network. And let's talk all things fertilizer. All right, folks, joining me once again from the crop management network. I've got James Mitchell, CEO. James, how's your week going?
[00:05:59] Speaker B: Week's going good. A little cooler today. That's probably good. Cool some guys off.
[00:06:06] Speaker A: Yeah, you bet.
I've been joking on the pod that I started to take an aerobics class. It's not quite an aerobics class. But my wife is having me come along to this Tuesday class. And it was raining this morning. On our drive into Sherwood park. So it felt very spring like at my place here this morning.
It was great to see you. A couple of weeks ago, I was at the big crop management conference. That you guys held in Cameros.
Hundreds of producers in the room, fantastic speakers. Overall, really good day. And a couple of things impressed me by that event. But the one thing that really stood out to me was all of the partners that you guys work with. At crop management network. Like the amount of companies. And products and services that you guys work with is phenomenal.
[00:07:07] Speaker B: Yeah, we've got a great partnership with lots of companies. That help us serve the farmers every day. We've got really tight relationships with, you know, it's a two way street. They support us, we support them.
[00:07:19] Speaker A: Yeah.
I was happy to see my friends over at UPL as well were there. So that was great.
So we got together. James, it was like late January. The episode went out somewhere around January 26. And I'm just going to cover off a few of the key things here from that episode. And I want to know, has this stuff kind of come to fruition or what's maybe changed? And so in the episode, you were concerned about phosphate, concerned about getting the product and getting it at the right time. Okay, so that was the one major theme. You also said you had about 45 days until D day. I think what you meant by that is, and you can correct me, but just having that product close to being in house or definitely on its way.
We talked about. There was no real reason to wait to buy your foss specifically. And even some of your other fertilizers as well. At the time, everything we talked about. We talked about conflict in some of the major waterways, the extra freight.
I guess, as a summary, has anything changed from that? Or how did we do over the last six weeks.
[00:08:41] Speaker C: Yeah.
[00:08:43] Speaker B: Fortunately or unfortunately seemed to hit the nail on the head on all of those topics. Everything is as said or as advertised, I would say.
The one issue that maybe wasn't totally expected was how early the season would sneak up on us in the US. So you see, they're about two to three weeks ahead of schedule, which is causing a lot of problems because you have vessels arriving three to ten days later. So that Delta is pretty wide.
We're hearing reports of outages at terminals inland, terminals throughout the US.
Thankfully, the Mississippi waterways are open now all the way to Minneapolis, so we're having barge traffic going north, which is late for how early the season is, but at least it's open. So that's good news for those growers down there. So I was at a conference last week in the US, and lots of supply problems everywhere from New Orleans all the way to the PNW.
[00:09:45] Speaker A: And is that strictly from being caught off guard with the early start?
[00:09:53] Speaker B: Yeah, I think caught off guard. The deferral from the grower to the retailer to the wholesaler. That whole supply chain thing was kind of hung up. Soft commodity prices, rising fertilizer prices, I would almost call it. It's a perfect storm, right? Yeah, probably it's going to bring lower prices earlier to growers in western Canada and North America. When it comes to a summer fill, there could be an opportunity to have barges and vessels show up late called.
When they show up like that situation, they have to discount them. So for summer, Phil, probably bringing forward lower prices earlier than anticipated.
[00:10:35] Speaker A: Okay, that doesn't help us right now. Yeah, it doesn't help us now. I was going to say, though, we haven't talked about a lot of positivity on the podcast since it started in November. And that's like a little hint of. Maybe a hint of some positivity for this summer. So I'll take it.
[00:10:54] Speaker B: Absolutely.
[00:10:55] Speaker A: We'll see, but I'll take it.
Okay.
Actually, I want to start with, how are growers doing out there?
Because I think when we spoke last, you had about 70% were kind of committed or locked in at the time. Have we moved that needle now to 100%? Are farmers making the decisions and getting that fertilizer, or have they booked that fertilizer?
[00:11:22] Speaker B: We're definitely making progress. It's not 100% and it never is 100%, but things are moving forward. You definitely feel that cash flow is tighter for some guys than it has been in a number of years.
[00:11:35] Speaker A: Okay.
[00:11:37] Speaker B: And we're also seeing maybe a little delayed fertilizer movement. Because again, fertilizer bins aren't empty. Now we have road bands come on in some of our geographies now too, which isn't helpful. But there are some growers that would typically take in March. Who've asked to take it in May now. Which it does put some strain on the abilities of facilities to move additional product in the month of May. So that's going to build to a little bit tighter logistical situation than we probably wanted. But I think for most companies it's doable.
[00:12:12] Speaker A: Okay.
The cash flow thing is interesting because I see it as well. I see that cash flow is tight or uncomfortable. And yet there's still this theory out there, these comments that farms are. The bank accounts are full. And there was great wealth generating events back in 21, 22. Maybe not so much 21 with the drought, but 22 and to some degree 23 in a way for some farms. But it's just not the reality out there. I see it super tight across the prairies. And anyway, that's a bit more of a rant than anything. But I agree with you on that one.
Okay, let's talk now about phosphate.
Has that situation, has it improved at all or does it look like it could improve?
[00:13:09] Speaker B: No, I don't think it looks like it improves.
A number of our wholesale suppliers have kind of put the pause on new sales right now. So even if you did need it, you couldn't get it. Not widely, especially with the season coming forward. We're seeing tightness in rail car supply out of the US.
Which means we're shifting over to more truck supply. And obviously those trucks come up light at 33 to 35 ton versus 90 in a rail car. So not the most efficient use of logistics right now. So we're really clawing to get inventory in. We feel very comfortable as far as crop management goes about our supplies. But definitely I don't think that's the tone across western Canada.
[00:13:57] Speaker A: Okay. And so if there's a pause out there, is that just a sign of the supplier being a little bit uncomfortable on committing to additional orders at this time? Just trying to see how things are going to play out.
[00:14:15] Speaker B: Yeah, well, the big poll is in the US right now. Earlier than they anticipated. That's taken up some of their rail car supply. So the earliness of the US is really stopping them from shipping to Canada as much as they would have liked at this time of year.
So that's the big hiccup here.
[00:14:34] Speaker A: Yeah, I listened to a few different US based updates. It might be crop marketing. It might be other things, but yeah, there's some action and it's going to be very busy, if it's not already, it's going to be very busy there in just a matter of days, it seems.
Okay.
How about nitrogen? Have things settled down in nitrogen at all? Are prices on the rise? How's supply doing for nitrogen?
[00:15:04] Speaker B: Yeah, prices have rose.
[00:15:07] Speaker A: Okay.
[00:15:08] Speaker B: I would say you're going to see retail nitrogen pricing. I think earlier in our podcast I said it might touch $800. It looks like it's probably more like 850 to 900 by the time the dust settles on urea. And as far as availability tighter than we thought we'd see, some of the manufacturers outages were more severe than they initially anticipated. Okay, so offers aren't abundant right now as far as us grabbing extra tons to get through spring, if you're looking for a bit of a silver lining, there probably not so much for our friends in southern Alberta, but there's definitely allocations of irrigation water to those growers in south and I think we're seeing some cropping intentions change as well. So I think that may free up a bit of product out of southern Alberta. Now that only helps if they're finished seeding before we are. And when I look outside, it feels like we could start seeding 15th or 20 April, maybe in some of our geographies, which probably doesn't give us much of a window.
We won't be that far behind our southern Alberta counterparts.
[00:16:19] Speaker A: No, that's a week to ten days earlier than usual, I would say. And growers are going to go and chase that moisture as well. A little bit of that moisture because we got a little bit of snow across the prairies here over the last number of weeks. And yeah, people are going to get after it if they can.
So what you're telling me here, James, is if you listen to the podcast on January 26 and listen to the great advice of yourself as a farmer, you saved a little dough here, a little bit of money it looks like. So that's what the show is all about. James, so good on you. That's great.
How is it going from a labor side or a logistics side? So now I'm just thinking we've talked a little bit about rail cars and trucks, but early spring in the US, early spring maybe in western Canada as well, we'll know that window of getting product in is tighter.
How are we doing on the truck supply, the logistics? How is that all shaping up now?
[00:17:35] Speaker B: Yeah, I mean, right now truck supply seems to be decent ourselves. We have our own logistics company, who have our own house trucks. So that takes a bit of the pressure off of us. But definitely labor is a concern right now, and it has been since COVID But filling seasonal positions in our facilities is not as easy as it used to have.
We are, we're feeling the crunch there. And then again, bringing the season forward, giving us less time to get those positions filled.
Yeah, it's challenging right now, and I think it's across Canada. I think you still see that labor.
[00:18:19] Speaker A: Definitely, yeah, for sure. Okay, is there anything right now? So we talked about maybe a silver lining here for summer fill, potentially, but from a product standpoint, for planting in 2024, is there any product out there that you feel is well supplied today or isn't seeing as much of these hiccups? Is there anything that stands out that looks a little bit better?
[00:18:52] Speaker B: I guess, yeah, lots of potash in Saskatchewan for everybody. Minor nutrient sulfate supplies look to be really know. We produce a lot of it in western Canada. That looks fine, but when the rubber hits the road, it's the P and the K that really matters to the growers, and those are tight.
[00:19:13] Speaker A: Okay. Yeah.
So we use, on our farm, we use liquid nitrogen, so we use 280 zero.
Anything like when you look at an hydros or liquid nitrogen, anything different there from a logistics standpoint?
Can you tell if it looks better or worse on that side or is it all kind of the same?
[00:19:40] Speaker B: Yeah, I think it's all kind of the same.
Probably UaN, if I would say, if there's one product that has a little bit of excess capacity, it would be uan for sure. But then logistically challenging when you're moving around 28% nitrogen versus 46 supply is good, but it does take more truck power to move the equivalent pounds of end there.
[00:20:05] Speaker A: My very first summer job, at my first year of university, my first summer job was for the local retail. And I remember I was in charge of the fertilizer stuff, mixing the fertilizer, the liquid stuff, big liquid area, dormy Saskatchewan. And I remember the truck showing up during the night from wherever they were coming from, having to fill the tanks. Right. And then all my three tons, of course, this is like 2004, right? So all the three tons were all lined up, keys and all the ignitions. And I spent the rest of the night in the morning getting everybody loaded up and having their trucks lined up for spring. So in some ways, it's kind of like that today, but not, probably not a bunch of three tons anymore.
[00:20:55] Speaker B: No. The velocity of what the farms can do is quite incredible right now. Right. What used to be a lineup of three tons is now a lineup of super bees. And a grower used to see it a quarter section a day, and now it's like 300 acres a day. So everything happens just that much faster now. And that creates a lot of the logistical constraints that we face, is just the velocity of how things happen.
[00:21:25] Speaker A: Yep. Yeah. Fair enough. I've got one international question for you, and I'm not sure if we have the answers yet or not, but India put out a tender for fertilizer. Anything around that that you're seeing?
[00:21:41] Speaker B: Yeah. So much anticipated tender, which will be welcomed to Middle east nitrogen producers and China as well.
India did put out an exceptionally long shipment date on that tender, which will attract lower prices, giving them that type of flexibility. I think it is end of May 20 shipment window. So they're really trying to encourage low prices right now. And this might be the last glimmer of hope for producers before they head into the summer months of finding an outlet for nitrogen.
After that, it doesn't look good for them finding homes for that. And then we're going to have China come back into the market as more of a consistent supplier of nitrogen and phosphate, which they've been out of the market for the last few years. That's all adding to this pressure on the summer market that we think we'll see.
As a western canadian retailer, I don't know if urea will have a four or a five in front of it, but if it's a five, it's going to be a very low five. And if it's a four, it's a fairly high four on urea. But welcome prices for growers to step in and take a layer, I think, at that time.
[00:23:02] Speaker A: Yeah. Awesome. Okay, James, anything else you'd like to add?
[00:23:12] Speaker B: If you haven't spoke to your retailer about your needs, I highly encourage you to do so.
Like I said, with this cliff of low prices facing us in the summer, all retailers are working towards ending extremely empty. And if you walk in looking for a couple of hundred tons of blend on May 10, right in the middle of it, there's no guarantees that it'll just be there.
[00:23:38] Speaker A: Sure. Yes. Fair enough. Okay. Awesome stuff. I really appreciate you jumping back on the show, and hopefully we can do it again here after the busy season for you. Maybe it doesn't slow down now until the snowflies in the fall for you, but anyways, maybe we can get together this summer and see how that summer fill program's doing.
[00:24:02] Speaker B: Anytime I appreciate the opportunity.
[00:24:05] Speaker A: Awesome. Thanks, James. Take care.
[00:24:07] Speaker B: Yeah. Bye bye.
[00:24:08] Speaker A: Well, we certainly appreciate James joining the show here once again. And we're going to check in with him sometime towards that later part of spring planting and see what summer fill is looking like because that could be a little bit more exciting for growers here across the prairies. All right, folks, so Chuck hasn't been on the show for quite some time, so we had a lot to talk about. This next segment is about 30 minutes in length. And so I'm going to stop talking now and just turn it over to Chuck because he has some great updates and tips that I want you to hear about. So without further ado, let's go over to Chuck. All right, folks, joining me once again, I have Chuck Penner from left field commodity research.
Chuck, it's been a while, my friend. How are you doing?
[00:24:56] Speaker C: It's good. We're back from vacation and we're waiting for the spring now, but it's not coming quick enough. But whatever. As the saying goes, everybody talks about the weather nobody does anything about.
[00:25:08] Speaker A: Yeah. Oh, we had a taste of it yesterday. It was raining yesterday morning in the Edmonton region. So you got a little bit of that spring smell going and everything. So it's kind of nice. But it's snowing now this morning. So back to know.
[00:25:23] Speaker C: It's funny because talking to people in various parts, even though the mounts haven't turned the situation around and made it all perfect and all of that kind of stuff, there seems to be a little more optimism growing now. And that's good.
We'll see how that affects planting and all of that kind of stuff yet.
[00:25:44] Speaker A: Yeah, 100%. I even saw it on our own farm. We got a snow event south of Prince Albert and it just changed the mood on the farm. Even so, it was good to see. And of course, we'll need a few more of those yet here this summer, this spring and summer. But why don't we start off here with seeding intentions? So we haven't talked about the stats can update.
So why don't you give us maybe your latest on seeding intentions across the prairies?
[00:26:15] Speaker C: Yeah, it's been kind of interesting and we can talk about some of the stuff individually or certain specific crops and that kind of thing. But the first thing to note is the statscan report came out early last week and that was based on a survey that was done of farmers mid December to mid January. And it's interesting because the numbers that Statscan came out with were kind of close to our own estimates that we did back in December, odly enough.
So we were actually kind of close to what they were saying, or conversely, they were close to what we were saying. But then we redid our numbers in March, beginning of March, and so made some more adjustments and things like that. And those seem to fit with what the trade is expecting as well, too.
So StatsCan was looking at acreage of wheat, for example, spring wheat, for example, almost unchanged from last year. So really no difference there. Canola down a little bit? If there's a bit of a theme, I would say it's that pulses are up from last year and pretty much across the board from peas, lentils, chickpeas and even dry beans. So all of the pulses seem to be looking a little more favorable. Barley down, oats up. Of course, oats couldn't get worse than it was last year because the acreage absolutely cratered last year.
It looks like a huge increase, but really it's not even quite back to average, at least according to Statscan. So those are some of the things.
Since then, we think we. Well, it's interesting because we've been talking about moisture, right? And so one of the reasons why the pulse acres were reported to be higher was concerns about dryness. And instead of putting in something like canola, that's a high input, high risk kind of crop, you might put in pulses and hope that the disease issues don't come.
You know, is that flipping back a little bit now that some moisture has come in, especially in Saskatchewan, central Saskatchewan, and that kind of, you know, is that changing?
Is that flipping back a little?
You know, we still think, on balance, pulse acres will be up a little bit more yet than what Statscan was saying.
[00:28:44] Speaker A: Okay.
[00:28:46] Speaker C: Within that, green peas, green lentils would see the biggest increases just because those prices have been really positive.
So there's that, and probably oats up a little bit more, barley maybe down a little bit more.
But it's like talking to people in different parts of the prairies. We talk to people who have networks of farmer customers and that kind of thing. So we talk to those kind of people, and it really varies by region. So I was talking to somebody yesterday from where your farm is kind of in north central there, and he was saying that farmers are turning away from spring wheat and maybe putting in more oats and some other things and other areas talked about, well, okay, we're going to get rid of, there's canola seed being returned and all of those kind of things. So it really varies by area. So trying to get the overall prairie sense of it is a little bit difficult to do.
[00:29:53] Speaker A: I agree with you 100% because I've been in my own little bubble here wondering where these extra oat acres are coming from because I can't find them in Alberta. But that's not where they should be anyway.
They should be in northeast Sask and in Manitoba. I would.
[00:30:11] Speaker C: Would. I would suggest or I would say that it's coming mostly out of barley, know to keep the cereal in the rotation.
But even then, like I said, I think the number from stats can. I don't have the percentage in front of me, but I think it's like about 25% increase in oat acres from last year. But last year there were almost none.
So it's actually not a whole lot of oat acres. We're just getting back to normal, actually.
[00:30:40] Speaker A: Yeah. No, 100%. I agree.
We're going to talk about canola futures a little bit later on, but the wheat market has done nothing for new crop.
Your pulse prices. I heard green lentil prices for new crop peeled back or pulled back a little bit after that. Stats can. But yellow peas have hung in there. Green peas are hanging in there as well.
Wheat is not doing anything to buy any acres right now across the prairie.
[00:31:13] Speaker C: Yeah, well, when this person told me, he said at $8 spring wheat, you need like $60.60 bushels is not even break even.
I know I'm out of touch on the input cost because I don't track those all that closely, but it's just kind of eyewatering. $480 an acre is not even break even. It's kind of, wow.
[00:31:39] Speaker A: I talked to a farm yesterday, and I can reference our own farm here as well. But on spring weed, it was just over $500 an acre for break even.
[00:31:49] Speaker C: Unbelievable.
[00:31:50] Speaker A: A high producing area, though. Like, they would pencil in probably 80 bushel wheat crop so they can make some money at $8. Still, when I chatted with some bankers and accountants here the last couple of weeks, 612, 600 and $2700 an acre. All those numbers are very real.
And growers have been emailing the show talking about where can I save money or how can I reduce costs? Well, Chuck, there's no easy answer to that. You can't just look out the window and say, well, that equipment's gone or that land is gone, or it's. It's a slow process to try to cut costs anyway.
Okay, is there anything that scares you from an acreage perspective, where you'd sit here and say, whoa, we're going to plant a lot of this, we better be on our toes for marketing.
[00:32:48] Speaker C: There's some interesting stuff, and I've been bearish on mustard for a long time.
They say even a broken clock is right twice a day. So I'm finally right on mustard.
But that's one that scares me. StatsCan was showing a drop in acres, but last year it was the highest in, I don't know, decades, like a long, long time. So we're down a little bit from that, but not enough. And so we really don't need that many mustard acres. So again, that was survey in December, January. Hopefully some of those people have reconsidered.
But in that case, if people are waiting for a return to $0.60 even or $0.80 or a dollar, they're going to be sitting on it for a number of years, which they're kind of used to in the mustard market.
Another one might be, I think we're going to, even with a drop in barley acres, I think we're going to be sitting on some heavy supplies there for a while. Of course, all of this assumes kind of normalish weather. Yeah, production, that's the disclaimer that I got. But those would be a couple that I think that have the potential to stay heavy, be heavy and stay heavy. And I think the p market, which I wouldn't mind talking about a little bit later, there's a bit of risk developing in that market as well, too. Okay, so we'll want to talk about that one. One of the ones where I think there might be the flip side, if that was going to be your next question, that one might be flax. It might be the sleeper crop this year. So stats can't show the acres we're going to drop to, like 510,000 acres, which is the lowest since 1949, before my time.
And so that's one that I think has some potential.
And I'm just going to go down a bit of a rabbit trail here, if I may. 1 of the bits of news that came out last week or this week even, is that the European Commission is talking about restricting imports of russian crops. So you'd think, well, this war has been going on for over two years. Know, maybe it's time that that happened, or you'd think that had already happened. But if that's the case, Russia is a significant supplier of flax to Europe and a significant supplier of mustard. Actually, they're the largest supplier of mustard to Europe.
[00:35:36] Speaker A: Okay.
[00:35:36] Speaker C: So I don't know if those two crops are going to get caught in these restrictions, but if they are, it could really change that market for us considerably. So Europe might need to start coming to Canada for flax, which they haven't for a couple of years now, and might need to start buying more mustard, particularly brown mustard.
That's a bit of a possibility. But again, I don't know if that's going to happen, when it's going to happen, if it replies to all crops or what. So anyway, just something as a bit.
[00:36:16] Speaker A: Of an aside, I did have flax circled here as well on my paper, but for a different reason. And we haven't talked about flax a whole bunch on the show, and it's been a very quiet market and obviously maybe less optimism from that acreage number. But flax supply, is it fairly comfortable or projected to be comfortable for ending stocks?
[00:36:40] Speaker C: Yeah, it is fairly comfortable.
You're right. You're absolutely right. It's been quiet is a polite way of saying dismal last couple, or basically since the 21 drought when prices hit $45 and it killed, just choked off demand. And so the only place that we were really exporting to was the US. So normally it's three. It's Europe, China and the US. Those are our three main destinations. And so that one, we haven't exported anything to Europe for a couple of years. China. Just minimal container volumes to China for the last couple of years as well, too. But part of that is Russia and Kazakhstan really built up production.
They had a really poor crop last year, though, so their inventories have been drawn down.
And if acres in Canada are going to drop, us acres are also going to drop. So that could provide a little more demand from the.
So I think that it's more the demand side. I'm a little nervous about how strong us demand is going to be, but again, we're probably going to see smallish production again from our competitors and also from some of our buyers. So it has some potential.
[00:38:02] Speaker A: Anyway. Sure.
[00:38:03] Speaker C: In fact, I just noticed while here in Manitoba, anyway, I noticed my first new crop bid of $16.
[00:38:11] Speaker A: There you go.
[00:38:13] Speaker C: That comes from one of the domestic users. They tend to be the most aggressive buyers, but still, that's heading in the right direction.
[00:38:21] Speaker A: Yeah, 100%. Okay, cool.
Let's switch gears now. Let's dive into maybe the latest in the yellow pea market and what you're seeing for some implications there.
[00:38:36] Speaker C: Yeah, I'm going to go back a little bit in history to 2017, which is essentially when India stopped buying canadian peas. They imposed these tariffs and quantitative restrictions, so basically they wouldn't allow any into the country.
At the same time that that happened. That's when the business to China really ramped up. So China really saved our bacon back in 2017. So there was this shift from India being the major destination to China being the major destination. And so that's been the case over the last five years, or no more than five years now.
So that's been the situation. And then, of course, this year, India decided to drop its tariff to zero temporarily. That happened back in December, and then the deadline was March 31. And so we've exported a whole lot of yellow peas to India. Estimates are somewhere between 750, maybe 850,000 tons.
[00:39:40] Speaker A: Oh, wow.
[00:39:41] Speaker C: So that's a lot of peas to move in a short period of time.
[00:39:44] Speaker A: Yeah.
[00:39:44] Speaker C: And so that's been very positive. So we saw yellow pea bids bump up and so on. India has since extended that deadline from March 31 to April 30. But really, that is too short of a time. We haven't seen any evidence that there's been a bunch more sales that have happened because of that.
But there are now some rumors that India will extend that deadline yet again, which is needed, and it would need to be more than just one month at a time, because that just doesn't give time for canadian buyers to buy it from farmers, get it delivered, get it on rail, get it to the west coast and get it to India. So it would need to be a longer timeframe for them to do that. If that happens, though, even what we've done so far, we'll see ending stocks really drawn down by the end of the year, that's a really positive sign. And if this extension goes into the new year, into the new crop year, then, of course, then we'll see new crop bids pop a little bit more as well, too. So that's really positive. One of the reasons why they're talking about extending it or why these rumors are there is because their desi chickpea crop is smaller this year. And so the official estimates from India don't say that. But the real estimates are all suggesting that there's this idea that they're desi chickpeas and yellow peas substitute for those that will cause them to keep that zero tariff on yellow pea imports. So that would be positive. But there's a cloud behind that silver lining.
[00:41:38] Speaker A: Oh, come.
[00:41:43] Speaker C: Be the downer here.
And that China is looking more vulnerable for a couple of reasons.
China saved our hides when India backed away from the market. Now it looks like the flip side is happening where India is stepping in as chinese demand is dropping. So we've talked before about Russia exporting peas into China and taking a bunch of the market share, mostly that's in the feed market where we weren't really shipping to anyway.
But pea inventories in China very high right now. And so there's kind of flush with that. And I just saw the latest chinese import data for January and February, which showed very low volumes from Canada and Russia.
And so one of the things is that they're sitting on all of these peas right now. Meanwhile, the feed market in China has, like for corn and soy meal has just dropped really hard. And so they're not interested feeders, they're not interested in feeding peas, so they're not being consumed. The other one is a court case, an anti dumping case that was brought by Us against China for pea protein.
That's the other vulnerable part of this. So what's been happening is that China imports these peas, canadian peas, fractionates them, turns them into protein, starch and fiber, and they ship that protein.
Then China exports that protein. And so they're exporting. The US is one of their large destinations for that. Okay, so this antidumping case, now, there's been a temporary ruling. Part of it happened in December, part of it now, part of it in February, but that, yes, indeed, China was dumping this p protein into the US.
So tariffs have been imposed anywhere from 200% to 600% on these protein imports. Okay, so what does that mean? Well, if China can't export protein to the US, then it doesn't need as many yellow peas to turn into protein. And so that's a risk to the lope market specifically.
And so again, you've got the upside from India and then you've got this negative news from China.
Still trying to sort out how big of a deal that is. Like how much of their China imports has imported from Canada. Probably about 1.2 million tons a year last couple of years. So how much of that could be cut back?
We're still trying to sort that out a little bit, figure that out, but it is a bit of a threat for that chinese market going forward. So we got to cross our fingers and hope that India extends that zero tariff and they can buy yellow peas.
[00:44:51] Speaker A: Yeah. So hopefully we should get that news before the end of April and then see what that looks like. So, yellow pea growers, you're on notice here to pay attention to what's going to happen.
[00:45:04] Speaker C: Yellow pea bids are kind of at the point where you can make some money or whatever.
I wouldn't want to go into next year completely unpriced.
I'm not saying sell the whole lot, but maybe take some of that risk off the table.
[00:45:22] Speaker A: Well, there can be a pain in transition as well. Right. It doesn't happen perfectly each and every time. So hopefully India extends and hopefully they extend into the fall. Traders feel know about getting some sales on, get that little bump, hopefully, and take advantage of that. But sometimes it just doesn't work perfect. So you can get that?
[00:45:45] Speaker C: No. And it's a little scary worry.
A little scary. Depending on government decisions for your marketing plan.
[00:45:52] Speaker A: Yeah, 100%. Okay.
Anything on lentils to add to that?
[00:46:00] Speaker C: Sure. Well, the indian harvest is probably actually over half done right now of their winter harvest is rabi crop that we hear about. So that is their chickpeas and peas and lentils. And so far there's been some varying things. Again, the government estimate, the official government estimate was a little over 1.6 million tons, which would be a record crop for India.
Private estimates are about 300,000 tons less than that, at least the ones that I've seen, but still a little bit more than last year. Even the private estimates are saying it's a little bit more than what we estimated last year.
[00:46:43] Speaker A: Okay.
[00:46:45] Speaker C: And we have seen some indications that India is buying fewer red lentils. They've had a really strong import pace up till now, but now it's starting to fade a little bit. And of course you have to compete with Australia and maybe even Kazakhstan a little bit bit.
That's a little bit of an issue. I think for the most part their crop is good, but not as good as what the official estimates are.
I think we'll probably see a bit of a lull now that they have their own crop arriving into their markets. So we'll see a bit of a lull and then hopefully come out the other side. But we're also hearing that it's not just green lentil acres here that are increasing, but reds as well. So that's another one where we will have not much left by the end of the year, but depending on it all depend on that indian demand about how things go going forward.
[00:47:49] Speaker A: Yeah. Okay, awesome. I appreciate that update. I know we've kept you for a while here already, Chuck, but if I may, we covered a lot of ground, but we have not talked about this canola futures little rally that we've experienced.
Any quick thoughts on that? On the canola?
[00:48:07] Speaker C: It's going to the moon, Ryan.
[00:48:09] Speaker A: It's going to the moon. We're going to edit that out. We're editing that out. Jeff, if you hear this, we're going to take that.
[00:48:16] Speaker C: It's, it's. We're very close. Oh, I'm just looking at the futures board. Right.
So if you look at a canola chart, and I put this on X, if anybody wants to still uses X.
So there's been a series of. The market has gone through this series of lower highs, so drops, then it does a little bit of this, then it down, and each one of these peaks has been a little bit lower. But this move now is kind of key. So it's rallied since then. It hasn't quite reached the last peak. So if you're a technical fan, technical indicator fan, if we can move up through that last lower high, I'm trying to use hand signals so that people will see that, but if they're listening just to audio, that's not going to help anyway.
We're very close to taking out that previous high. That was in January. And if we can do that, it's a stronger signal that this rally is something more sustained. The other part of it is, too, that funds have had this record short position, and now in the last week, anyway, they had trimmed that by about 18,000 contracts or something like that. So they're less short than they were before. And I would guess that January high is one of their stops. So if we can push up through there, some of those funds that have short positions will be buying those back at that point. And so it could even accelerate that move a little bit.
Don't ask me how high it can go, because I have no clue.
But if we can get through that, I think it's about 645 on the May contract. If we can get up through that, that's a pretty strong signal that this move isn't just a blip.
My question always is, though, is that farmers have said, okay, if canola bounces, I'm going to sell it this time.
And so I'm just wondering, are they going to sell it this time, or are they just going to say, oh, no, it's going higher. I got to hang on. That's human nature. I don't mean to make fun of farmers.
That's just human nature.
So we'll see whether farmers are deciding to sell at the same time as funds are buying it back.
So it's all very interesting, but, yeah, we're within a couple of dollars now of hitting taking out that January high.
[00:50:53] Speaker A: Sounds like I got to go price a little basis contract here for the farm in the next few moments.
[00:50:59] Speaker C: Well, it's interesting because I've heard a couple of people said that basis has jumped at some locations. Some buyers have really boosted their basis in the last little bit. So again, that's another friendly signal, too, that there's something going on.
[00:51:14] Speaker A: Yeah, I haven't looked into Yorkton yet. The one, watch out, I have. And I don't like when a company says they're sold out.
[00:51:21] Speaker C: Right?
[00:51:21] Speaker A: Like, we're sold out, we're not buying anymore. But in this example, bungee in Fort Saskatchewan, they've been doing this for years, and it's quite accurate when they say they're sold out, they're sold out and they're sold out. Tell new crop you cannot sell. Stitch a canola in there. Tell new crop. And I have never seen that from them in March. So maybe some farmers were jumping and buying or, sorry, selling.
But yeah, I don't know. I like to see the bounce. I'm relieved to see the bounce. And I hope farmers are adjusting their plans and taking advantage more than anything. So I know that's what we've done on our farm and even tickle in a little new crop here as well because it's paying the bills. Anyway, awesome. Chuck, I appreciate your time. I know we went really long here today, but lots of very good information and we hadn't chatted in a while. So good to get caught up. So appreciate you jumping on.
[00:52:22] Speaker C: Absolutely. Glad to.
[00:52:23] Speaker A: All right, enjoy your spring. Talk soon.
[00:52:25] Speaker C: Okay.
[00:52:26] Speaker A: All right, well, that was some great stuff. And perspective once again from Chuck Penner of left field. I hope you guys enjoyed that one. It had been a while since we connected, so that's why we went a little bit longer than normal. So we're getting towards the end of the show here. Just a couple more segments to go, and I appreciate you hanging in. So let's get to the mailbag segment. This is sponsored by Pioneer Seeds. If you ask a question, you send in a question to the podcast. That's Ryan at Whatthefuturespodcast cA. Or you can go through the website and do it that way. But just by submitting a question, you get entered to potentially win a bag of p 516 L. So that's a bag of canola seed from our friends over at Pioneer Seed. So don't be shy. Send in your questions and we will be drawing for the march bag here. It's actually going to be probably the April 5 Friday, I believe that is a Friday. Next week is Easter, and I'm going to be pre recording that podcast. So anyways, let's get to this week's question. This comes from Keaton and he says, hey Ryan, the podcast is great. Glad to see that you're getting traction. I hope your family's well and staying healthy. My question for you is, with the current input, prices increasing and drought in the prairies, every dollar counts. How do you see farmers changing their operation? Purchasing. So that's for fertilizer, seed and chemical. And then he also says, and marketing strategies. So thanks. Keep up the good work. Take care, Keaton. All right, man.
So this is a question where I probably don't have the perfect answer.
Not that you really ever have that perfect answer in marketing specifically, but if we want to just tackle marketing strategies first, it's almost a two part question. So marketing strategies, when you're looking at a drought, obviously you're hesitant. You're hesitant until the crop establishes itself. You're hesitant until you start to get comfortable with the growing season. And honestly, you're hesitant until that crop is in the bin. Now for 2024.
It could be that a lot of the preselling we do ends up being some of the best pricing we have all year. That's a fairly normal thing for crop marketing. But if you're sitting here with the dryness we have this winter and the dryness from last year, and the thoughts of 2021, farms are going to contract less than usual or less than they have in the past. They're not going to do a whole bunch of contracting unless it has act of God or something to help them manage the risk on a buyout.
But what I would say, I'm not saying that's the right thing to do, but everyone has their own comfort level. But if the question is how do you change your marketing strategy in a dry year, well, I would say number one, the easy thing right off the bat is to go look at those contracts with active God. A lot of the specialty crop contracts, if it's lentils, peas, it might be a mustard contract, or chickpeas, some oats.
Look to see what you can get an act of God on and what the cost of that act of God looks like. Not every act of God makes sense.
There are some pretty steep discounts out there for act of God, so just keep that in mind. But that could give you peace of mind and maybe an opportunity to price some crops at a profit. But that's the easy one. Go look at act of God. The second thing I would do is if you have a crop that is hedgeable, that is traded on the futures, if it's going to be wheat or canola or soybeans. Then in a year of dryness or concerns about drought, you go and educate yourself on what can I do to still lock in a price. Think about the canola rally we have today.
We're going from a 575 up to now 650.
We're like a buck 75. We've gained here in the last number of weeks.
Dollar 75 a bushel. So what can you do now on the November contract or January contract, the new crop months to lock in some type of floor, but stay in the market. So in years of drought or concern, you got to make a few extra phone calls and get those alternative strategies figured out. It might be your futures broker with RBC or whoever it is, and it could be phoning the Vitera, the Cargill and seeing what's available. And I think I'm on record on the podcast. I know in my presentations I talked about even for our farm, we are looking at companies that offer these alternative contracts and using them a little bit more for our marketing plan. It just gives us another layer to protect ourselves here.
And the third thing, again, depending on what your comfort level is, but is to have a conversation with a futures broker and see what they can offer you from a risk management standpoint when it comes to locking in profits on your crop. So on the marketing side, those are kind of the three that I would look at, and I see a lot of those conversations happen in years like this. The other thing about purchases, so your inputs, your fertilizer, seed, chemical, they're all a little bit different, in my opinion. So on the seed side, I would say farms are booking varieties that they're comfortable with, that have a strong history of performance on their farm.
And maybe if it's a cereal, using some of your own clean seed to cut down on cost that way, that's typically what happens in these environments, in my opinion.
On the chemical side, we see farms look at what's my spectrum like, what's my issue out there in the field, and how can I effectively tackle that issue?
How can I handle that weed spectrum effectively? But at the lesser price point or smaller price point, I'd say that's what I see on the chemical side, on the fertilizer. Know if you have the ability to feed that crop, and I know Mike Lee talked about this a little while back on the podcast, but if you can kind of feed that crop the nutrients throughout the growing, know we see that as well. And so putting down some type of starter blend to get things going and then increasing your expense, feeding that crop further as those rains happen and as the crop becomes stronger and looking better. So it's not easy, folks. But I would say, generally speaking, you're trying to hold back some of those expenses until you feel more comfortable with your growing. Hey, you know, Keaton, maybe these snow events are falling on your farm as well, and maybe you're starting to feel a bit better about moisture. I'm not.
You know, we'll see what April brings as well from a moisture standpoint. So hopefully that helps. There's no easy answer, but hopefully that helps just a little bit.
All right. I'm not going to talk about news this week or crop prices. Nothing really stands out. You guys know what your canola market's doing in your backyard?
I did notice bunkey in fort, Saskatchewan, again, sold out until new crop. But anyways, we'll tackle that in the next pod in more detail. So let's go to eating your veggies, of course, because it's the right thing to do. And I've got just maybe four quick things for you today.
Number one, I would and again seek the advice of a professional always, folks. But price some new crop canola, you've had a bounce here. Can it go higher? Yes, it can.
But take a look at pricing canola. And if you say, hey, Ryan, I'm not pricing anything, I'm not comfortable with this drought conditions or dryness, then pick up the phone and ask what a put option is going to cost you. Okay, new crop canola here at 676 75, wherever it's at now for Nov, in my opinion, you got to take action on that and also price some old crop canola. If you want to leave a bullet back or two, that's fine. But take advantage of this nice rally we've had and get some old crop priced at this time.
My next one for eating your veggies is crop insurance deadlines. They're starting to come here real quick, so it's kind of crunch time from a crop insurance perspective. And so if you haven't already, make sure you've got your quotes from all your providers coming in and then spend some time making that plan. Because I see it on the 11th hour all the time where people are firing in their crop insurance decisions. And it doesn't have to be like that. You can get ahead of it and give yourself some time to work on that now and then. Also, I want you to set aside a little bit of office time, and I put by Easter Monday. Okay, but set aside some office time, number one, just to update your crop marketing plan. So has anything changed since you've reviewed it last?
Sit down, maybe write down your thoughts and your goals when it comes to crop marketing. Maybe some timelines in there as well, even jotting down some levels you'd like to target. If it's a document that you can revisit, that's important.
But office time, obviously, folks, it's going to get really busy here as we get closer to spring.
And I guess it is officially spring now. But just take that office time and get your ducks in a row for the planting season. There's a whole bunch of stuff to obviously cover there.
All right, folks, let's just wrap up episode number 20 here.
I'm going to email this out, but I do have a question for you. A parting question. And my question is, so what futures is planning a farm conference for November? And I want to know what would you like to see on the agenda again, I'll email that question out, but I am starting to build out that agenda and I'm curious what you guys would like to hear about. Also, we are giving away a trip to Nashville, Tennessee. Actually, I am going to draw for that. It is going to be on the April 5 episode, so you'll have a little extra time to get registered and get your name entered. It's quite easy if you want to get entered to potentially win a trip for two to Nashville, Tennessee. All you have to do is tell your friends and your family members and people on the farm to head to the website. That's Whatthefuturespodcast ca sign up for the weekly newsletter. I'll email them and ask how did you hear about the pod? If they say your name, you get a double entry and they also get entered to potentially win this trip. So let's keep going with that one. And again, I'm going to draw for this on April 5. There's been multiple ways to enter this contest over the last couple of months, and so you may have entered through a different way, but that's how you get entered between now and the draw for this on April 5. All right, folks, subscribe to our YouTube channel. Follow us on our social media platforms. I hope you enjoyed the episode. Have a good weekend.
I'm out.
