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Marketing For Base Hits Vs. Home Runs

Do you recall the poem “Casey at the Bat” by Ernest Lawrence Thayer? It’s a story about baseball, yes, but more about the dangers of over confidence. Casey’s team from Mudville is down two runs in the bottom of the ninth. Two unlikely batters make it on base and the crowd erupts as mighty Casey comes to the plate. As the story goes , the crowd is so confident in Casey’s swing that they would bet even money that now they will win the game. Casey is so confident in his abilities he arrogantly ignores the first two pitches as they slide past for strikes. Then, with the game on the line, Casey takes a mighty swing at the third, misses and the game is lost.

How does this apply to marketing pulses, grains and oilseeds?

Right now, the market has everyone brimming with confidence and rightly so. Commodity prices are firm in the major grains and oilseeds. Low farm-gate prices that had farmers feeling behind and unable to catch up have been replaced with positive market values. Strong canola, wheat and pulse prices have farmers feeling like they can’t help but “hit the home run.” Optimism isn’t a dangerous thing, but we need to balance it with realism. If you become over confident as Casey did you could strike out.

STRIKE ONE: WEATHER EVENTS

In recent columns, I’ve talked about significant weather events

around the world. Continued reports of frost in parts of India and potential drought in China have many western Canadian farmers convinced that commodity prices will remain firm. But we’re not immune to negative weather events, either. The 2010 growing season created delays in harvest and significant quality problems damaging our reputation as a reliable and quality supplier, especially in the pulse sector. Weather, as always, has proven unreliable and unpredictable.

STRIKE TWO: EMERGING COMPETITION

There are now regions emerging that can and will produce pulses to compete with Canadian product. The producers in these areas seem, in many cases, to be less interested in hitting a marketing home run and more interested in positive returns per acre. Green lentils in the U.S., kabuli types in South America and kabuli and field peas in Eastern Europe are all being grown and sold at prices more competitive than Canadians seem willing to accept at times.

STRIKE THREE: UNREALISTIC PRICE EXPECTATIONS

There are those out there who are promoting the idea that because the market is firm and/ or firming for major grains and oilseeds that it will continue, and the lentils, peas, chickpeas, etc., will all be buoyed along with canola and wheat. Some believe prices for your low grade lentils or even top grade lentils will continue to rise, unchecked. That is possible, but is it realistic?

At the time of writing (mid- February), laird-type lentils are 39 to 40 cents for No. 1, 35 cents for No. 2s. I find it hard to imagine an upside to these prices. If you believe there is how much do you see? Extra3s and No. 3 lairds are about 25 and 18 cents respectively. Again, I don’t really see upside here. Do you?

Farmers are currently being offered 25 to 26 cents for red lentils (No. 2s) and 22 or so for X3s. The world really does not support these values today, so where do you see the upside coming from? An unpredictable weather event somewhere else in the world? Do you want to gamble on that as Casey did with his first two pitches?

BASE HITS VS. HOME RUNS

I don’t want to leave you with the thought that lentil prices are softening or have a weak future. I am bullish in the sense that I believe lentils prices will remain firm, close to the range they are at now. I just don’t see much upside at this point. Don’t mistake confidence and firming prices in other markets to mean pulses will continue to rise, too. Going forward, I believe there will continue to be peaks and valleys in pulse bids. Strategically selling smaller volumes into various spikes verses trying to hit a home run at one peak is more likely to result in a winning marketing season.

JeffJacksonisexportmarketingmanager withWigmoreFarms( www.wigmorefarms.com) basedatRegina,Sask.Haveyougota marketingstrategyquestion?Sendthemto [email protected] orcall306-757-3005

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There are now regions emerging that can and will

produce pulses

to compete with Canadian product

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