The sluggish western Canadian canaryseed market is facing more problems than the current trade dispute with Mexico, but the longer-term outlook could still be pointed higher given the tightening supply situation, said market analyst Mike Jubinville.
Jubinville, an analyst in Winnipeg with ProFarmer Canada, made a market outlook presentation Monday to the Canaryseed Development Commission of Saskatchewan during the annual Crop Week conferences in Saskatoon.
Mexico is traditionally the largest export destination for Canadian canaryseed, but exports to the country are down 25 per cent this year due to a trade dispute over weed seeds in shipments.
While the Mexican situation is unlikely to resolve itself anytime soon, Jubinville pointed out there are other problems brewing in the canaryseed sector as well.
Canadian canaryseed sales to Europe were down about 90 per cent during the first quarter of the 2011-12 marketing year, while sales to Brazil were also sharply lower.
Jubinville attributed some of the lack of demand to global macroeconomic uncertainty and the strength of the Canadian dollar relative to the currencies in many importing countries.
A mild winter in the northern hemisphere was also limiting the demand for bird feed, and Jubinville said a series of winter storms would be a good thing from a pricing standpoint.
Canada grew 102,000 tonnes of canaryseed in 2011, according to the latest Statistics Canada estimates, which is well below average yearly demand.
While there are ideas that actual production was larger, the canaryseed situation is still tight overall and Jubinville estimated ending stocks could come in as low as 20,000 tonnes.
He described that level as "effectively zero," with farmers unlikely to sell any more canaryseed when supplies are that tight, preferring instead to store it until prices jump considerably higher than current levels.
Assuming the StatsCan production number is correct, Jubinville saw little downside potential in the canaryseed market, despite the current sluggish demand.
On the other side, he said even a moderate resurgence of demand could see prices move from their current levels, near 26 cents per pound, to as high as 30 cents per pound. At that level more grower selling was likely to come forward, limiting any further advances.
Going forward, Jubinville’s advice to farmers still holding unpriced canaryseed was to be patient, and to put their own offers in as well. The sporadic spot opportunities that become available will likely go to those producers who have already put in offers, he said.
Looking ahead to the 2012 growing season, he said canaryseed was in the lower third of cropping options in terms of profitability, with little incentive currently in the market to boost acres.
If that incentive doesn’t come forward before spring seeding, supplies could be even tighter for the 2012-13 marketing year, which led Jubinville to describe canaryseed as a possible "dark horse" crop.