CNS — Feed grain prices are above milling prices in some areas of Western Canada right now due to complicated travel logistics and patient farmers, says an industry analyst.
“Just in general right now, farmers aren’t really big sellers of crop,” said Charlie Pearson, a provincial crops market analyst at Alberta Agriculture and Rural Development. “I think a lot of farmers are kind of hanging back a little bit just until they’re more satisfied with their own crop or what’s happening in the 2014 crops.”
Feed grain prices in Lethbridge, where Pearson says the most demand is, were at $169 per tonne for feed barley and $152 per tonne for feed wheat as of July 22, according to the Alberta Canola Commission. As an example, this compares with Cargill, Lethbridge prices, which were slightly lower at $167.66 per tonne for red spring wheat and $130.90 per tonne for Canadian Prairie Spring wheat.
“They’re (end-users) probably as surprised as anybody the fact that prices haven’t come down in corn and in the other crops,” said Pearson. “So they’ve been caught probably on the other side and are caught just a little bit short right now on having to bid prices up so they’ll get out of farmers hands.”
The other factor holding feed grain prices steady are the transportation issues, Pearson says.
“I go to the Lethbridge areas, where there is major demand right now. (There is) good movement out of those areas in terms of crop, in general,” said Pearson. “Even on milling wheat, Alberta has been pretty lucky.”
Pearson added that this isn’t the case for other regions.
“To get it to other areas, you’re probably going to bring it in by a truck, and if you look at trucks right now the availability of trucks is down from normal,” said Pearson. “There’s probably less backhaul opportunities. Before you would bring crop in from Saskatchewan and there would be a backhaul out of Alberta, maybe fertilizer or something.”
Expensive diesel fuel is another contributing factor. Some brokers are saying that trucking costs have probably increased by 25 to 30 per cent as compared with six to nine months ago, Pearson says.
“So there’s a whole bunch of things that impacted both the availability of trucks,” said Pearson. “(There is) not a lot of trucks to move grain from where there is lots of supply to where there is less supply or where it’s needed.
“It costs you more, if you can get it, period,” said Pearson. “There’s just not many trucks around right now.”