"Overall demand for birds is down so much, canaryseed is just not needed," said Maurice Coupal of GrainEx International at Sedley, Sask., about 50 km southeast of Regina.

Coupal said there is not enough demand to drive production contracts and justify the increase in intended acres.

Some of the lack of demand seen in canaryseed in recent years has been tied to dwindling interest in canaryseed food, as buyers see canaryseed as a luxury item that gets cut during tough economic times, he said.

The lack of interest for canaries from a younger generation is also an undermining factor in canaryseed demand, he said.

StatsCan’s intended-acreage report on April 24 showed farmers plan to seed about 275,000 acres in Saskatchewan, up from 235,000 acres seeded last year.

"Continue to struggle"

Coupal said he does not believe the 275,000 will be planted, as declining export demand will push on acreage interest downward.

Some of the declining export demand is tied to increased pressure from Ukraine and Kazakhstan supplying the rest of the European market, he said.

Canaryseed, he said, is currently not competitive with any other crops.

In Saskatchewan, canaryseed averages 1,000 to 1,200 pounds per acre, he said, and at 25 cents a pound, equaling $250 an acre, that would hardly break even.

Canaryseed prices would have to around the 40-cent level to compete with canola and other crops, he said.

The end of the Canadian Wheat Board’s single marketing desk for Prairie wheat, durum and barley could potentially weigh on canaryseed prices, as farmers look towards the more profitable spring wheat and durum crops, he said.

"Canaryseed has lost its glow and charm in the past 10 years. It’s struggled and will continue to struggle until the crop is dead," Coupal said.

Current canaryseed spot bids were between 26.5 and 27 cents a pound, according to data from Prairie Ag Hotwire. That’s unchanged from two weeks ago and up between 0.5 and one cent per pound from a month ago.

New-crop canaryseed bids are going for between 25.5 and 26 cents.

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"We’ve seen inclusion rates of feed wheat go up, so feedlots are buying more feed wheat because it’s more cheaper than feed barley," said Jim Beusekom, a grain merchant with Market Place Commodities at Lethbridge.

Inclusion rates for dried distillers grain have also increased, he said. Corn distillers’ grain can displace as much as 25 per cent of the feed barley in cattle rations.

As prices have increased, the amount of feed barley used has dropped, he said. Despite the decline in feed barley usage, that has not caused a big enough dent in the continuing upward price trend for Alberta feed barley, Beusekom said.

The ongoing upward trend seen in Alberta feed barley spot prices is tied to the continued tightness in the cash market, he said. With grain prices moving upward, sellers are currently reluctant to move their feed barley.

Cash spot bids for feed barley are trading at $255 per tonne in the Lethbridge area, he said. That compares to $240 per tonne a month ago and marks an increase of almost $40 to $45 per tonne since mid-February, Beusekom said.

Currently, spot bids for feed wheat in Lethbridge are going for $245 per tonne, Beusekom said, and the price for corn distillers grain at Lethbridge is around $265 per tonne.

However, despite the declining spread between feed barley and other feed grains, U.S. corn is still not competitive, currently going for $290 per tonne in Lethbridge, he said.

U.S. corn prices would have to be at par with Alberta feed barley prices in order to be competitive, at around the $255-$260 per tonne level in Lethbridge, he said.

Feed barley historically reaches its peak between May and June, which means prices may still have some room to the upside, he said.

However, feed barley prices should taper off after July, he said. New-crop Alberta feed barley values are considerably less, around a $40-$45 spread for early September.

Eventually old- and new-crop Alberta feed barley prices will start converging as farmers begin selling their barley after spring seeding and June’s rainy season, Beusekom said, and that will move old-crop Alberta feed barley prices downward.

Declining feedlot demand after July will also help move Alberta feed barley prices down, he said.

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Wayne Digby, executive director of the Canadian Forage and Grassland Association, said some of the underlying support in Canadian exports has been associated with strong demand from the U.S.

Drought conditions over Texas and Oklahoma last year have sparked a need for forage in order to cover livestock demand, he said, although Digby said it will be hard to tell what impact recent rainfall in the southern U.S. will have on Canadian exports to the southwestern U.S. this year.

Meanwhile, continuing interest from China for Canadian forage has also added some bullish sentiment in Canadian exports. The forage industry is working with China on protocol for timothy exports, which would allow for further shipments of the product, Digby said.

Two processing plants are currently able to ship alfalfa into the emerging market, which he described as good for overall business.

"China will be an interesting potential market if we can be competitive in that market," he said.

Other emerging markets could create some potential fresh demand for Canadian forage, including South Korea, Mexico, India and countries in the Middle East.

Canada exports 600,000 tonnes of forages annually on average, the CFGA has said, giving it about 10 per cent of the world’s forage export market share. In 2011, Canadian exports in alfalfa, timothy hay, meal and pellets totaled over $85 million, according to Agriculture and Agri-Food Canada.

However, near-term challenges remain for the Canadian forage exports. Transportation issues remain a concern as they create a disadvantage for exporters, Digby said. Increased fuel costs, along with concerns over container availability, have added some pressure on moving Canadian forage out into the global market.

U.S. exports from the Midwest into the global market may also limit further upside Canadian export potential, he said.

Even with dry conditions in Western Canada and the potential for drought, it’s still very early to tell what impact the current conditions will have on long-term export potential of Canadian forage, Digby said.

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Mike Jubinville, an analyst with ProFarmer Canada in Winnipeg, said some of the underlying support seen in new-crop canola bids is tied to firm demand in the spot canola market. That has spilled over into new-crop canola values.

The record pace seen by domestic crushers, along with the firm export market, has chewed away at nearby supply, he said.

Meanwhile, the upward trend in the CBOT (Chicago Board of Trade) soybean complex has provided some underlying support to new-crop canola prices, Jubinville said.

Continuing concerns over the South American soybean crop have moved CBOT soybean values upward in the past few months. The CBOT May soybean contract on Monday was going for US$14.31 per bushel, up almost US$2.37 per bushel since the start of 2012.

New-crop canola bids in Western Canada are currently going for as high as C$12.75 in Saskatchewan, C$12.82 in Manitoba, and C$12.95 in Alberta, according to Prairie Ag Hotwire data. That is up anywhere from 90 to 99 cents per bushel from one month ago, and up $1.46-$1.62 since the start of 2012.

Prairie cash bids for old-crop canola also continue to move upward. Explosive speculative buying in the oilseed futures market by the large hedge funds and strong commercial demand has helped move canola cash prices upward, Jubinville said.

Spot bids for western Canadian canola are as high as C$14.45 in Saskatchewan, C$14.51 in Manitoba, and C$14.32 in Alberta, according to Prairie Ag Hotwire data. That is up from C88 cents to C$1.17 per bushel, compared to one month prior.

Despite canola’s continuing surge in prices, further advances may be limited for canola new-crop bids. Jubinville said ideas that futures positions are overbought and due for a downward correction could undermine canola values.

Farmers getting out in the fields and seeding an anticipated record area to the crop, along with beneficial weather, could cause major players such as China to pull back on purchases, he said.

Farmers will plant 20-23 million acres of canola across Western Canada this spring, according to some trade estimates. The first survey data from Statistics Canada will be released on April 24.

The pull-back of speculative purchases in the futures by a variety of market participants would also weigh on spot bids, Jubinville said.

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"One of the impacts, psychologically, with the recent rainfall is it’s been tremendous for farmers," said Stuart McMillan, a weather and crop analyst with the Canadian Wheat Board in Winnipeg.

In the past month, he said, eastern parts of the Prairies have received about 20-50 millimetres of rainfall, which is normal to slightly above normal for this time of year. Parts of Saskatchewan and Alberta have also had similar amounts of precipitation within March, he said.

The recent precipitation has eased some concerns amongst Prairie farmers regarding very limited topsoil moisture, he said. McMillan noted some sections across Western Canada have some good topsoil moisture conditions, including western Saskatchewan and in Manitoba.

Farmers now should be able to start planting with some of the concerns over a possible drought easing slightly, he said. The attractive pricing seen for a variety of crops is enticing farmers to plant more seeded acres across Western Canada this spring, he said.

However, despite much-welcomed moisture, regular rainfall is still needed in order to support the 20 million acres of canola expected to be seeded across Western Canada, McMillan said.

Dry and warm winter conditions across the Prairies caused moisture shortfall in some areas. Parts of the Prairies are still running very significant moisture deficits of approximately 80 to 100 mm, he said. Northwestern Saskatchewan, the Lloydminster area of Alberta and parts of Manitoba are the most affected, he said.

Heading into late spring and summertime, McMillan said various forecasts call for above-normal rainfall across the Prairies.

Drew Lerner, meteorologist with World Weather Inc. at Overland Park, Kan., said precipitation will pick up later this spring and heading into summer, as periodic contrast in airmass temperatures will provide increased chances of storms across the Prairies.

Lerner also expects some areas across Western Canada to receive higher than normal amounts of rainfall this summer. Southwestern and central Saskatchewan, and parts of southeastern Alberta near Medicine Hat, are expected to be the wettest areas.

Meanwhile, the southeast corner of Saskatchewan and southern Manitoba will be drier than normal this summer, he said.

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"Tight global supplies have certainly helped the strengthening of flax bids," said Mike Jubinville of ProFarmer Canada in Winnipeg. The fact flax supplies in Western Canada are also tight has also been supportive to the cash sector.

Some of the tightening of global flax supply was associated with ideas of dryness and winterkill potentially affecting flaxseed crops from former Soviet Union countries, Jubinville said.

Meanwhile, Canadian flaxseed supply remains short. Extremely wet conditions last spring, along with a very hot dry summer across Manitoba and Saskatchewan, brought lower than anticipated high quality yields.

Jubinville said the lack of near-term supply is limiting exports of western Canadian flaxseed. Most of the exports of western Canadian flaxseed are currently within North America, he said.

While smaller near-term supply is keeping values firm, the continuing upward trend in outside commodities, including canola, is also providing support for flaxseed values, Jubinville said.

Currently, flaxseed spot bids go for as much as $13.17 per bushel in Alberta, $13.46 in Saskatchewan and $13.61 in Manitoba, according to Prairie Ag Hotwire data. That’s down eight cents in Alberta, compared to one month ago, while up 21 cents in Saskatchewan and 61 cents in Manitoba from a month earlier.

"Well supported"

Jubinville said there is very limited downside potential seen in new-crop flaxseed bids.

The limited downside in new-crop values is associated with tight old-crop inventory, he said, along with the potential for supplies to remain tight in the new crop year.

"Flaxseed is a well supported market," he said.

Farmers are expected to plant near a million acres of flaxseed across Western Canada this spring, Jubinville said. That compares to last year’s level of approximately 694,000 acres seeded, according to Agriculture and Agri-Food Canada.

The increase in seeded area will reflect lost acreage due to wet conditions last spring in Manitoba and Saskatchewan, he said.

However, the lower flaxseed yield potential may make it less attractive to some customers to grow further seeded area, said Paul Martin of Prairie Flax Products at Portage la Prairie, Man.

Some customers have switched over from flaxseed to canola because of canola’s higher yield potential, Martin said.

New-crop bid prices are between $12.40 per bushel and $13 in Saskatchewan, and $13 to $13.25 in Manitoba, according to Prairie Ag Hotwire data.

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"There is been more feed wheat bids than offers," said Jim Beusekom, an analyst with Market Place Commodities at Lethbridge, Alta.

Some of the strength seen in demand is associated with end users looking for coverage ahead of spring and summer, he said.

Along with stronger demand, tightness in the cash market is also adding toward the firmness in western Canadian feed wheat bids, Beusekom said. Currently, with higher prices in canola, wheat and peas, farmers are not motivated to sell their feed wheat, while waiting for higher prices, he said.

Current spot bids for western feed wheat are going as high as $6.18 per bushel in Saskatchewan, $6.53 in Manitoba and $6.07 in Alberta, according to data from Prairie Ag Hotwire. That’s up anywhere from 33 to 63 cents from this time last month.

In the near term, feed wheat prices across Western Canada should remain strong. Beusekom said values should continue to trend higher, as they usually advance during this time of year. The continuance of reluctant sellers in the market will be supportive toward near-term cash bids, he said.

However, despite the continued strength in feed prices, some factors may move values down. Increased farmer selling, along with a downward trend in commodity prices. would undermine values, he said.

The long-term outlook for feed wheat values for the rest of the 2011-12 marketing year will continue to remain strong. Beusekom sees ongoing tightness in the cash market being supportive toward prices.

However, after July, much of the direction in new-crop bids will depend on quality of the fall harvest and how much grades as feed, he said.

New-crop feed wheat bids across Western Canada range from as high as $5.68 a bushel in Saskatchewan and $5.55 in Alberta to $5.30 in Manitoba, according to Prairie Ag Hotwire.

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"Lentils are a dead market for the foreseeable future," said Mike Jubinville, an analyst with ProFarmer Canada in Winnipeg.

Some of the weakness in new-crop bids was associated with the large supply of Canadian lentils, he said. The production of red Canadian lentils, which is two to three times bigger than green, has contributed toward the ample supply, he said.

Pulse crops, he said, are traded in one- to three-month cycles compared to other crops, which limits forward pricing and risk. The limited amount of risk in lentils is also moving prices down, he said.

Jubinville remains bearish overall on lentils in the long term. It could take another year to deplete current supplies and significantly move prices upward.

New-crop bids for green lentils were 24 to 25.5 cents a pound, compared to 25 to 25.5 cents last month, according to Prairie Ag Hotwire. There were no new-crop bids for red lentils available.

Spot bids for green lentils are currently in the 24-25.5 cents a pound range, down anywhere from one to two cents from last month. Meanwhile, spot bids for red lentils were going for between 16 and 19 cents, compared to 16.5-17.5 cents per pound last month.

With spot bids for green lentils higher than red lentils, that may prompt farmers to grow more green lentils than red, pushing green lentil prices down and adding to the ample western Canadian lentil supply, Jubinville said.

However, despite abundant supply keeping lentil prices sluggish, the market will be taking cues from India’s crop. Concerns over dry conditions in India have been raised.

If India’s harvest is smaller than expected, that may encourage some fresh demand and underlying support for prices, Jubinville said.

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"The Chinese market has really helped out western Canadian flax prices this year," said Chuck Penner, an analyst with LeftField Commodity Research in Winnipeg.

The Chinese and U.S. interest in Canadian flax has provided a bullish flavour to the cash market recently, he said.

Tightening global supply, thanks to a smaller than expected crop in Kazakhstan, along with smaller Russian flax exports, also has added to the upward price potential, he said. Penner noted that these factors are pushing prices for eastern European flaxseed up, while making it more attractive for buyers to look at western Canadian flaxseed.

Currently, flaxseed spot bids go for as much as $12.64 per bushel in Alberta, $13 per bushel in Manitoba and $13.25 in Saskatchewan, according to data from Prairie Ag Hotwire. That is up anywhere from six cents to 50 cents per bushel, compared to one month ago.

In the near term, Penner sees western Canadian flaxseed cash bids remaining steady to improving slightly. Continued demand from China and the U.S., along with thin supplies, will be supportive.

The firm cash bids for new-crop flax, meanwhile, have garnered the attention of western Canadian farmers, Penner said. With the current price for new-crop bids ranging between $12 and $12.50, farmers will get a good return for their money, he said, adding that the higher input costs for canola makes flaxseed a less risky investment for farmers.

Farmers are expected to seed close to a million acres of flax this spring, compared to 694,000 acres last year, Penner said.

The increase in seeded area will reflect the reclaiming of lost acres due to wet conditions in southeastern Saskatchewan and Manitoba, as well as the stronger price outlook, he said.

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However, ideas that canola may be oversold, along with uncertainty in the global macroeconomic picture, could temper the upward price potential in the long-term.

Mike Jubinville, an analyst with Pro Farmer Canada in Winnipeg, said much of the strength in the canola cash market continues to come from record domestic crushing and export demand. Currently, 300,000 tonnes more canola has been crushed halfway through the marketing year compared to this time last year, he said.

Meanwhile, export business continues to be strong. Solid Chinese buying is adding towards the firmness seen in canola prices, Jubinville said.

Southern Manitoba, with firm demand coming from the U.S., is continuing to provide some of the best cash basis opportunities in Western Canada. Alberta traditionally offers the best value, as it is closer to port locations, he said.

While record crushing and export demand have been supportive, increased chart-based buying in canola futures, has also added toward the upward price trend, he said. Speculative money that left a few months ago is returning to perk up bids, Jubinville said.

Continued bullish sentiment toward the global macroeconomic picture, along with the upward trend in soy complexes, has also added to the firmness in futures, he said. If risk sentiment in the energy, equity and metals markets continues, that will remain supportive toward canola cash bids, he said.

Current spot bids for canola are as high as $12.95 a bushel in Manitoba, $12.75 in Alberta, and $12.80 in Saskatchewan, according to Prairie Ag Hotwire data. That is up by anywhere from 86 cents to $1.01, compared to one month ago.

Meanwhile, new-crop canola bids have are coming in as high as $11.48 a bushel in Manitoba, $11.66 in Alberta and $11.53 in Saskatchewan, up between 58 and 73 cents from the previous month.

Some factors could undermine the long-term price potential, including ideas that current canola cash prices may be oversold and could be due for a correction.

Increased spring seeding estimates, projected between 19 million to 20 million acres, could also weigh on prices, Jubinville said.

The looming South American soybean crop, and uncertainty in global financial markets, could also limit the upside in canola bids, he said.

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