With harvest operations getting ready to being across the Prairies, the price of feed barley has seen a decline of late, and more losses are expected to occur in the next six weeks to two months.

Errol Anderson, president of Pro Market Communications in Calgary, said bids are currently bringing around $200 per tonne, but he expected values to go down once the harvest begins.

“Once we get into full blown harvest, it wouldn’t surprise me if we get down to about $185 (per tonne) or $190, and then hopefully we will start to pull out of that after harvest, maybe around late October,” Anderson said.

“The Alberta crops look pretty good, and there should be a lot of stocks coming in here. So guys who don’t have the bin space, or are looking for some cash flow, they have been selling.”

Although he expected prices will bounce back further on toward the winter, Anderson said if the global economy continues to falter, barley prices — and agricultural markets in general — will weaken.

“With the price of crude oil dropping, ethanol demand is also going down,” he said. “At current levels, ethanol margins are in the red, and if the U.S. starts to pull subsidies, 40 per cent of the corn demand is ethanol, so demand could really start to drop.”

The price of corn often serves as the catalyst for the direction of other grains and oilseeds, he noted.

The one bit of good news for the market, he said, is that demand from feedlots has been fairly robust.

“There has been really good demand of late,” Anderson said. “Feedlots have been actively booking forward right out through March.”

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However, Brad Vannan, president of ICE Futures Canada in Winnipeg, said they aren’t worried about losing business to Minneapolis.

“The contract we are in the process of creating is entirely designed to suit the Canadian market,” Vannan said. “The Canadian wheat market is large and geographically distinct, so it will follow its own price.

“Farmers and elevator companies will find that having a spring wheat contract priced in Canadian dollars per tonne for western Canadian delivery is much easier to relate to, and provides a higher degree of transparency.”

Vannan did admit that the elimination of U.S. origin product at the MGEX would take some business away from Canada, but he noted the Winnipeg-based market would be getting some business from the U.S.

“There is a good chance too that U.S. business will be hedged in Canada. They are looking forward to having an additional wheat contract in the marketplace,” he said.

“Our goal was never to abolish Minneapolis, but rather allow another contract for the Canadian market as a whole.”

The spring wheat contract is not legally able to be introduced on the ICE Futures Canada platform until the Canadian Wheat Board Act is abolished or changed by the federal government. The government has said it plans to put an end to the CWB’s single-desk marketing powers in August 2012.

Along with its spring wheat contract, ICE Futures Canada has said it intends to bring in a durum wheat future, which would be the only one of its kind in the world.

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Flax prices in Western Canada have declined over the past month — and given the uncertainty of the global economic situation, that trend may continue into the winter months.

Elevator deliveries for flax were bringing as much $13.91 per bushel in Alberta, $13.39 per bushel in Saskatchewan and $13.40 per bushel in Manitoba, according to Prairie Ag Hotwire. Those prices are anywhere from 50 cents to $1.61 per bushel lower than one month ago.

Paul Martin, director of operations with Prairie Flax Products at Portage la Prairie, Man., said a lack of demand was behind the recent price decline.

“A lot of companies have done all their purchasing and have a good amount of supplies in hand,” he said. “Line companies have been dropping their prices as they are getting ready for the winter wheat harvest so they don’t really want to see flax right now.”

Another factor that has brought values down of late has been the unrest in the U.S. and the concerns regarding the global economy.

“The economic worries have been weighing on the market as well,” Martin said. “Flax should stand on its own, but the recent losses in soybeans and canola — because of the economic worries — have provided spillover weakness.”

The larger Canadian flax carryout as viewed in Agriculture and Agri-Food Canada’s supply/demand outlook was also a downward price influence. Flaxseed carryout stocks for the 2011-12 crop year are pegged to be at 230,000 tonnes. AAFC’s previous report had flax end-of-year stocks to be at just 80,000 tonnes.

As far as the developing crop is concerned, Martin said progress varies depending on what part of the Canadian Prairies the crop was seeded.

“Anything that is on the east side of Manitoba has been hit by the drought. In parts of Saskatchewan they are on the late side and still flowering, so the weather that comes up here will be the big variable.”

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Poor crops being grown in Australia and Turkey have led to a significant increase in the value of chickpeas in Western Canada.

Omer Al-Katib, director of corporate affairs and investor relations with Alliance Grain Traders in Regina, said the two nations have had separate problems this year, which have led to a jump in the price of chickpeas.

“Overall acreage in Australia is down and production in Turkey is below normal, so a number of key origins for growing product are down a bit in terms of production,” Al-Katib said.

Not only are a number of key global players looking at production shortfall, Statistics Canada reported that only 105,000 acres were planted to chickpeas this year, down from 205,000 acres one year ago.

Fortunately, Al-Katib said, stocks wouldn’t be too low in Canada; the crop is thought to be in good shape in most parts of Saskatchewan.

“Acres are a way down from last year, so you do depend on some yield gains to offset some of those shortages,” he said.

“The southeast corner of the province, with all of the moisture in the spring, is not as good, but outside of that, things look pretty good.”

Al-Katib said most of the demand for the pulse crop was coming for Turkey and nations in the Middle East.

Elevator bids for chickpeas in Western Canada are bringing as much as 48.5 cents per pound, according to Prairie Ag Hotwire. That’s 6.5 cents higher than one week ago, and 12.5 cents higher than a month ago.

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Many cattle feedlots across the Prairies have reduced the number of cattle on their yards now that the summer has arrived, and with fewer animals being fed, the price of feed wheat has declined.

Gerald Snip, a grain trader with Marketplace Commodities at Lethbridge, Alta., said he wasn’t surprised to see fewer animals at the feedlots, and ultimately, lower feed wheat prices.

“Feedlots don’t have the manpower to have people feeding the livestock and putting up silage, so demand is a bit lower,” he said. “It’s really no surprise that there are fewer animals. This is fairly common to see in the summer.”

Both wheat and corn futures on the Chicago Board of Trade (CBOT) saw sharp declines last week following the U.S. Department of Agriculture’s acreage report. When asked if spillover weakness can be found from those futures markets, Snip said corn had more of an impact on the feed wheat market.

“You are more likely to see a bit of a tie-in with corn prices, as corn is used for livestock feed more than wheat is on the CBOT,” he said. “The price of wheat (on the CBOT) is based on supply and demand from humans, as opposed from animals.”

Snip said he didn’t expect to see prices change too much for the remainder of the calendar year.

“At the moment, for September delivery (in Lethbridge), we are looking at about $2 per ton less than right now,” he said. “For October, November, and December (deliveries) feed wheat is about the same price as it is right now.”

Current elevator deliveries for feed wheat are bringing as much as $6 per bushel in Manitoba, $5.78 per bushel in Saskatchewan, and $5.77 per bushel in Alberta, according to Prairie Ag Hotwire. Those prices are anywhere from two to 80 cents per bushel lower than one month ago.

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A total of 5.11 million tons of canola have been crushed in Canada as of June 8 in the 2010-11 crop year, according to the Canadian Oilseed Processors Association. That number is an all-time high and there are six weeks still left in the crop year.

The previous high was set last year, when 4.79 million tons were crushed in 2009-10. By comparison, there has been 1.29 million more tons of canola crushed to this point in the current year, than at the same time last year.

Bill Craddock, a southern Manitoba-based trader and producer, said the addition of two new crushing facilities at Yorkton, Sask. was one of the main reasons for the big increase in crushed canola during the year.

The two new plants at Yorkton bring the total of crushing facilities in Canada to 11: three in Manitoba, four in Saskatchewan, three in Alberta and one in Ontario.

Craddock said he fully expects to see another record set in the 2011-12 crop year, as all 11 plants will be in operation for the entire year. The two in Yorkton opened midway through the current crop year.

Another factor behind the record crush amount has been strong crush margins.

“The good crush margins are keeping everybody going at pretty good capacity,” he said.

According to ICE Futures Canada, canola crush margins are bringing as much as $80.52 per ton, while the November contract is sitting at $80.59 per ton.

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In the middle of November, Husky Energy’s plants at Minnedosa, Man. and Lloydminster, Sask. were paying producers $4.25 and $4.55 per bushel respectively for feed wheat deliveries. Now, farmers are receiving $6.80 at Minnedosa and $6 at Lloydminster for their feed wheat.

Jake Davidson, executive manager of Winter Cereals Canada, said the plant in Minnedosa used a heavy ration of corn throughout the winter, and are now looking find some wheat.

However, he added, wheat supplies are tight right now, and hard to find.

“I don’t know how much there is to sell. A number of Hutterite colonies I’ve talked to have had to go well into Saskatchewan to be able to buy any wheat,” Davidson said. “Whether it’s hard, soft, spring, winter, red or what have you, wheat supplies are small.”

With the price of corn remaining very strong, Davidson said it was more affordable for ethanol plants to look for wheat.

Davidson said another reason why ethanol companies are so willing to pay big money for wheat is because they fear there could be troubles with the crop currently in the ground.

“I haven’t seen nearly as much winter wheat out of the ground as I usually do at this time of year,” he said. “The stuff that is up looks pretty good, but things are behind schedule.”

Officials at the Husky plant at Minnedosa were contacted, but would not offer any comment.

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Richard Zacharias, general manager of Prairie Flax Products at Portage la Prairie, Man., said poor spring planting conditions have been the catalyst for the price advance, with many parts of Manitoba and Saskatchewan being excessively wet.

“In the central part of Manitoba we are 55 to 60 per cent finished seeding flax, but in the western part and into the eastern part of Saskatchewan, it is only about 20 per cent or so,” he said.

Concerns about acreage and, ultimately, supplies have been amplified as there is plenty of interest in terms of buying product.

“Demand has been very steady,” Zacharias said. “It has been pretty steady right around the world.” Global stocks, he added, are on the lower end of the spectrum.

When asked if producers are looking to sell right now given the solid prices, Zacharias said, “It’s pretty well 50-50. The price is pretty good right now, but of course there are some producers who have said they will wait. When prices are trending up, they often try and wait for them to go higher.”

Current elevator deliveries for flaxseed are bringing as much as $14.17 per bushel in Manitoba, $14.36 per bushel in Saskatchewan and $13.96 per bushel in Alberta, according to Prairie Ag Hotwire. Those are anywhere from $1.02 to $1.51 per bushel higher than one month ago.

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Although oat values on the Chicago Board of Trade (CBOT) have been trending upward — albeit slightly — over the past couple of weeks, one analyst said producers on Canada’s Prairies should be thinking about selling some of their product before values decline.

Ryan McKnight, a grain merchant with Linear Grain at Carman, Man., said prices tend to follow what’s happening on the CBOT, and although prices have moved higher, that doesn’t mean they will last.

“Speculative activity tends to happen in big chunks, and that can often move the market up or down quite significantly and quickly,” he said.

There has not been a lot of selling from Prairie farmers, he said.

“There were better opportunities earlier in the year, but guys had these numbers in their head that they wanted, but the price just never got there,” he said.

Another factor expected to weigh on values, according to McKnight, is a lack of demand from the horse sector.

“We aren’t seeing much in the way of demand from the horse market. I keep hearing that in the southern U.S. they are using corn gluten pellets and soy hulls,” he said. “They are about as healthy for the animals as oats are, and they are quite a bit cheaper.

“Hopefully we will get some more feed demand, because historically we have shipped a fairly large percentage of our product in the horse market.”

Asked if the low stock total would end up having a bullish influence on prices, McKnight said that wouldn’t be the case, because the market was expecting a low stocks total.

Current elevator deliveries for oats are bringing as much as $3.12 per bushel in Manitoba, $2.83 per bushel in Saskatchewan, and $3.01 per bushel in Alberta, according to Prairie Ag Hotwire.

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Brian Wilson, a potato specialist with Manitoba Agriculture, Food and Rural Initiatives at Carman, said there would obviously be some producers who would be affected, but said there were no supply concerns at the moment.

“Some acres in Manitoba will be affected, if producers own land in river flats or right along the river, but even if those producers can’t plant potatoes, and they still likely will, they could still look to other crops,” Wilson said.

In order to divert water and reduce the number of properties at risk of flooding, the provincial government opened one of its dikes on the Assiniboine on Saturday morning in what it calls a “controlled release” onto adjacent fields.

While there has been plenty of controversy about the province’s decision to breach the dike at the Hoop and Holler Bend, Wilson said that at the moment at least, things were looking good.

“Right now they aren’t releasing a lot of water, so the creeks in the area have been able to keep up with the flow of the extra water.”

If more rain had fallen last week, it could have been a much different story, he added.

Manitoba grew a total of 71,000 acres of potatoes last year, with an average yield of 31.38 tons per acre, according to Statistics Canada.

Larry McIntosh, CEO of grower-owned vegetable distributor Peak of the Market in Winnipeg, said from what he had seen, there would be a negligible impact on overall potato production in the province with the flood.

Acreage was expected to be about the same as what was seen last year, he said.

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