Home Grain Market Analysis Don’t be Caught Holding the Bag

Don’t be Caught Holding the Bag

By Scott Shiels

Last year at this time, markets were facing downward pressure with large global stocks of wheat, corn and soybeans, and crop conditions were very good nearly everywhere across North America.

This year, we have large stocks of grain on farm pushing markets lower again, but growing conditions that should be bringing them back up. 

Spring flooding in many of the major grain-growing regions of the U.S. Midwest and dry conditions to start the crop in the Prairies of Western Canada got things off to a slower and later start than usual, but the bigger issue surrounding the softness of our markets are trade disputes with China on canola, and Europe on peas, lentils and durum. The unfortunate result of these international trade “wars”? Lower prices on commodities at the farm gate. Producers are generally left holding the bag when export markets are threatened, with little recourse aside from holding their grain and waiting. 

I feel this is when a balanced rotation really comes to the farmer’s aid. Not only is rotation imperative for disease management and weed control, but keeping a “balanced portfolio” can be a real farm saver when the markets get hit from so many directions like they have this year. 

Keeping some of the smaller acreage crops such as oats and flax in the rotation improve your opportunities to find local markets and to keep your grain moving throughout the year. We have really noticed a big increase in food markets for oats and flax, and the prices for these commodities have been holding strong this year when the value of other crops have faltered. Part of the reason for the surge in demand for these two crops is the major health craze that seems to have most of the planet in its grasp. 

With flax, it is the omega-3 fatty acid levels that have made it a popular additive in whole seed, ground seed and oil forms in the food industry. Flax is rich in alpha-linolenic acid (ALA), which is one of two essential fatty acids your body doesn’t produce on its own. ALA is important to heart health, as it helps cholesterol from being deposited in the heart. Just one tablespoon of flax contains a good amount of protein and fibre as well, so it doesn’t take much to reap the benefits of this healthy crop. 

With oats, the benefits are better known, as the “Heart Healthy” claim is now commonplace on many oat products found on store shelves. The Heart Healthy claim comes from the component in oats called beta glucan. Beta glucan is a form of soluble dietary fibre linked to heart health and improving cholesterol levels. One of the big new developments in the oat industry is the recent surge in sales for “oat milk,” a new beverage made from, you guessed it, oats! Oat milk has been popular in Europe for years, but has recently been making the news in Canada and the U.S. There are production facilities being built in the U.S. to service the North American market, and according to Neilsen, oat milk sales grew by 50 per cent from 2017 to 2018. 

Growth in new markets like this is the key to expansion in production, and by extension, will lead to more marketing opportunities for producers, and less reliance on export markets. If this year has taught us anything, it is that we definitely need to develop more high-value domestic markets.

Until next time…