By Scott Shiels
We’ve been on quite the marketing rollercoaster when it comes to grains this year, and there doesn’t appear to be much of an end to the ride anytime soon.
Markets that mere months ago were at all time record highs have come down significantly, but prices still sit well above levels historically seen. One thing I reiterate daily to my customers is they need to remember that old saying, “the best cure for high prices is high prices.” It’s a true statement. While it is true there really is a tight supply of all grains on a global scale, prices like we were seeing six months ago are simply not sustainable. All of us in the agriculture industry realize that input and fuel costs continue to climb, but in order for grain prices to rebound to recent record levels, we would have to experience a crop disaster again, and that would only benefit the lucky ones who manage to avoid said disaster.
With harvest upon us, it’s time to evaluate what you can and cannot store, and to look at the market options for the grain you absolutely need to move. While harvest is not usually the best time of year to sell for the highest prices, the fact remains that if all your storage is full, you have a good – maybe even great – crop coming off.
Finding a local market for the excess grain you cannot store is not always an option. Many line grain companies today are dictating that their elevators only handle specific grains at harvest. These will be the crops that are most easily shipped and enable the elevator to continuously turn over stocks and generate revenue for the parent company. What this can mean to producers is you may find yourself looking farther afield for homes for your excess grain. More often than not, it is bulky, higher yielding crops like oats and barley, or specialty crops like peas, flax, or lentils, you are trying to find a buyer for.
Opportunities to market directly to end users with milling oats, malting barley or those marketed towards new pulse protein processing plants – try saying that one fast 10 times – continue to grow on the Canadian Prairies. With that growth comes the chance to deal directly with the end user of the products you grow. At the end of the day, the line grain companies and trading companies are all selling their products to these places, so if you can reach out and get your foot directly in the door with an oat mill, malt plant, flax mill or pulse plant, there will be an opportunity to add some margin to your bottom line.
I realize this is not always convenient due to the proximity of your farm to these facilities, but most of them will offer picked up pricing on your grain and have trucks handle the hauling for you. The other thing I have learned in my 30 years in this business is that unlike the large line grain companies, most of the end use mills are looking to build relationships with customers who can become long term business partners. These partnerships work to benefit both sides financially, and to provide a stable synergy for years to come.
Until next time…