Don Mingle knows there s as much
theatrics in the soybean business as on
the big screen. It s just that Mingle
thought he d seen it all, especially the
acting from buyers during any sort of
market glut: You got this much? How
much? Oh, the other guy s cheaper.
But in 2008, the script changed competely,
says the Woodtock-based general
manager of PRO Seeds of Canada.
At one point, Mingle relates, these
importers were just about taking you
by the hand and dropping to their
knees… saying, please, please sell me
something, I ve got a plant I have to
keep running.
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Steve Scholze, grain merchant for
Parrish & Heimbecker at Mississauga,
Ont., describes premiums in the $1 to
$2 per bushel range following the 2007
crop year, appreciating in some cases
to $3 and beyond through the 2008
growing season.
Scholze says the market trajectory
defied the usual post-harvest chill. It s
very rare that we see this kind of spring
immediately after harvest, Scholze
says. Some of this he attributes to unanticipated
demand, some to supply issues
in other parts of the world.
David Hendrick, president of Hendrick
Seeds at Inkerman, Ont., sees a link
between strong premiums and food
security: One of the big factors… is the
fact that soybeans are now being used
not only for animal feed, not only for
human consumption, but they re now
being used for fuel and when you add
that third demand, all of the sudden
there s a concern about food security.
Hendricks sees food security
becoming a huge issue for countries
such as Japan, which imports 90 per
cent of its food.
Because of that, Hendricks predicts,
buyers will be under pressure to maintain
good premiums.
Prices beyond the horizon
From the growers point of view,
this is a good-news story, Dale Petrie
agrees as he looks toward 2009.
But the general manager of Ontario
Soybean Growers stops short of recommending
growers plant IP beans. It s
time to take a second look, Petrie suggests,
noting that the marketplace has
changed, so even growers who assessed
the IP opportunity last year may want to
update their assumptions and rework
their calculations for this coming spring.
And, despite all the bullish fundamentals,
Petrie repeats that IP production
isn t for everyone. You ve got to
be on the ball, Mingle adds.
There is a significant opportunity for
the Canadian farmer, Mingle says, but
he cautions that it takes a farmer who s
willing to go the extra mile for the premiums:
no night-time combining, no
mud tagging and a commitment to
cleaning planters and combines thoroughly
after each use.
Scholze has seen dealers come out
with aggressive premiums to encourage
IP production. I think we have done a
very good job, Scholze says as he talks
about the industry, encouraging growers
to think about IP beans.
But, Scholze injects, It s not a no-brainer
to contract IP soybeans for the
2009 crop. Some dealers are close to
filling their allocation, he says, and the
global economic environment means
companies will take a long hard look
before going long in the market.
Plus, Scholze also thinks that low edible
bean prices could encourage some
growers to switch their acres into IP soys.
While Mingle is glad buyers have committed
to good premiums for 2009
and they might for 2010 too he adds,
There s nobody more efficient than agriculture
in overproducing, and we will hurt
ourselves again in IP premiums over the
next couple years, I m sure.
Richard Audy, business development
manager at Syngenta Seeds Canada, is
cautious, saying, nobody has a crystal
ball. But he doesn t see how the supply
shortfall can be overwhelmed in the
next five years.
Nor can Audy see how soyfood buyers
can meet their needs without
Canada. We re really at a turning point
in 2008 and 2009.
Hendrick is quite optimistic about
the long-term: In general, I think premiums
are going to continue to strengthen
and that s simply a question of supply
and demand. He notes too, for example,
that the Japanese yen has been
trading up 20 per cent compared to a
year ago, so bigger premiums in Canada
aren t squeezing processors as much as
we might think.
Hendrick is less worried that surging
IP beans will dampen premiums. He
thinks fuel will keep the lid on runaway
production.
Says Hendrick: We re now into the
age of fuel there will be acres dedicated
to growing crops for fuel.
