LeftField Commodity Research
After a few years of extremely high prices across nearly all crops, markets have been trending down as supply transitions from being very tight to having a cushion. Weather will still be important, particularly in Western Canada where much of the area is dry going into the 2024 season, but barring a major setback in key growing regions, the overall trend is more likely to reflect pre-2021 levels than what we’ve seen the past two years.
Dry Beans Seeing Very Strong Export Demand
Through the first half of 2023-24, demand for Canadian dry beans has been very favourable. Exports have increased to a number of countries, but the major boost is seen in volumes to Mexico due to its ongoing drought conditions. From August to December, Canada exported over 27,000 tonnes of dry beans to Mexico compared to less than 4,000 tonnes the year before. Dry bean exports by the U.S. have also boomed to meet Mexican demand. North American supplies will be very low by the end of 2023-24.
As most dry beans are purchased via forward contracts, spot bids during the rest of the year aren’t very active. As a result, posted bids (where available) aren’t showing much response to the shrinking supplies in Canada and the U.S. For the few uncontracted beans still out there, over-the-phone bids have been strong. The heavy demand from Mexico isn’t expected to slow down any time soon, with very dry conditions in the north of the country damaging its upcoming 2024 winter harvest.
There’s been lots of interest in contracting dry beans this spring, with some companies’ programs already full. As a result, Canadian seeded area is expected to rise in 2024 and could hit 400,000 acres after a couple of years of smaller plantings. Odds are that seeded area will also rebound in the U.S. Whether this North American acreage will be enough to rebuild supplies will depend on yields, and it’s far too early to know how that will turn out. If there are any glitches in yields or further problems with the Mexican summer bean crop, prices for uncontracted beans (especially pintos and blacks) should remain quite strong.
Soybean Markets Caught Between Big Crush, Export Competition and Rising Production
Soybean prices have been trending lower in recent months, similar to most other crop markets. U.S. crush volumes have been running at a record pace, but export markets remain highly competitive. Brazil’s crop will be lower this season, but a rebound in Argentina’s yields means production in the region will still be record breaking. Markets are also anticipating higher seeded area in the U.S. in 2024. Initial expectations are that this will further add to larger stocks at the end of the 2024-25 crop year, although that will depend on yields and the longer-term export outlook. China’s import demand will continue to be a key factor, both in aggregate and in how much is purchased from the U.S. specifically.
One bright spot is the growing demand for soy oil from the biofuel sector. The U.S. Department of Agriculture figures suggest nearly 50 per cent of U.S. soy oil use will be for biodiesel, a trend that’s encouraging investment in additional crush capacity. The growth may not happen in a straight line, but this looks to be a tailwind for the industry in the coming years. The spillover effects will be beneficial for Canadian soybeans as well, even if the focus for the Prairies is on adding canola processing.
Manitoba may see a small increase in soybean plantings in 2024 from last season’s 1.6 million acres, which was the highest since 2018. Prices are down slightly, but soybeans are still a good option on many farms. The larger production in 2023 allowed for a bigger export program out of Vancouver, B.C. something that may be the case again the coming season, which can provide good marketing opportunities for growers.
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