All is calm, but could be brighter in organic markets

By Phil Franz-Warkentin
Glacier FarmMedia staff

All was relatively calm in the organic sector heading into the New Year, as the holiday season sees both buyers and sellers move to the sidelines. Prices for what was still moving were holding steady, although shadows remain on the horizon dimming the potential for a bright outlook.

“It’s the typical holiday slowdown right now, it doesn’t seem like there’s a whole lot of interest on either side, and everyone is just winding things down – which is typical for this time of year,” said Dwayne Lee, general manager of Growers International Organic Sales Inc. (GIOSI), in Winnipeg. He noted that both end users and farmers were now waiting to see what develops in the New Year and were generally comfortable with where they were sitting for the time being.

“Guys are locked in until January, but after that will be (more) movement,” said Clem Perrault, owner of Poplar Valley Organic Farms in Zenon Park, Sask., on the relatively quiet markets.

I could sell lots of low protein (wheat) if I could find it. – Clem Perrault

While there were still some localized areas of concern, crop production in Western Canada was better overall in 2022 compared to the previous year when widespread drought hurt yields.

“In the eastern side of the Prairies the crop was better, in the southwest – not so much,” said Lee, adding that while production was generally favourable “there were pockets of variability and not everybody was able to enjoy the better yields.”

One thing of interest in the wheat market was an increased demand for lower protein wheat than typically seen.

“I could sell lots of low protein (wheat) if I could find it,” said Perrault. He noted that end users have ample supplies of high protein wheat and are looking for lower protein wheat to mix in at a cheaper price.

Expensive transportation costs remain a concern, cutting into the returns seen by farmers. The fuel expenses and difficulties securing trucks were leading to some shifting of the flow of grain, according to Perrault. Zero-tolerance glyphosate measures in Europe were also limiting movement there.

Looking ahead, it’s still early to say where the market may go in the New Year, and if there will be any acreage shifts in the 2023 crop.

“We’ll see what the spring brings and what moisture conditions are like,” said Lee, noting that “it’s really about timing and the supply/demand balance.”

It will also depend on what happens in other countries, as well as geopolitical issues.

“There’s a shortage of grain in the system… there’s not as much as people think,” said Perrault, noting that persistent supply-chain issues were also contributing to shortages of some products in retail stores.

We’re losing our European customers because inflation is hitting harder there. – Harro Wehrmann

Higher prices at the retail level were likely cutting into some demand for premium organic products.

“We’re losing our European customers because inflation is hitting harder there,” said Harro Wehrmann, of Wehrmann Grain and Seeds in Ontario. “In North America we haven’t really seen that much change in consumption patterns,” he said, but added “that could be a shoe that will drop yet.”

As far as the markets go in Ontario, “corn is still steady and strong,” according to Wehrmann, but “soybeans declined because of imported product.”

He said container traffic was slowly picking up, with imports of feed from overseas weighing on soybean values especially. For corn, the South American harvest is still some time off, while Europe had drought issues.

“After two years of COVID and interrupted supply chains, soybean prices were slowly trying to find a new normal.”

Wheat prices in Ontario were well supported, which Wehrmann thought was tied to reduced acres in Western Canada and drought issues cutting into production in the United States.