2010/11 U.S. dry bean crop is forecast down 38% from last year, according to USDA crop production estimates.

U.S. acreage reduction was driven by weather problems at planting. Planted area is estimated down 37%, harvested area is forecast down 39% from the previous year, while yields are slightly higher.
Production is forecast to be down across all States but markedly so (by 41%) in the five largest producing States; North Dakota, Michigan, Minnesota, Nebraska, and Idaho.
Some Supply demand estimates indicate the barest of minimum of carry-over – nearly nonexistent. 
Current grower bid in Michigan for navy beans (white pea) is indicated at $49 – 50 USD per bag.

In Canada, Manitoba saw a better than average edible bean year – production wise, on significantly reduced acres (down 65%) .  Bean acres planted to all market classes in Manitoba is estimates at 51,182 versus last year’s total bean acres of 145,825.  In Ontario seeded acres to white beans for this harvest is estimated at 45,000 acres down from last year’s 81,000.  A cool wet spring and an average to wetter than normal season for some, with a warmer than normal harvest season is producing some unexpected results.  Quality is very good and much better than last year.  Yields are good to very good – ranging anywhere from the low to high 20 bags per acre.  Ontario producer prices indicated at 46 to 48 dollars per bag.

But as yet no ‘official’ prices for Ontario growers
Recent Headlines – and see previous Bean Blog entries
July 1st, 2011 “North America Faces Edible Bean Shortfall”
Aug. 11th, 2011 “Edible Bean Crop down a Third”
Aug. 19th, 2011 “Bean Markets … Production worries.”
From official government agencies (USDA, Stats Can. Etc.) and private industry sources this picture has coalesced to the point where a US based analyst is now suggesting there could be negative carry outs in all but one or two bean classes. This has never happened, nor does this writer expect it will this year.
In the meantime there has been no indication of this tightness via a price indication. The relative size (small), lack of central price discovery and no speculative activity to speak of has resulted in an opaque or less than transparent price. Leaving growers asking the questions “Where is the market?”, What about these rumors I am hearing?”. Currently price referencing against other crops has been one method to benchmark a price.
Another method would be to go beyond Ontario’s borders to see what ‘competing’ jurisdictions are doing and reference those prices. It could be argued that the market hasn’t been “established” – or ‘Not established’ – as the trade would say. The argument being “Does a single truckload sale in a thin market establish a price for the rest of the market?”.
In this writer’s opinion YES – definitely. Now that there is no liquidity/speculative activity that one load trade in today’s market was/is by default an end user and end users are establishing the market. Regardless of the finer points to this argument of a market – Not Established – any such market action can and should be used as a benchmark as well as relative price comparisons to other crops – this especially holds for 2012.
Growers need to do a cost benefit analysis such as 2010 COP (Cost of Producton) comparison.
The next step is to answer the question; “Is this sufficient return to the risk I am taking – particularly in today’s market environment?”
The ‘calculation methodology’ below is based on the following assumptions
a) a fungible and free flowing market
b) some long standing benchmarks that may or may not apply today
c) Canada/US processing efficiencies are comparable
Michigan (spot) out-market value        $56.00/cwt.
US /Canada Freight differential            ($0.25)
“Landed” Canada                              $55.75 USD
Forex differential (102)                       54.65 CND
Canadian (est.) Processor margin         (8.00)
A ‘factored’ Grower price                   $46.65/cwt. CND
So a bid of something less than 46 on 2010/11 production may not be competitive, in the historical sense. Perhaps Mr. Flaherty’s “Canada-US price gap” stretches back down the value chain.
A grower price indication in Michigan for harvest delivery, from one of the largest assembler of beans, is currently USD $48.00/cwt. for open market (un-contracted white beans). Another delivery point for growers is showing a “board price” of $40. There is no reason to believe that Michigan’s out-market will be much less than the current 56 therefore the calculations above should have relevance in Ontario during harvest.
However beyond this harvest and this year, concerns are mounting for the market’s ability to convince growers to plant beans in 2012. Corn prices are in an uptrend, because of deteriorating production prospects this year. This is putting a new higher floor into the market for next year. As one state-side grower quipped, “If they start out with a $50/cwt Navy price I may consider growing them but likely won’t sign a contract. I am booking (contracting) corn well over $6/bu. cash for 2012 and ’13; anything under the mid $50’s for Navy (white pea) beans doesn’t give me sufficient return over the other crops, never mind my risk, time, cost and grief to grow them.”
Growers would be well advised to use some sort of comparative margin analysis or spread sheet to give them a sense of return of the various crops and not rely on polished sales pitches and spin, or hack-kneed truisms like – “beans have always been good to me!”
Run the numbers – DO – THE – MATH – for yourself.
For those of you old enough to remember Rod Serling’s “Twilight Zone” – I submit for your approval – We have just crossed over and are entering; “The Managed Market”.

New Crop (2012-13) Michigan values are indicated at
$45 – $46.50 USD /bag.

This is now the consensus after a number of summer meetings.  This theme was first put forward at the recent Canadian Special Crops meeting held in Vancouver, and then again at the US Dry Bean convention in Hilton Head South Carolina.  It was reinforced by the USDA’s latest Vegetable and Melons Outlook.  The aggregate numbers indicate a drop of 36% across most market classes with declines centred in the major classes: Pintos (-52%), Navy (-31%), and Blacks (-25%).
White Pea (Navy) bean Acres in North America may only reach 260,000 acres.  In order to attain an available  supply level that meets current expected global usage of just under 300,000 Mt. (6.2 million bags), yield will need to exceed the current projections of 1720 lb/Ac. Carry-over from 2010/11 is thought to be 1.5 million bags.  Using current yield projections plus the carry-over suggests available supplies of 5.972 million bags against an expected demand of 6.2 million.
These numbers have led to some speculation within the industry of a ‘real’ shortfall, however as one wag suggested we have never yet run out of beans.
Meanwhile reports are circulating that better weather in the major growing regions of; North Dakota, Minnesota, Michigan, Ontario and Manitoba has and is improving production prospects.  A recent road trip and field walks this writer took confirms this for both Ontario and Michigan. However canopy size and pod set does not appear to be much better than just average. 
The market is signalling stronger prices, for the crop in the field with a $40.00/cwt ‘on the Web’ price having been posted for some time.  Indications in Michigan are currently at $48.00/cwt on open market (un-contracted white beans) for harvest delivery.  Concerns are growing for the market’s ability to convince growers to plant beans in 2012.  Advances in corn prices in particular, because of deteriorating production prospects for this year, are putting a new higher floor into the market. As one state-side grower quipped, “If they start out with a $50/cwt price I may consider growing Navies but likely won’t contract any.  I am booking (contracting) corn at better than $6/bu. cash for 2012 and ’13; anything under the mid $50’s for Navy (white) beans doesn’t give me sufficient return over the other crops, never mind my risk, time, cost and grief to grow them.”
Growers would be well advised to use some sort of comparative margin analysis or spread sheet to give them a sense of return of the various crops and not rely on polished sales pitches or hack-kneed truisms like – “beans have always been good to me!”  
A 2010 Cost of Production COP used in Michigan, to do just such an analysis can be found here.  Growers may wish to adapt something like this by tweaking it for their own use.

The recently released USDA’s Vegetables and Melons Report pegs 2010 U.S. dry edible bean production up 6% from the initial August crop forecast.  Good harvest weather helped ‘up’ national production of all dry beans by 29% over last year to an estimate of 32.6 million cwt.  This would be the fourth largest dry bean crop on record with large crops forecast for North Dakota, Minnesota, and Washington.  National yield is estimated to be a record 17.83 bags (cwt) per acre.
Eight bean classes including pinto, navy, Great Northern, black, garbanzo, pink, and dark red kidney should see good to outsized increased. 
Prices were slow to develop during harvest with growers reluctant sellers.  Considerable uncertainty remains in most dry bean markets with regard to pricing. 
Read more of the story here

Editors note:  Given the sustained surge in prices for competing commodities such as wheat, corn, soys, cotton etc. and their relative attractiveness for ‘good margins’ next season and the moribund bean prices being shown to and expected for growers in the 2010/11 season one can only predict a sharp drop in planted acres next season.

As promised earlier this year, we are now providing a quick easy-to-read summary of bean prices. By clicking here, you will be linked to the latest market prices for white pea beans at several of the major markets around North America.  We have also included prices for cranberry, black and kidney beans. Again, check back often as we will continue to update this blog if there is any significant swing in bean prices

There has been a request by several producers if there was a way they could easily get acces to current prices and market information. We have heard your request!

Beginning in the second half of July 2010, there will be regular posts of bean prices from the various regions around the world where whte beans are produced.  There will be a link to a printable report with each post so that producers can easily see where pricing in Ontario compares to the world market.  Check back often.