The first estimate of dry bean production by class was released by USDA on Dec. 10 and can be found here . Improved yields and increased acreage, for all major classes boosted output over the previous year. Strong gains were noted for each of the top five market classes.
The report noted that two of these five classes, black beans and garbanzo beans (chickpea), can be classified as growth markets, with the other three (pinto, navy, and Great Northern) being mature markets.
The U.S. black bean crop is expected to be record-large at 4.7 million cwt easily shattering the 1998 high (3.6 million cwt). Strong acreage gains powered by favorable prices will push the 2010 garbanzo crop past the 2006 record.
The report goes on to say: In the year ahead, if dry beans are to remain in the economic ballpark with grain crops, dry bean prices will generally have to increase from their current levels and move closer to where they were a year or two earlier.
“Meanwhile, average dry bean grower bids generally remain below year earlier levels [Editor’s comment - both for current and new crop positions]. If the current price relationships remain this spring, dry bean area will likely plummet even more in 2011 than it normally would in a year following a large crop…”.
Growers are currently being offered production contracts for the 2011 crop and in some instances a multiple 2 year contract through 2012. Generally growers are finding that prices are just barely competitive with IP (edible) soybean prices and the quoted 2011 dry bean prices just barely matches the historical ‘premium’ edibles would normally offer. Many growers are taking a second look before just jumping into edibles for two very cogent reasons. First: all commodity prices are trading at a much higher absolute value and pose a greater financial risk; therefore a historical price spread of $100/Ac. – (possible) premium edibles – may not be sufficient to entice growers – especially after a year of high discounts for missed quality. As one grower quipped – better to settle for just under $600/Ac. gross for soybeans where I have less input costs, less work and if I don’t make ‘the edible’ market quality, my beans (soy) will have some value in the crush market. [There is no such secondary market for dry edibles].
As well dealers are telegraphing that after 2010 they will need fewer acres. Historically whenever US production from acres exceeding 1.9 million, as happened in 2010 and previously in 1999 and 2002 one can expect 2 years of ‘lower’ acres which ultimately reduces the burdensome supplies.
For new crop – 2011 – the preliminary contract prices in Ontario are as follow:
$31/bag for 15 bags
or $32/” 10 bags
or $33/bag for 5 bags
In some cases ’a floor’ of $27/bag is offered beyond the contract price but to a maximum of 20 bags total.
Other permutations exist. One where an extra dollar per bag (on similar volumes) can be gotten if the grower signs up for two years.
There may be other variations and combinations or permutations. Growers are advised to sharpen their pencils and walk through the possibilities and then attempt to assess the levels of risk they are prepared to take. Most cases these contracts are not “bag contracts” where a grower is obliged to deliver just a predetermined number of bags. But they are production contracts where all production regardless of whether it is priced or not must be delivered to the contacting dealer.
Growers are advised to read their contracts and fully understand their commitments and obligations before signing.