Pulse Market Insight-Dry Bean Outlook

Keeping some perspective is important when looking at all crop prices, including dry beans. The chart below shows the last few years of dry bean bids in North Dakota. Compared to 2011/12 when bids in the mid to high 40s were common, current prices are looking pretty dismal. Looking a little further back though, bids above $30 per cwt were pretty rare.

Still, this doesn’t make dry beans any more competitive versus other crops or make people any happier about the sharp drop from last year. But it does suggest that holding onto old-crop beans in hope of last year’s prices isn’t a sound marketing strategy. The record prices of 2011/12 were caused by a huge drop in US production and this year’s price declines were caused by the big rebound in the 2012 bean crop; that fact isn’t going to change.

After running mostly sideways for the past several months, dry bean bids are starting to show signs they could take another turn lower. It’s not necessarily a sign of weak demand, at least for most classes of beans. Rather, it’s a matter of heavy supplies that farmers have been holding off the market, until now. It seems farmers are now looking at the odds of a short-term price increase and are deciding there’s little to gain from holding longer. Some may decide to lock the bin doors at bids below $30 per cwt, but if the selling picks up much more, it could add further to the declines.

As mentioned, export demand has been firm. In Canada, exports are running just ahead of average with 157,000 tonnes shipped in the first half of the year. Based on available supplies reported by StatsCan, that pace is not sustainable but demand tends to decline slightly in the second half of the year anyway. In any case, it looks like supplies will mostly be drawn down by the end of the year Unfortunately, the StatsCan export data doesn’t allow for a meaningful breakdown by type. But we think supplies of navies and pintos will be tighter by the end of the year while blacks will remain more plentiful.

In the US, exports of pinto beans are running well ahead of pace in the last few years and should mean fairly tight supplies of that type by the end of 2012/13. US exports of navy/pea beans are roughly on pace with last year. The bean class that’s lagging the most is black beans, the result of big supplies from China flooding the Mexican market. In general, it looks like the tighter supplies at the end of 2012/13 will be in the pinto and navy classes. If that’s the case, it raises the issue of what the 2013/14 supply situation could look like.