January 17, 2006
USDA released their latest break down of the 2005 edible bean crop in December, and the numbers were not surprising to many in the industry. The report showed a slightly better than expected crop. There were some problems in some regions of the U.S., but for the most part the size of the U.S. crop rebounded to 2003 levels.
U.S. dry edible bean production for 2005, by the numbers:
" Planted acres 1.6633 million acres
" Harvested acres: 1.5707 million acres
" Average yield: 1,731 lbs
" Production: 27.184 million cwt.
The three largest classes of edible beans are navy (14% of total production), black beans (7% of total production), and pinto beans (48% of total production). The major dry bean producing states are: ND (34% of Navy, 14% of blacks, and 50% of pinto), MI (33% of navy, 63% black, and 2% pinto), NE (2% navy, 3% black, and 15% pinto), MN (23% of navy, 7% of blacks, and 2% of pinto) and CO (13% of pinto).
The five main dry bean-producing states in the U.S. are ND, MI, NE, MN, and CO. As goes the production in those states, so goes the edible bean market. And as was seen in 2004, a production hiccup in any one or two of these states can result in a major price increase. On the flip side, a slight increase in acreage of any one of the classes of edible beans can result in a huge change in price.
The 2005 U.S. edible bean crop was 53% larger than the 2004 crop, and 7% larger than the 2003 crop, yet the change in price between the two years has been much more exaggerated. Part of this is a reflection of abundant supplies of pintos and adequate supply of navies, as well a larger crop in Canada, which will increase competition for demand.
Final production estimates released by Statistics Canada indicate a dry bean crop in Manitoba that was over 30% larger than in 2004. Overall during the past few years, Canadian production and supplies of dry edible beans have come in below normal levels. But in 2005, production in all three of Canada's bean-producing provinces of Ontario, Manitoba and Alberta rose considerably from 2004. Production in Ontario was 60% larger than 2004, and Alberta, 34% larger. Most of Albertas production is colored beans; Canada's dry white bean production comes primarily out of Manitoba and Ontario.
A larger overall North American supply base compared to the past few years compounds a soft demand situation. It is not fun selling last years $25 dry bean crop for $14 this year. The biggest item to help with the decision to sell the remainder of the 2005 crop or not, we believe, should not be based on what last years price was or even on last years production estimate, but more on what you think the crop potential next year will be.
At this point with the current high input costs, many producers are looking at ways to cut expenses. This will likely prompt many producers to switch their acres from higher input cost crops (wheat and corn) to lower input cost crops like soybeans, sunflowers, and dry beans. The key to where and how much the dry bean acres will increase will be mainly dependent on how many free acres producers have available and are allowable under the farm program.
The bottom line is that prospective dry bean acres in 2006 are likely to be similar to or even above 2005, as producers look for lower input cost crops that could have a potential increase in price. Thus, temper expectations for seasonal strength, especially since theres likely to be less competition for acres in '06.
If demand for dry beans could increase just slightly, it could result in a slightly better cash bid, so keep your eye on sales opportunities for overrun production this winter.
Martinson (email@example.com) is a grain market analyst with Progressive Ag Marketing, Fargo.