Volatility Returns

Weather disrupts 2019 dry edible bean crop

Unprecedented. Disastrous. Stressful.

These are just some of the words that have been used to describe the 2019-2020 dry edible bean harvest. Just a couple of months ago everything was fine and dry bean prices had been steady although depressed. Then mother nature stepped in and delivered a relentless barrage of snow, continuous rains, warm temperatures, hail, and a deep freeze across the biggest dry edible bean producing states from North Dakota to Minnesota and Nebraska.

For several weeks, between late September thru November many dry bean dealers were “off the board” while the market evaluated the extent of the crop damage from bad weather. As the news began to spread dry bean participants began to realize things had gone from bad to worst to disastrous very quickly. Concerns about supply and demand started weighing on the market as prices reacted with a bump up, then a jump, and finally spiking. Pinto beans were the variety which had the most volatile reaction in terms of pricing. Wet weather has discolored much of the pinto harvest this year. For much of the 2018-2019 crop year, slow dark pintos did not receive a premium in the market versus conventional pinto and for that reason many growers decided not to plant the slow dark variety this year which turned out to be a bad move for those who didn’t.

This year light colored pinto beans will receive a premium in the marketplace. The question is though, how much will end users be willing to pay? It has been a long time since the market has seen pinto bean prices this high and consumers have been used to lower prices for quite sometime now. Will consumption slow? Where’s Mexico? Can we expect prices to go higher from here? The answer is probably, waiting, and they could. This is scary stuff people, if you need a minute to change into a clean set of your Duluth Trading underwear go for it.

Even the USDA is having a hard time finding out where prices stand as many dealers are reluctant to provide firm numbers. Last time I checked, not available (NA) seemed to be the most consistent offer by dealers, and those who are offering beans have adjusted pricing much higher.

What happens from here, no one really knows. The only thing for certain is volatility has returned to the dry edible bean market and participants will need to adjust.

2015 Dry Edible Bean Market Summary

Bean Prices Go Back To The Future

The United States Department of Agriculture has published their annual dry edible bean market summary. The report is quite lengthy and we will not be commenting on it’s entirety, just the meat and potatoes part. Please click here to view a portion of the 2015 Dry Edible Bean Summary. Starting with the first chart we can see North Dakota and Minnesota dealer monthly average prices over the past five years. We have highlighted in pink the highest prices offered by dealers and highlighted in yellow the lowest prices.

So going back to the 2011-2012 dry edible bean season you can plainly see prices hitting all time highs…peaking out about $61-62 dollars /CWT, FOB – North Dakota / Minnesota. Since then, price action has trended downward towards the lows at about $25 / CWT. On the second chart we take a look at Northern Colorado dealers and the values extracted during the 2011-2012 season. Rocky mountain dealers were about $3-$5 higher than the peak values of their competitors in the Upper Midwest. However, price action has also trended lower from the lofty $60’s down towards current values to just above $30.

The last two pages I have attached to this post show monthly prices for each crop year (previous 5 years) on pinto beans, great northerns, black beans, pink beans, and garbanzo. Remember the pink highlighted numbers indicate the highs and the yellow highlighted prices indicate the lows.

Now go back to the first two charts showing pinto bean prices over the past five years. This is actually a beautiful chart to look at (depending on your perspective of course). At the moment, pinto bean growers are probably puking when they see this chart because of where pinto bean prices are currently trading at, but…had this chart been back in 2011-2012 and shown the previous five dry edible bean market years from 2006 through 2012.. it would be the most beautiful looking price chart any pinto bean grower could ever want to see! (No matter where prices trade at, perspective is always different)

The reason the chart is beautiful is not because prices are low now, but because it’s so obvious to see all time high’s versus all time low’s. The big ginormous gap in the middle between the low’s and high’s is where pinto bean growers can expect prices to get back to the future. The reason growers can expect pinto bean prices to go higher (not necessarily in the short term) but in the long term is because of a mathematical phenomenon known as “mean reversion” which happens in every market on earth…no matter what type of commodity is being discussed or traded.

What is the ‘Mean Reversion’

The mean reversion is the theory suggesting that prices and returns eventually move back towards the mean or average. This mean or average can be the historical average of the price or return or another relevant average such as the growth in the economy or the average return of an industry. Read more: Mean Reversion Definition | Investopedia http://www.investopedia.com/terms/m/meanreversion.asp#ixzz40Xk7gaf0

Bottom line: That being said, it’s obvious to anyone who is not ignorant prices will revert back to their proper averages in given time. The only uncertainty is when and how fast prices will revert back.

For the entire United States Department of Agriculture’s Dry Edible Bean Summary please visit this link USDA 2015 Dry Edible Bean Summary.

 

 

 

 

Houston…We’re ready for liftoff!

Dry Bean Prices Firm Up

Happy 2016 everyone! We’re back in the saddle again after a nice long break with the holidays and new year. Dry bean prices have been soft lately and do seem to have touched the bottom in terms of price by taking a look at dealer prices this week. This week was the first time bean varieties have moved upward since the start of 2016. The big winners were pinto beans and lentils in terms of price action. Pinto dealers out of the rocky mountain region decide enough was enough and bumped up the bid by $2, and the ask by about a buck.

Mindak pinto dealers also nudged up $0.50 per CWT while Pacific dealers felt good about raising bid/ask for a $1. Lentils on the other hand saw continued strength from growers jumping up by $4-$6 per CWT on brewers and pardina varieties. The reason for the jump in lentils is simple, demand has skyrocketed and grower prices continue to set new records. Export markets to India, Turkey and Middle East have increased their consumption rate by almost one quarter the past 8 years. Many of you already know 2016 has been declared International Year of Pulses (IYOP). The United Nations declaration is to bring awareness to the world about the nutritional benefits of consuming pulses. In comparison with animal protein, pulse-based protein is much cheaper.

Navy beans also saw a nice $2 surge north bound as dealer bids averaged about $31 per CWT. Chickpeas on the other hand saw dealer bids drop by $3 to $39 per CWT versus being at $42 the previous week.

So where do bean and pulse prices go from here? No one knows yet. The Mexico dry bean crop has some uncertainty due to frost and quality concerns. If harvest yields are less than expected in January then there is a good chance Mexico will have to import any shortages they may experience. This would provide support to pinto and black bean growers and give them the chance to continue rebounding in price.

Speaking of black beans…prices haven’t been this low since dinosaurs roamed the earth millions of years ago. Some of you were probably alive back then and can remember (or maybe not by now), but due to the amount of blacks this year in the market prices have fallen well below grower comfort zones. Thus causing talk about an acreage reduction of  anywhere between 15%-25% in certain growing areas of the US going into next year. If that does come to fruition then market participants might be sorry by not taking a second mortgage and buying more black beans today.

Bottom line: Might be a good time to start considering building a portfolio in certain varieties for next year.

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Slow Dark Pinto Beans Arrive

Slow Dark Pinto Beans

For several years, the dry edible bean industry has been trying to develop a pinto seed variety that is resistant to light and slow it’s natural darkening process. When pinto bean buyers choose their products, they typically choose the lightest colored beans. This is the reason why pinto bean dealers (although they might not like to admit it) have been trying to create a new pinto bean seed variety that stays brighter + whiter longer (and would also have good yield in the field).

Mother nature intended for pinto beans to darken over time to a brownish color. However, it’s tougher selling a darker pinto bean than selling a brighter pinto bean when it comes to certain markets. When pintos are first harvested they are typically much lighter in color, but as the days + weeks + months pass pinto beans naturally darken due to exposure to light + heat + the natural elements. Please note: The darkening process does not affect the nutritional properties of the pinto beans, it only changes it’s color to a darker tone.

Dry edible seed companies & the leading agricultural schools in certain state universities have been busy in the lab (and fields) trying to splice and dice the perfect pinto bean so it’s color does not darken as quickly. After several years of hard work it seems the dry edible bean industry has achieved a new pinto bean variety which stays much brighter than other pinto seed varieties. This new pinto variety is called “slow dark” pinto beans. They have been recently tested in Florida and other locations in the United States to see how it performs against other pinto seed varieties such as La Paz & Wind Breaker.

Dry Pinto Beans has been able to attain some photographs from friends of ours who conducted the “slow dark” pinto bean trials and the results were very impressive! 

In the link below there are photos of 3 different pinto bean varieties: La Paz, Wind Breaker, and Vibrant (which is now called “slow dark pintos” or “SD” for short). As you can see, the vibrant variety (slow dark) is much lighter than it’s cousins – Wind Breaker & La Paz. Take a look at the results and click the link below to view for yourself.

2010, 2011, and 2013 Seed Photos of Windbreaker, Vibrant, and La Paz

Dry Edible Bean Area Planted

USA Dry Edible Bean 2015-2016 Crop Production Numbers

Dry Edible Bean Area Planted, Harvested, Yield, and Production – States and

United States: 2014 and Forecasted October 1, 2015

——————————————————————————–

:         Area planted          :        Area harvested

State     :—————————————————————

:     2014      :     2015      :     2014      :     2015

——————————————————————————–

:                          1,000 acres

:

Arizona 1/ …..:       11.0             9.0            10.9             8.9

California …..:       48.0            43.0            47.5            42.5

Colorado …….:       46.0            49.0            44.0            46.0

Idaho ……….:      125.0           120.0           124.0           119.0

Kansas ………:        7.5             7.0             6.9             6.5

Michigan …….:      250.0           270.0           245.3           266.0

Minnesota ……:      155.0           190.0           148.0           182.0

Montana 1/ …..:       37.5            46.0            37.0            45.0

Nebraska …….:      165.0           140.0           152.0           129.0

New Mexico 1/ ..:       10.5            12.5            10.5            12.4

:

New York …….:        8.0             8.0             7.7             7.8

North Dakota …:      630.0           660.0           615.0           645.0

Oregon 1/ ……:        8.5            10.0             8.5            10.0

South Dakota …:       14.0            12.5            12.9            11.7

Texas ……….:       23.0            31.0            21.0            28.0

Washington …..:      130.0           110.0           129.0           109.0

Wisconsin 1/ …:        7.9             7.9             7.9             7.9

Wyoming ……..:       42.0            31.0            37.6            29.5

:

United States ..:    1,718.9         1,756.9         1,665.7         1,706.2

——————————————————————————–

:       Yield per acre 2/       :         Production 2/

State     :—————————————————————

:     2014      :     2015      :     2014      :     2015

——————————————————————————–

:      ——- pounds ——          —— 1,000 cwt —–

:

Arizona 1/ …..:      1,940           1,950             211             174

California …..:      2,190           2,200           1,040             935

Colorado …….:      1,900           2,300             835           1,058

Idaho ……….:      1,800           1,800           2,232           2,142

Kansas ………:      1,710           1,700             118             111

Michigan …….:      1,940           1,900           4,749           5,054

Minnesota ……:      1,950           1,950           2,887           3,549

Montana 1/ …..:      1,630           1,800             603             810

Nebraska …….:      2,500           2,300           3,800           2,967

New Mexico 1/ ..:      1,900           2,100             200             260

:

New York …….:      1,490           1,900             115             148

North Dakota …:      1,430           1,200           8,795           7,740

Oregon 1/ ……:      2,260           2,300             192             230

South Dakota …:      1,880           2,050             243             240

Texas ……….:      1,220           1,150             256             322

Washington …..:      1,500           1,400           1,935           1,526

Wisconsin 1/ …:      2,480           2,500             196             198

Wyoming ……..:      2,130           2,200             799             649

:

United States ..:      1,753           1,648          29,206          28,113

——————————————————————————–

Kansas Pinto Beans Hold Their Own!

Kansas Pinto Beans Rock Solid

2014 new crop Kansas pinto beans are looking rock solid this year! Growers out of Western Kansas can be proud of this year’s harvest. Dry Pinto Beans was fortunate enough to receive some Kansas pinto bean samples this week from a contact of ours and were pleased with what we saw. Color is what you would expect to find out of the Rocky Mountain growing region and a bit on the lighter side when compared to last year’s color. We would like to take the time and celebrate the processing quality on the samples given to us. It was the cleanest pinto bean processing we have seen this year from all the samples we have featured. Way to go guys great job! Dry Pinto Beans would like to say thank you to Kansas pinto bean growers and the processors for all their hard work this season. We are very glad you submitted these good looking samples so everyone can see what a fine job was done!

Kansas Pinto Beans  Kansas Pinto Beans

United States Dry Edible Bean Acres 2014 NASS Forecast

The National Agricultural Statistics Service released it’s long awaited June 30 acreage report on principal crops and dry edible beans.  Below is the report:

Dry Edible Bean Area Planted and Harvested – States and United States: 2013 and 2014
[Excludes beans grown for garden seed]
————————————————————————————–
: Area planted : Area harvested
State :——————————————————————-
: 2013 : 2014 : 2013 : 2014 1/
————————————————————————————–
: 1,000 acres
:
Arizona ……….: 10.0 9.0 10.0 8.9
California …….: 50.0 45.0 49.5 44.0
Colorado ………: 39.0 60.0 36.0 56.0
Idaho …………: 125.0 140.0 124.0 139.0
Kansas ………..: 5.0 7.0 4.8 6.5
Michigan ………: 175.0 210.0 172.0 207.0
Minnesota ……..: 125.0 125.0 120.0 120.0
Montana ……….: 24.0 41.0 23.6 40.0
Nebraska ………: 130.0 175.0 117.0 161.0
New Mexico …….: 10.0 9.8 9.5 9.7
:
New York ………: 9.0 8.0 8.8 7.8
North Dakota …..: 440.0 700.0 430.0 665.0
Oregon ………..: 8.3 9.5 8.2 9.5
South Dakota …..: 12.0 13.0 11.5 12.3
Texas …………: 33.0 22.0 30.0 20.0
Washington …….: 115.0 130.0 114.0 130.0
Wisconsin ……..: 5.4 6.4 5.4 6.4
Wyoming ……….: 39.0 38.0 37.0 36.0
:
United States ….: 1,354.7 1,748.7 1,311.3 1,679.1
————————————————————————————–
1/ Forecasted.

Dry Pinto Bean Market News

US dry pinto bean prices stayed flat again this week as prices look to be settled for the near term. Growers are currently waiting for wet weather to subside across most of the country and haven’t had much of a chance to get into the fields. Flooding up in the Mindak area will contribute to further delays regarding planting, so we’ll just have to sit back and see what unfolds the next few weeks.

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