Marketing

Today rye food markets include distilling, milling, and malting. Products include rye whiskey in liquors; flour and flakes in breads and cereals; and malt in foods and beverages. These markets all have daily and monthly requirements for sourcing, so consistent supply and prior sales contracting is important.

Hybrid fall rye is the first choice for food processors as the grain has improved uniformity in kernel size and weight making it more efficient and profitable to process. Hybrid fall rye also has an improved falling number resulting in improved dough strength for the miller and improved starch conversion for the distiller. Hybrid fall rye has lower protein and increased starch and sugars which is key for distillers and maltsters.

Selling to the food market

Today approximately 80% of the rye destined for the food market is exported to the USA. Of this, around 66% goes to the distillers and 33% goes to the millers. The Canadian rye market includes several distilleries and a few specialty millers and bakers. Most of Canada’s rye flour is processed in the USA and sold back to Canada.

Pricing

In general, the commodity price for food market rye is set in the rye belt of Northern Europe as it accounts for around 70% of world production. It is relatively inexpensive to ship hybrid fall rye from this region to the Southern USA via the Mississippi River. To determine the price of rye to the Southern USA whiskey producing states, the seller must add the cost of delivering product to the EU commodity price. This is done by adding the cost of freight, storage, delivery, shrink loss, interest, brokerage, and foreign exchange to the commodity price. The price for Canadian rye is then established by taking this US delivered price and subtracting the cost of shipping from Canada to this region.

If the cost of Canadian rye to the USA is higher than delivered European rye, Canada’s share of the market will be reduced to a “just in time” market share to fill gaps between larger cargo loads from Europe.

Supply

In addition to price, consistent quality and timely supply are necessary for food processors as manufacturing occurs daily. To secure supply, USA buyers are purchasing product 12-18 months in advance. This allows buyers time to manage supply on a more global basis. Quality is critical in the food market, buyers look for product with high test weight, high thousand kernel weight, high falling number, and low ergot contamination. To be considered a regular supplier of the food market, sellers will need competitive pricing, consistent quality, timely supply, and be prepared to sign longer-term future delivery contracts.

The newest and most exciting market for hybrid fall rye is feed. The increased yield production per acre results in hybrid fall rye being one of the lowest cost products per metric tonne for feed. This low cost guarantees sustainable feed pricing for livestock rations. Hybrid fall rye has high starch and high soluble fibers that improve feed performance and animal health. It also has the lowest incidence of fusarium head blight (FHB) and lower associated deoxynivalenol (DON) vomitoxin levels of any cereal and corn. Using hybrid fall rye in a ration can reduce the concern of the DON vomitoxin. The new hybrids that are available in the market are attractive for feed because of the new pollen plus trait. This trait strengthens its resistance to ergot making it an improved option for feed rations.

Hybrid fall Rye for Swine

Hybrid Fall Rye is an excellent feed source for swine. Research is showing similar performance measures to wheat and corn in iso-formulated diets including feed intake, body weight, average daily gain, and carcass quality.

Hybrid Fall rye is high in two fibers called arabinoxylan and fructans. These fibers are not digested in the stomach but in the anterior digestive tract of the large intestine of the pig where the soluble part of the fibers are fermented to butyric acid by intestinal microbiota. This additional butyric acid provides the pig with additional energy, improved digestive tract health, and improved satiety that keeps pigs calmer for improved performance. Since these fibers are not digested in the stomach, digestion time frame is lengthened and the glycemic response of insulin is lowered and spread out over a longer time frame further improving hog health.

Hybrid fall rye for poultry

Hybrid fall rye is now being tested in poultry. New feed trial experiments will be available shortly.

Selling to the food market

The feed market is extremely efficient at finding the least cost ingredients to make the best feed ration. This is because around 75% of livestock production costs are in feed and most feed ingredients are easily interchangeable. Price, feed value and supply are the determining factors for which products will be used.

Pricing

Hybrid Fall rye has an energy value for monogastric animals that is right between wheat and barley. If rye is priced between these two commodities it will be considered for a feed ration. As pricing moves closer to feed barley, hybrid fall rye will take on a greater share in the feed ration.

Example for illustration purposes:

Feed Barley: Base commodity Value

Feed Rye: Base commodity Value + ($0 to $10/MT premium over feed barley)

Feed Wheat: Base commodity Value + ($10 to $20/MT premium over feed barley)

Another way to value the rye feed market is to discount the cost of rye to the food market by ~$10.00/mt or $0.25/bu to arrive at a feed price as this is a normal discount in Europe.

Supply

Consistent supply is important in the feed supply complex as nutritionists and feed manufactures wish to keep rations relatively consistent over the short term. To get an ingredient into the mix, supply must be available for at least 2-3 months. This requirement is especially important for a smaller but growing feed commodity like hybrid fall rye that has a reduced group of growers to purchase from.

Rye has always had a place in Canada for forages as a risk management tool to augment perennial forages and pastures. Hybrid fall rye brings this opportunity to a whole new level. With its extensive root system and high tillering capacity, hybrid fall rye produces a higher volume of forage material from its stems, leaves and heads than the older conventional rye and other cereal crops such as wheat, barley and oats.

Silage for Dairy Cattle

Dairy farmers are looking for high protein and high digestibility silage. This comes from the rye plant when it is in the flag leaf stage just prior to heading. Here the grower would expect high protein between 16-18% and digestibility over 80%. This stage is especially useful where growers are looking for improved feed value for milk production. This option also allows the grower to double crop and produce another crop within the same season.

Silage for Beef Cattle

Beef farmers are looking for high volume silage. This comes from the rye plant when it is in the milky head stage, just prior to the soft dough stage when forage material is at its highest volume. Here the grower would expect lower protein at 10-12% and digestibility at 70%. This stage is especially useful in beef production where growers are looking for higher volume feed.

Grazing – There are many options

Late summer grazing. This option requires earlier seeding, generally in June with an opportunity to graze in late July or early August. This will allow for a second grazing in fall during September/October.

Fall grazing. This option requires seeding in early August for a late September/October grazing period. This option can follow a previous early annual silage that was harvested by late July.

Spring grazing. This option requires seeding by early September for the earliest spring grazing period. This option may also be followed by a second spring grazing, silage or grain harvest.

Selling to the forage market

The forage market is primarily managed internally in an integrated crop and livestock production system. As a result, most of the product is produced internally or with suppliers that are within the buyers’ circle of production.

Silage Pricing

A standard pricing mechanism for forage value (in the pit) for silage is 12 times the bushel price of feed barley. If the feed barley price is $200/mt or $4.35/bushel, the value of wet silage in the pit is $52.20/mt. If cutting and hauling are worth about $18/mt, then the value of the wet silage is $34.20/mt standing.

Hybrid fall rye is an excellent ingredient for fuel production. Hybrid fall rye has an improved starch and sugar source which are the main ingredients sought after in ethanol production. Hybrid fall rye is also known for its lower incidence of fusarium head blight (FHB) and lower associated deoxynivalenol (DON) vomitoxin levels. These vomitoxins are concentrated in the dry distiller’s grain, which is a feed biproduct of ethanol. Lower DON levels associated with hybrid fall rye produce a safer high-quality dry distillers grain bi-product.

Selling to the fuel market

The fuel market is a primarily a starch market. Commodities selling into this market are priced based on the starch and to a lesser degree the soluble fiber value of each product. In general hybrid fall rye has 5% less starch than corn, 3% less starch than soft and general-purpose wheats and 1% less starch than CWRS wheats while its soluble fiber fractions are much higher than both wheat and corn. The price difference per tonne ranges within these values. Hybrid fall rye does have a superior soluble fiber component and when added to the starch value, increases overall levels of ethanol by up to 10% over wheat making it a very attractive product for ethanol production. It is important to note that hybrid fall rye yields are significantly higher than the wheat complex and therefore will provide a higher net return to farmers in this market.

Pricing

Example for illustration purposes (Terra Grain Spot bid Mar 25, 2020)

Soft wheats (CWSWS/CWSWW/CWRW/CWGP) $186.00/mt

Corn $184.00/mt

Feed wheat (CWRS/CWAD) $182.00/mt

Feed Rye $180.00/mt

Supply

Once in a ration an ethanol manfucaturer will want to ensure consistent supply to maintain the ration over the long term.