Cereals North America day one

GRIM OUTLOOK BY DAN BASSE OF AGRESOURCE CO

The world produced lots and lots of crops this year, will likely continue to do so, the ethanol boom is over, and hopes for higher prices hinge on a massive drought happening in an important region.

That’s the grim outlook of Dan Basse of AgResource, who says today’s world for grain farmers is more like 1990-2005 than it is like 2006-13.

Hopes for rallies are restrained by the lower sensitivity of markets to low stocks-to-use ratios.

“This is going to be a slog, we expect,” said Basse.

Basse thinks market-leading corn futures will find support at $2.75 per bushel and that the next-year market is probably caught in a $2.75-$5.00 range unless there’s a major drought somewhere.

Over the longer term the range should average $2.75 to $3.90.

China’s growth slowdown will reduce demand from there, and the country is likely to use GMO licensing and approval as handy trade barriers.

U.S. farmers have enough storage this winter, but if they get another bumper crop next year they’ll run out of room.

Farmland values will drop with continued lower prices, Basse said. “We think the adjustment will take three to five years.”

LOOKING BACK AT THE HELL WINTER OF 2013-14: Mark Hemmes of Quorum Corp.

Mark Hemmes of Quorum Corp, the federally-appointed monitor of the grain transportation system, said last winter’s awful winter and huge crop revealed “systemic” problems within the system, rather than being solely responsible for them.

Huge demurrage charges on Prairie grain will likely continue through 2014-15 from last year because there’s still a huge crop to move and no easy way to get it all there for everyone waiting for it.

The bad thing for farmers is that the unreliability of rail service means marketers of export grains are scaling back their forward sales because they’re not sure they can get the grain to port on time and avoid demurrage charges.

“They are starting to pare back,” said Hemmes.

“That’s not good for us in the long term.”

WHAT KIND OF CROPS DOES CANADA HAVE?

Bruce Burnett of the CWB gave the company’s best guesses at what Prairie farmers harvested this year.

Best way for you to see some of the main points is for you to go and check out my Twitter feed here.

Here are a couple of highlights:

* Canada has good quality Canada Western Red Spring wheat. “There is quality grain available in Western Canada,” said Burnett. Protein is good. Lots of quality differences and problems, of course. But the protein levels look OK>

* Anyone with good durum should have a lovely time with it. Western Canada is short of good durum and other exporters can’t fill the whole void too easily. “Anyway you move these numbers there is a shortage of quality durum in the market.” Can’t be alleviated for most of a year.

JIM RICHARDSON – NATIONAL GEORGRAPHIC

How do you make soil science sexy for urbanites and others who could be turned off by a subject many would consider dull.

That’s something National Geographic photographer (and Kansas farm boy) Jim Richardson discussed and illustrated in a friggin spectacular opening session at Cereals North America. I feel I have permission to praise what he said, because I often deal with soil science and am always dealing with farming and my photos never look anything as good as his. Our Mike Raine and Bill DeKay are excellent, like Richardson, but a presentation like this makes me feel rather inadequate. (That’s a challenge to me to do better.)

So how do you make soil pix interesting? 1) Put the farmer into it; 2) show roots and soil structure in a cool, colourful way; 3) show cool stuff like blown-up fungi and earthworms.

Like this:

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WELCOME TO WINNIPEG, THE CANADIAN GRAIN HUB

Manitoba Agriculture minsiter Ron Kostyshyn, regardless of cabinet crisis, opened Cereals North American by drawing attention to Winnipeg’s “Grain Innovation Hub.” Winnipeg has a critical mass of Canada’s grain trade and industry and Kostyshyn made sure foreign visitors to this conference knew this.

Kostyshyn also reiterated his argument that Canada’s rail logistics system needs to be designed to handle big crops like last year’s, not average size crops. Needs “surge” capacity.

WHERE DO GRAIN GROWING PROFITS COME FROM?: BASSE

Dan Basse of Ag Resource Co notes that 67 percent of grain grower net returns come from marketing decisions, so that’s why confs like this take such an intimate look at market dynamics.


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