Grain and oilseed markets by their very nature are made up of humans making decisions about what they speculate will come to pass at some point in the future.
The world has long desired better systems of information to deliver a more perfect market, one that gives buyers and sellers confidence that they will in fact be able to grow and process the food and feed that they need to grow and process.
To those ends, over the past decade, we have largely been speculating about the accuracy of various production reports. The U.S. Department of Agriculture’s World Agricultural Supply and Demand Estimate is always called into question by analysts, as is the crop condition report.
In these pages over the past weeks you will note that several interviewees suggested that Agriculture Canada’s seeded acreage and production estimates are regularly off the mark.
Various companies offer their own computer modelling projections with estimates based in part on government figures and in part on their own magical formulas.
There are some very high-end commodity analysts out there that we never hear from, working for investment houses, banks and global food companies. Many have teams of support staff and large budgets to help them ensure that their clients or production streams remain satisfied.
We are very interested in the latest in satellite technology that pegs crop yields and in some cases seeded acreage in advance by measuring leaf reflections and plant stress at various, critical points in the growing season.
Some countries, India for one, are known to fudge a few facts about their national crop conditions and inventories in order to keep domestic prices or seeded acreage where they want it to be, politically.
The goal for nearly everyone who grows or processes agricultural commodities is to peg a price we can live with. To that end, everyone has been striving to improve our technical understanding of supply and demand.
Of course, speculators and the demand for places to invest at a profit also fuel commodities, but these too can be mapped and planned for, to a point — 2007 and 2008 aside, when equity investors jumped to agricultural commodities.
However, the American administration’s war on trade was not one of the things that we could plan for.