Agriculture might be the right business after all, at least for now.
Three months ago, farmers planning the coming season found projected costs were higher than expected returns among most crop choices. Many growers were also concerned about financing a big crop and some still had harvest to complete. The outlook wasn’t that rosy in terms of crop production.
But COVID-19 has disrupted most of what we knew three months ago. While several things remain that previously suppressed grain and oilseed prices back then, the importance of assured supply has made them less prominent. It helps that governments appear to have determined that funding a big crop is more important too.
A recent auction sale in southern Saskatchewan set records for attendance and saw strong bidding from buyers in the United States and Canada. Auctions are often a good barometer of farm confidence and if that one was any measure, farmers are feeling optimistic about the coming crop and its prospects to deliver both yield and price.
The big U.S. crops of corn and soybeans are not as blessed by current markets as spring wheat, durum, peas, lentils, flax or even canola, but American farmers seem to believe their government’s treasury will help keep them whole during this international health crisis.
Canada’s treasury is not as rich or as generous but the COVID-19 turmoil has nevertheless pried loose $5 billion in new lending.
Wet conditions last fall hurt quality and quantity of crops and boosted drying costs, but damp ground in spring brings a different outlook: the prospect of bigger yields.
Late last fall, farmers were staring at yellow pea prices of $6 per bushel. Today’s $7.30 price won’t make anyone wealthy, but it’s better. Chinese demand coupled with fewer American acres creates further potential.
Green peas are $2 per bu. more than they have been in the past two springs. Red lentils above 22 cents are far more attractive than last fall’s 18-cent crop. Harvest issues in India add to the prospects for Canadian pulses.
Hard red spring wheat at $6.30-ish isn’t a big money maker but still attractive for many and durum at more than $8 per bu. offers profits with average yields. New-crop canola at more than $10 per bu. can also add to the balance sheet.
Elevator shipments of prairie crops are nearly equal to last year’s strong performance, despite rail line closures earlier this winter, so cash from sales should flow ahead of seeding.
Positive though it seems on the crop side this spring, the same is not true for hog, beef and dairy producers who are feeling significant pain from various COVID-19 disruptions. Much depends on packer and processor activities and supply lines for those sectors.
The post-2008 shift of investors’ interest to agriculture could, or perhaps should, see dollars from equities markets shift to food production.
In this uncertain world, we can nevertheless be certain that food will be needed and farmers will do their best to deliver it.
Karen Briere, Bruce Dyck, Barb Glen and Michael Raine collaborate in the writing of Western Producer editorials.