WINNIPEG — After years of saying “maybe next year,” could this be the one that puts the fun back into farming?
By all early accounts, the overall quality of this year’s harvest looks good, despite the pockets of disease and insects. The weather has put some scares into the markets, but so far it hasn’t taken too big a bite from actual yields.
And commodity prices are, for the most part, running well ahead of last year’s futures market.
November canola futures traded at $323.60 Aug. 20, 1993. Last week it traded for $362.80. October flax last week traded for $280, up from $257.70 a year ago, while October feed wheat was at $108.90 compared to $91 a year ago.
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The yield estimates for wheat and soybeans were neutral to bullish, but these were largely a sideshow when compared with corn.
Market observers caution straight prices must be viewed within the context of the Canadian dollar’s strength against the U.S. dollar and Japanese yen.
Taking those fluctuations into account, “the canola price isn’t a heck of lot different and maybe a bit cheaper in terms of the dollar,” said Dave Champion, a trader with James Richardsons and Sons Ltd.
But he said there are still plenty of reasons to be bullish on price.
Despite a supply that is expected to be 1.5 times higher than last year, the market has expanded. “We’ve added the Chinese, which is a potentially enormous buyer,” Champion said. “It is only restricted by our capacity to deliver it.”
Flax production is expected to reach 975,000 tonnes, Canada’s third-highest volume on record. But prices have been strengthening. “To me, flax should be even higher,” Champion said. He’s projecting exports of 600,000 tonnes this year.
Feed wheat prices are reacting to the fact there is less of it around this year. And milling wheat prices are climbing in response to a shortage of good quality crops outside North America, Champion said.
The one cloud that continues to hang over the industry is whether the crop can be moved. While industry leaders meeting in Winnipeg last week concluded there would be enough railcars in the system, the job will be to use them efficiently in light of the range of crops in line for export.
Bin space in the terminals will be at a premium as managers struggle to keep an ever-increasing range of commodities segregated, accessible and flowing.
“This is probably the most diversified prairie harvest in history,” federal agriculture minister Ralph Goodale told reporters after he met with transportation officials last week. “That’s good, but it’s also a challenge.”
