Price decline likely temporary
Our line charts showing grains and oilseeds prices sliding down might have some readers wondering whatever happened to those projections last June of the highest returns ever.
Back in spring, prices were rocketing up on reports of the tightest supplies in 20 years or more and weather problems that were cutting yields in the U.S. winter crop and delaying spring seeding.
But it turns out growing conditions weren’t quite as bad as predicted and there is the possibility of a good harvest in Canada and the U.S. this fall.
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Supplies will soon be rolling in off the combines and fears that the U.S. might completely run out of corn are unfounded.
Traders have been calmed and prices are slipping in a harvest market.
But few market watchers feel weaker prices are the trend for the year.
Stronger later in year
For example, cash canola at Vancouver has dropped from an early August high of about $480 a tonne to below $420. Yet the fundamentals of world oilseed markets still point to gathering strength later in the crop year.
Growers Report, published by United Grain Growers, notes recent European Union rapeseed production forecasts point to a 6.9 million tonne crop, down from an earlier forecast of 7.3 million and well down from the 8.2 million produced last year.
Meanwhile, a lack of available South American soybeans this fall should cause buyers to turn to northern hemisphere production, drawing down supplies by midwinter.
At home, there should be strong demand by canola crushers, including the new Cargill plant just outside Saskatoon, but also the existing plants owned by CanAmera, which have boosted capacity.
All this indicates the strong posibility of rallies during the year.
Barley prices, too, will feel the weight of harvest as a particularly large Canadian crop comes off. But feed grain stocks in North America and throughout the world are still tight and values will probably rebound somewhat as markets sort themselves out.
Overall, this should be another good year for crop prices. And if barley is somewhat lower, that is certainly not bad for the general agricultural economy.
Cattle producers and feeders have come through a very bad year. Lower feed costs are most welcome and could help the long-term stability of western Canadian agriculture.
Before winding up, I should perhaps explain who I am and why I get to shoot my mouth off here.
I was recently named to the post of Western Producer farm management editor and will oversee the markets and production sections of the newspaper.
I joined the Western Producer in mid May and over the summer covered general news.
Before that, I was agricultural reporter and columnist at the Regina Leader-Post for nine years. I’ve done brief work in radio and worked for a couple of years early in my career at the Moose Jaw Times Herald, my hometown newspaper.
Charts get facelift
One of my first goals in my new job is to rejuvenate the grain and livestock tables and charts in the markets section. Some of the information we were able to run in the past is no longer available so we’ll fill the gaps with new material we hope will help with marketing plans.
I’ve already received useful suggestions from readers about adding more months to our Winnipeg and Chicago futures charts.
If you have comments, I’d be glad to hear them. Information on how to reach me is located on the top of the markets section front.
