Spring brings optimism
The world’s economy seems to be edging back toward stability after two years of shakeups.
Western Canada’s agricultural sector desperately needs a better world economy to stimulate demand for grains, oilseeds and meats.
Demand will be very important because the supply side of the market indicates nothing but big crops worldwide and ample stocks this coming crop year.
We have to eat our way out of this agricultural depression.
So it is a consolation that the signals of an improving world economy are appearing like spring crocuses tentatively pushing through the snow.
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China’s grain imports have slumped big-time
China purchased just over 20 million tonnes of wheat, corn, barley and sorghum last year, that is well below the 60 million tonnes purchased in 2021-22.
Recovery is most needed in Asia because it has a much bigger impact on the global economy than South America or Russia.
Asia’s weakness has been a major factor in agriculture’s recent problems. United States Federal Reserve Board chair Alan Greenspan said recently that falling shipments to Asian countries accounted for more than 80 percent of the drop in value of U.S. farm exports over the past two years. Canadian numbers are similar.
Last week, the Japanese parliament enacted a budget with tax cuts and public spending designed to pull the economy out of its downturn.
In perhaps an overabundance of optimism, the Japanese prime minister and finance minister said they expect their economy, the second largest in the world, to show life by May.
And finance ministers of the Association of South East Asian Nations, who met last weekend, cautiously welcomed recent developments such as stability in regional foreign exchange markets, healthy current account surpluses and lower interest rates.
In China, concerns that economic growth might slow were eased somewhat by an amendment passed last week giving private enterprise a special place in the communist constitution, recognizing its role in creating jobs and underpinning the slowing economy.
With confidence in the Asian economy slowly returning and growth in the American economy unabated, some commodity prices are starting to firm after being in a free fall for most of the last 12 months.
It is too soon to say there will be a sustained rise in commodity prices or that the agricultural segment of the commodity pie will follow the trend.
Although we can only dream of profits in agriculture in 1999, there is a glimmer of hope emerging, just like the crocus in the snow.
