Don’t be surprised if Western Canada’s crop is even smaller than what
Statistics Canada reported last week.
The agency already says about 20 percent of acres seeded to spring
wheat and canola will not be harvested, compared to just two percent
last year.
But the report is based on a survey done before frost and heavy rain
damaged many acres.
A lot of that damaged crop is now being cut for feed so the final grain
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production numbers could be even smaller.
Given crop problems at home and abroad, how high can grain prices go?
It might be instructive to look back to other wrecks and see what
prices were then.
In 1988 drought hit big parts of the Canadian prairies and the American
plains.
In the last week of August 1988, the following prices were published in
The Western Producer. In brackets are prices for Aug. 26 of this year.
The asking price for No. 1 13.5 CWRS was $249 ($296) per tonne in store
St. Lawrence. No. 1 durum was about $301 ($334) per tonne. The canola
futures contract was about $379 ($450) per tonne in store Vancouver.
Chicago December wheat was $3.98 (3.65) US per bushel, Nov. soybeans
were $8.22 ($5.39) and Dec. corn was $2.88 ($2.75).
The big soy price difference reflects the fact that the U.S. now shares
the world soybean market with South America.
Except for wheat, prices today also are generally a little higher than
they were in late August 1995 after a soggy spring and summer in Canada
and the U.S. slashed production.
Overall, it seems markets are reacting to today’s problems as they have
to past crop failures.
There may be a little room yet for further price increases, but big
gains would require harvest problems in the U.S., unexpected demand
from a big buyer such as China or poor growing weather in South America.
While grain prices today are close to the highs of the last two
decades, that doesn’t mean the farmgate return is better.
Farmers today pay much more of the freight bill than they did in the
past, reducing their take home pay.
And inflation has worn down buying power.
One dollar in 1988 would buy the equivalent of $1.40 today, according
to the Canadian Consumer Price Index.
