World markets seem to be conspiring to put a smile on farmers’ faces.
And while there may not be a lot of grins in the tractor cabs yet, there’s probably a lot less white-knuckle anxiety about surviving this year.
“It looks like there might actually be an opportunity to make some money this year and reverse some of the losses we’ve made for the last couple of years,” said Elie, Man., farmer Chuck Fossay, as he harrowed a field.
“The way prices were three or four months ago, no one expected to make a profit this year.”
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Indeed, since the beginning of spring, prices of the Prairies’ big-acreage crops have soared.
Canola is still valued relatively cheaply compared to many years, but it’s at a much better level now than it was for most of the winter, when it seemed foolish to hope for $300 per tonne.
Even a United States Department of Agriculture report last week that projected large soybean stocks failed to undermine canola.
Wheat prices have been on a tear, bucking around but generally climbing on U.S. futures exchanges as the market reacts to problems with the U.S. hard red winter wheat crop. The same USDA report projected much tighter wheat supplies than expected, sending prices soaring.
Huge new ethanol demand is also helping wheat, with about 20 percent of the U.S. corn crop expected to be consumed by ethanol production. As corn rises, it drags up other cereals.
Canadian canola is being helped by the development of a major biodiesel industry in the U.S., which will consume mostly soybean oil. Most biodiesel plants are not yet in production, but many commodity investors speculate that as they do over the next 18 months, prices will go higher.
The development of canola-using biodiesel plants in North Dakota offers the hope of more competition for a crop that has been badly oversupplied this crop year.
Three Hills, Alta., farmer Don Boles said he’s cheered by the suddenly better price outlook for the crops he is seeding. But he’s not going to try to figure out which crop will give him the best return six months from now. He’s sticking with his rotation.
“Markets change and no one can predict them, so why fight that battle,” said Boles, while he took a break from dumping bags of canola seed into his seeder.
“I’m more rotational than market driven. I have this theory that if you’re good to the soil, you’ll be better off in the long run.”
Still, the better news from world markets has him feeling happier about putting in the crop, a sentiment his friends share.
“The guys are really starting to think about this possible wheat issue in the U.S.,” said Boles.
“And this runup in the (nonagricultural commodities) also seems to be pulling up ag too. It’s certainly better than it was two months ago.”
Canadian Wheat Board chair Ken Ritter said he was delighted to see better price prospects, both for the sake of the farmers he’s trying to serve and for his own west-central Saskatchewan farm.
“I’m pouring a lot of money into the ground with fertilizer and seed, so it’s nice to see this,” said Ritter.
“Given the high price of fertilizer and fuel, this is a real boost to farmer’s morale at this time of year. Suddenly there’s a real sense of optimism.”
Soybean oil prices, which support canola prices, have rallied based on speculation about biodiesel demand leading to supply fears. If those fears don’t persist, vegetable oil prices could slide back.
But for now, farmers are in the happy position of being able to seed crops that could make them some money.
“You have to grow something. You can’t just leave the land idle,” said Fossay. “If (the rally) continues, we have the chance of making a profit.”
