This morning I left my hotel in downtown Saskatoon and trudged through the leafy streets of Saskatoon towards the headquarters of The Western Producer. It’s the time of our annual editorial conference, so our reporters from Ottawa, Brandon, Regina, Calgary and Camrose have all descended on the Bridge City for two days of discussions with colleagues in the newsroom. (It’s been our first chance to see the cool new Western Producer website. You can get to it by clicking on the blue banner at the top of the regular Western Producer site.)
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I’ve become so used to this warm and sunny September that I just threw on a thin shirt and didn’t put on a jacket. When I got outside a chill wind reached through the fabric and sucked out my breath. Wow. That’s what the autumn normally feels like, I thought. And as I walked the four miles to that journalistic castle on Millar Avenue, I was engulfed by chilly winds, grey skies and quiet. The only sounds were from the wind and the fallen leaves it blew along the streets and sidewalks. Bugs and birds have left for another year.
There are a lot more fallen leaves here than in Winnipeg, but it fell to minus-two yesterday in eastern Manitoba, so I expect when I get back to the city leaves will be trinkling down from the branches and gathering on the grass. My wife told me the wildly overgrown pumpkin patch in our backyard is looking pretty poorly today. All the springy, uplifted leaves that have sucked in the sun and heat and have produced six nice pumpkins have slumped, perhaps slaughtered by the cold and frost. But I think the pumpkins are beyond frost danger, so I’m not too worried that my two year old daughter won’t have a nice homegrown pumpkin for Hallowe’en. Before I flew out of Winnipeg yesterday I picked all the remaining tomatoes in the garden. Incredibly, their most robust growth has occurred in the past three weeks, after developing little in July and August.
I wonder if there is much crop left out there for the frost to ravage. All through August and September frost fears have steadily been alleviated, with speculation about frosts on August 20, around the full moon in early September and last week evaporating as the temperatures have generally refused to fall below freezing. Every day of hot, dry weather has allowed millions of tonnes of crop in North America to mature past the point of damage, helping give farmers bigger crops than many expected but suppressing prices, which still had a frost factor built into them.
Even the hope for lower protein levels in U.S. hard red spring wheat, which would have helped increase the premium for high protein wheat, has been removed to a great degree by the hot dry weather which promotes protein content.
There have been no shocks and surprises to lower the market’s expectations for the crop. As my markets editor, D’arce McMillan, pointed out to me early last week, every news story and report out of the United States seems to find more crop out there than expected. Since then that trend has continued. And most crop prices have steadily declined. It’s a phenomenon most years: as harvest continues, crops prove to be yielding more and better quality than expected, relieving the market of worry. At the same time, thousands of farmers with need for cash or too little bin space on farm move crop directly from the field to the elevator. The combination of bigger and better crops with heavy deliveries sets up all the reasons the market normally needs to fall.
The harvest market tends to end by early December, when farmers have everything off the field and have either binned the crops or have already delivered it. No more surprises remain in the fields because there’s nothing left in the fields.
This cold, frosty weather in patches of the prairies could create some of the negative-for-production, positive-for-prices surprises that lead to the end of the harvest market. Many crops are still in the field and it’s possible that some are less safe from frost than everyone expects. When they finally come in they may be a bit smaller and lower quality than expected.
Regardless of positive surprises for prices, the ending of negative surprises should slow the decline of crop prices and hopefully we’ll soon see the 2009-2010 low and prices from December on will be higher. Last year technical analyst David Drozd pointed out that the Prairie Oat Growers Association annual convention, held in the first week of December, tends to be held at the very moment of the market bottom, so maybe that will happen again. That’s still two months away, so prices could trend down gently for a few more weeks, which will seem agonizing.
But at least the potential for North American crops to be radically larger than expected is declining quickly, and as that knife is withdrawn from crop markets’ throats, farmers will be able to reasonably hope for higher prices ahead. For a few weeks higher prices won’t be a safe assumption, but by the new year they should be.
