Counting chickens before they hatch a downer

For a variety of reasons, the Saskatchewan crop is turning out to be average or even less than average. The latest crop report from the Saskatchewan agriculture ministry confirms the shrinking potential.

In both the southeastern and southwestern corners of the province, crop reporters describe yields as average to very poor. In the east-central, west-central and northeastern regions, the description is less than average to very poor. The northwest is slightly more optimistic with yields described as “variable and, for the most part, disappointing.”

While the average yield of canola is pegged at 30 bushels per acre in the northwest, it’s only 24 in the east-central region. Unlike last year, you don’t hear many stories of 50 plus canola.

Canola has been a disappointment in most of Western Canada. Scler-otinia and aster yellows have exacted a toll. Flooding in the spring and too much heat in July and August have added to the woes. Parts of Manitoba were uncharacteristically dry, cutting production levels.

While producers are generally disappointed with their canola yields, some of the financial hit is being offset by prices that are considerably higher than most were anticipating.

Crop woes in Saskatchewan can usually be summed up quite easily. In recent years, it’s been flooding and unseeded acres. Often it’s drought in one region or another. Sometimes it’s been an early fall frost that’s cut yield and quality. Wet harvest weather and subsequent quality downgrades can also be an overriding concern that defines the growing season.

This year’s disappointment isn’t as easy to explain. It’s a combination of too wet in the spring, too hot and dry in July and a lot of disease pressure. Crop quality is also down, which doesn’t usually correspond to an earlier than normal harvest.

In many parts of the central and northern grain belt, there’s standing water from recent heavy rains. Across the south, it’s very dry. Clay soil has cracks that can swallow a wrench.

Although weather conditions have varied, the end result is the same. There won’t be the bushels or the quality that were anticipated.

Whenever crops are below average, there are farms with much below average production. Overall though, it won’t be a financial disaster. It won’t be as lucrative as it might have been, but record and near-record high prices should ensure that most producers have a profitable year.

What are the other ramifications? There might be less enthusiasm next spring to push rotations to seed more canola. When you take into account the extra cost of growing canola, cereal crops could look more competitive than usual.

The grain handling system is going to see less total volume than expected, which will affect the bottom line of elevator companies and trucking firms.

Less grain to move should ensure a less congested handling system. There won’t be record volumes to move in a transition year for how grain cars are allocated.

Will lower yields slow the rise in land prices and cash rents? My guess is not appreciably. As long as grain prices stay strong and interest rates low, farmers and others will be chasing farmland.

Farmers are generally pretty good at not counting their chickens before they hatch. Nothing is sure until the crop is in the bin. As this year proves, that caution is also warranted on an industry-wide basis.


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