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Eurotypes got one more fix, but it’s worn off

European and global stock market investors have been facing the European debt meltdown situation like a junkie thinking “just one fix” will cure his pain and problems.

Every time the old fix begins to wear off, Eurobosses come up with another one. The problem is that each one is less effective, and the junk wears off more quickly. Remember the last Eurofix? It was a week ago. It’s already worn off. Just check out the equity markets today:

S&P 500  1222.02   -31.28  |   DOW  11725.01   -230.00  |   EUR/USD  1.36490   -0.02079

Here’s the impact on crop prices so far:

Brad Hanmer sat and listened while a commodity broker, a trader and an analyst told him and fellow farmers how a variety of market factors would influence their pulse seeding decisions.The experts talked about world supply and demand, interest rates, currency issues and soil moisture all affecting farmers' seeding intentions.They told producers how the Muslim world's Ramadan window was closing for Canada due to timing issues, how 25 percent of the grain they ship will be in containers by 2005 and how drastic swings in what they grow is threatening Canada's reputation as a consistent and reliable exporter.Hanmer, a young farmer from Govan, Sask., found the presentations interesting and insightful but he said many producers will rely on more tangible factors for their seeding signals."The weather is going to determine a lot between now and May 1," he said.Practical realities also weigh heavily. For many producers, the seeding decision comes down to what they can grow best on their farms and what crops fit into their rotations."We can't grow poplar trees to tobacco. There's only so many tools in our box that we've got."The plan for his farm includes heavy doses of canola and pulses, a decision driven more by what's unprofitable than anything else."The cereal market is just such a dog right now," said Hanmer. "Unfortunately cereals have been so lacklustre for us that we're putting so much pressure on stuff like our pulses and our oilseeds."

That’s a stinky start for a generally stinky month in the markets, although November often turns up by the end.

This downness was inspired by the rather unremarkable news that the Greek PM is going to hold a springtime referendum on his government’s austerity program. SHOCK!!!! STUNNING!!!!

Apparently equity investors thought the Greek government could just keep slashing away its safety net and pushing the country into deeper depression and Greeks would just kinda say “OK with me!” Of course the plan’s going to fail. (As I keep saying, just so you know where I stand on all this econ stuff since ’07, I think bankrupt companies and countries need to be allowed to go bankrupt – not propped up – and get rid of their debts. Until the debts are liquidated, there’s no hope for recovery. And bondholders need to lose a bunch of money so that they learn to be more careful next time and not inspire asset bubbles. And governments need to provide basic safety net stuff so people don’t go homeless and hungry, and governments should offer every-man-with-a-shovel jobs programs so they don’t go psycho and destroy their societies and families. And countries like Greece need to leave the Euro so they can depreciate their way out of this mess. That’s why I call myself a Wimpy Austrian.)

Anyhow, while this slow dance of death goes on with Greece, far longer than I would have thought you could drag this sort of thing out, I am happy to see BMO has come out with a report forecasting better ag conditions for Canadian producers in the next year.

Personally, I think everything will depend on the Euromess, whether the U.S. goes back into recession, and if China finally blows up, but just based on fundamentals of ags, here’s a positive and cheerful outlook that I’m going to look into this week.

Here’s the press release, which I’d might as well pass on unedited by my annoying commentary:

Canadian Agricultural Sector Set to Expand – BMO Economics

  • Sector to grow 2 per cent in 2012, 2 to 3 per cent in subsequent years
  • Diversification and increased sales to fast-growing world markets key to growth
  • Expected re-opening of South Korean market to benefit beef producers
  • Productivity key in the face of global competition


TORONTO, October 31, 2011 – Canada’s agricultural sector is projected to expand at a rate near 2 per cent in 2012, and between 2 and 3 per cent in subsequent years, according to the new Canadian Agricultural Prospects report released today by BMO Capital Markets Economics.


“The livestock segment should grow at a comparatively fast pace in the area of 3 per cent next year, as producers respond to still-favourable prices,” said Kenrick Jordan, Senior Economist, BMO Capital Markets.  “In particular, livestock production should get a lift from the expected re-opening of the South Korean market to Canadian beef. Moreover, pork exports to Asia should continue at a brisk clip. “


Mr. Jordan also noted that crop production is slated to grow by about 1.5 per cent in 2012 as planted acreage and yields move back to more normal levels and prices remain elevated.


“The sector has shown remarkable adaptability, evident in superior productivity growth, rising export orientation, a shift in output mix toward value-added products, and the launch of new enterprises like greenhouse vegetable production and specialty crops,” said Mr. Jordan.  “These trends must hold for the sector to enhance its competitiveness.”


“Canadian agricultural producers faced some challenges this year as many prairie grain growers had to deal with epic moisture levels and livestock farmers contended with rising input costs,” said David Rinneard, National Manager, Agriculture, BMO Bank of Montreal.  “However, Canada’s farmers have a wonderful track record of perseverance and success. With a return to better growing conditions, favourable prices, and continued demand, the 2012 table appears set for the industry to expand in the coming year.”


Mr. Jordan noted that it is specifically critical for farmers to boost productivity.
“Competition is intensifying, as ‘non-traditional’ producers like Brazil, Argentina and Russia make inroads into global markets. In addition, sophisticated risk management strategies will be needed to address volatility in input and output prices, production and profits. Given the need for ongoing cost reduction, innovation, market diversification and risk management capacity, consolidation is likely to continue based on larger, more capital-intensive and more complex operations.”


The report also included the following:


  • ·         Agricultural production is forecast to grow above the longer-term trend beyond 2012, at annual rates between 2 and 3 per cent
  • ·         Continued price strength should support further increases in crop production.
  • ·         The prices of major grains and oilseeds are expected to remain above historical norms and to trend higher amid robust demand from developing countries, continuing expansion of biofuel production globally, and increasingly scarce resources such as arable land and water. 
  • ·         Meat demand is projected to grow briskly, as expanding populations in fast-growth developing countries broaden their diets, which would be positive for both livestock and crop producers.


“Agricultural production should also be promoted by the growing demand by advanced-country consumers for products embodying a range of attributes – related, for instance, to health, environmental sustainability and food safety – that offer scope for increased value-added as well as by the development of niche markets like greenhouse vegetables, organics, and specialty crops,” suggested Mr. Jordan.


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