IN LIKE a lion, out like a lamb – that’s what they say about March. Judging by recent headlines, it might seem like March’s lion is a ferocious beast, tearing down the price outlook and farm cash receipts, and scaring nitrogen fertilizer prices into flight.
But headlines don’t tell the whole story and this lion might yet be transformed into an embraceable lamb.
Let’s look first at the Pool Return Outlook for Canadian Wheat Board grains for 2003-04. The forecast is well down from the current 2002-03 PRO, but for wheat and designated barley the outlook is no worse than it was in the first PRO last year.
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But this year stocks held by the usual exporters are much smaller than at this time last year and are the tightest they have been in about a decade.
The PRO assumes a return to average wheat crops in the five major exporting regions of Canada, the United States, the European Union, Australia and Argentina. But if any one of them have production problems that continue this year, wheat prices should start to climb again.
This is especially true because Ukraine, a wild card exporter that helped fill the wheat gap this year, expects a much smaller crop in 2003-04.
Canola and flax prices are also off from their highs of a few months ago, but are stronger than they were at this time last year. The November canola futures contract on the Winnipeg Commodities Exchange is about $25 a tonne higher than it was at this time last year. November flax is about $35 a tonne higher.
The price prospects for oats, rye and some pulse crops are also better than they were a year ago.
Livestock prices for 2003 should be better than 2002 because the number of animals ready for slaughter is poised to decline.
With a large portion of the Prairies having experienced the worst growing conditions in decades, you’d think farmer’s financial situation would be near the breaking point.
But looking at 2002 farm cash receipts as a measure, the numbers are off only a little from 2001, which posted the best numbers in quite a while. Indeed, 2002 cash receipts were significantly better than the five-year and 10-year averages.
Prospects for 2003 cash receipts can be considered optimistic given reasonably buoyant markets and especially the improved moisture situation, the greatest reason for optimism.
Rain last fall and better snow cover this winter have improved crop and pasture prospects over most of the Prairies, although stubborn dry pockets persist. Moisture is the critical input in farming. It lowers risk, fills dugouts, helps crops grow and turns pastures an inviting green for frolicking March lambs.
Spring definitely holds promise.
