YIKES!!!!!!!
Where are we going to get oats?
That’s what the market is saying right now in these charts:
That’s a rocketship taking off, and if we have any luck at all, it’ll keep going up and carry the other commodities with it. If there’s going to be any compensation for the rain and the unseeded and drowned acreage we’re stuck with, it’ll come in the form of higher prices for prairie-based commodities like oats, canola and pulses, and from whatever crop insurance people have.
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Kochia has become a significant problem for Prairie farmers
As you travel through southern Saskatchewan and Alberta, particularly in areas challenged by dry growing conditions, the magnitude of the kochia problem is easy to see.
Canola hasn’t taken off as much, but it’s showing the same sharp takeoff since production became seriously imperilled.
It looks beautiful on the chart, but of course that beautiful increase in prices is caused by serious hurt on the farm, so it’s hard to be too celebratory.
Hard red spring wheat is rising too:
Because the U.S. produces a massive winter wheat crop, the rise is less incredible, but it’s still impressive.
All of these are prairie-dominated crops, so it makes sense that those particular markets would react to significant production problems on the prairies. But I get the sense that the other ag markets might start to be moved by this too. I know for certain that our problems are beginning to get noticed, because I was just called by a Chicago-area analyst I know who wanted to know about the situation up here. From guys like him the knowledge gets disseminated far and wide and has an impact.
He was stunned by the move in oats and impressed by the move in canola. To him, this suggests soybeans might be next for  a significant move. Minneapolis wheat also caught his eye. And he noted there are more weather problems in the U.S. Midwest right now than the markets seem to be recognizing, so there’s a chance of a rally igniting.
The crop markets have been weak for months now. Many analysts have been saying crop prices are stumbling along at the bottom of their ranges and need something to kick them out of the trough. Well, maybe our disastrous weather will do it. It’s frustrating for anyone who can’t seed a crop – or who has seeded a crop and seen it drowned by floods of rain – to see a market rally for a crop he won’t harvest, but for every farmer who gets a crop, things are getting to look suddenly better. Whether the prairie problems are enough to spark a general crop market rally remains to be seen, but we can hope.
