(Alice McFarlane/farmnewsNOW Staff)

By Alice McFarlane

Commodity Markets

Five charts for farmers to watch while making marketing plans

Feb 7, 2020 | 5:08 PM

Roughly 200 farmers and industry professionals were on hand for the annual Saskatchewan Institute of Agrologists Ag Update in Melfort yesterday.

They were there to gather some new information they could take back to their own businesses.

LeftField Commodity Research vice president Jon Driedger shared five charts farmers should be watching as they make marketing plans in the next year.

He said the situation with the coronavirus outbreak has created uncertainty with all markets.

“There is always the potential for that situation to get much worse which would justify a bit more pessimism but unless that circumstance gets worse than what people are thinking, it’s not necessarily that negative on canola prices,” he told farmnewsNOW. “From a global perspective, Canadian canola is relatively cheap. I think we’re going through a window here where we should see some improvement in export volumes.”

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Driedger said the good news is the pace of canola crushing in Western Canada has been strong but he is still cautious from a price perspective.

“We feel prices should hold up and maybe see a little bit of improvement particularly for farmers if basis levels improve,” he said.

The wheat crop was a little smaller in Western Canada with quality issues. Driedger said there is a lot of wheat on the global market.

“One of the concerns into this next growing season is we’ll probably see an even bigger (wheat) crop globally. So unless export volumes pick up in a meaningful way it backs up a little bit in the system,” he said. “I think we’ll see some improvement in the second half of the year, but we’ve also got a lot of catching up to do. That’s where we’re a little cautious about wheat in terms of exports, and, what that might mean for prices to farmers.”

Corn continues to be the king of the commodities. Driedger said it’s enormously important.

“Even though we’re a long way from Iowa or Nebraska, where so much wheat is grown, the ripple effects of the U.S. corn market affect everything grown in Western Canada,” he said. “If we see both acres and yield rebound, boy, that’s a big corn crop coming in.”

Even with India taking fewer Canadian peas, China has picked up purchases and that’s been welcomed.

“Peas have been a pretty good story. China really is the one that is taking such a huge portion of our crop. There’s always some risk when you rely so heavily on one market but they’re buying has been quite impressive,” he said. “That’s helped draw our pea supplies down even though we had a fair size crop last year. There’s a bit of encouragement in that story.”

Driedger said the uncertainty impacts all markets including gold.

“It’s viewed as a bit of a safe haven when people aren’t sure what’s coming up the pipeline. We use that as an illustration that we have an environment that’s very, very uncertain from a geopolitical and macroeconomic perspective,” he said. “Agricultural markets aren’t immune to that. We can’t claim to know what’s coming around the corner but we would be remiss if we weren’t paying attention.”