Global supplies, climate, and political pressure impacting prices for grain farmers

Boersch spoke with farmnewsNOW at the beginning of November both about future commodity prices as well as international issues that may affect commodity prices.

At that point in time, there were problems in Russia, Siberia and Kazakhstan that may have impacted grain prices as well as the harvest was just beginning in Australia.

Boersch also had not seen any demand rationing yet, she said.

“People have continued to buy, partly because they (commodities) weren’t well covered earlier and they’re still not well covered. So we foresee continued strength in wheat specifically.”

Boersch predicted feed grain prices to be well sustained in the coming months, including $6 per bushel corn, however oil seeds have been a bit of a different story with high prices right now for canola. While we can sustain those high prices for a little while, that is not an indefinitely thing, said Boersch.

“Canola is under supplied because we are the major exporter and obviously can’t export as much, and particularly since we expect crush to hold up fairly well, at some point in time, we really have to ration exports.”

Global supplies are tight in peas and lentils, especially with Canada being a major contributor, and Boersch said she has seen all-time highs for peas and second highest lentil prices, with Boersch seeing higher prices in 2008.

According to Statistics Canada, the 2021-2022 pea exports will be below three million tonnes for the first time in nearly 10 years, at 2.6 million tonnes and a 43 per cent drop from the previous year. At two million tonnes, lentils exports will see a 31 per cent drop from last year.

Balancing the high prices with filling those demands in the market will be interesting to watch, said Boersch.

“I don’t think the market will drop a lot but at the same time, we are missing some follow-through on the demand side.”

Smaller markets, like oats and flax, are looking like good returns to fill in those missing tonnes. Oats have been trading consistently for the last few months around that $7.50 to $6.50 per bushel range in the last few months.Even with strong market prices right now, producers will be weighing those against production costs. Boersch hopes that producers did do some forward buying in the summer for chemicals as nitrogen costs have doubled and fuel costs are consistently on the rise.

While harvest is complete in the northern hemisphere countries, and commodity production numbers are known, Boersch said a new export tax in Russia has impacted how much grain will be added to the global markets.

“Initially, people rushed to get a product out before the export tax came into place. But you know, that uncertainty, the ability to source at a level that works given the export tax into the international market, certainly has kept some Russian product off the international market.”

France, while the biggest grain exporter in the European Union, does have some quality issues, even with a strong harvest, that will impact how much they contribute to the global markets.

“They have maintained a shipping pace that has been very rapid, substituting some of the Russian exports and, in my opinion, that pace is not maintainable.”

While countries in the southern hemisphere wrap up harvest, their own success could impact what is sold internationally by Canadian markets.

China is always an “unreliable trading partner,” said Boersch, and with inclement weather possibly causing some quality issues, no one really knows how their stock market or levels of production will impact international trade.

“To what extent that really has affected their crop we do not really know because they kind of stopped communication on crops during the late summer and fall. I would suspect that the crops are worse than they led us to believe but we don’t know that.”

Boersch said that we have entered an era where we can only speculate what weather events are coming our way and of course those events always hit agricultural production the hardest.

While drought has had wide spread impacts on North American production, especially in Alberta and central and northwestern Saskatchewan, those areas are far too dry heading into the winter to know what’s going to come in the spring for optimal seeding conditions. Snowfall and spring melt capture is especially a concern right now for producers.

“We don’t know what the winter precipitation will be and how it will be able to capture all the snow and so on but that’s certainly an issue of concern for next year already.”

Boersch and Temple also write weekly market reports for both Sask Wheat and SaskCanola which are available every Monday.

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becky.zimmer@pattisonmedia.com

On Twitter: @bex_zim

by Becky Zimmer

Global supplies, climate, and political pressure impacting prices for grain farmers

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