Grain and oilseed prices are down from last year, and the outlook is not favourable to a big bounce back.
That was the message producers attending a presentation at the Sask Grains Expo last Wednesday as part of their Grain Millers Harvest Showdown in Yorkton heard.
“We’ve seen things go downhill a little the last few months,” said Brennan Turner, president, Farmlead.com. “It hasn’t been very pretty at all the last couple of months.”
Turner said prices “saw a lot of volatility in June and July, and then started to see a down trend.”
There are a number of elements to the current price declines.
As an example, the stronger American dollar has meant the Brazilian real has declined by comparison, making imports from Brazil more reasonable, in particular soybeans where the South American country is a major grower, offered Turner.
The continued low prices of oil are also an influence on the bigger commodity complex.
The Chinese economy has also stalled, and that has curbed demand for grains and oilseeds.
“China sucks. It hasn’t hit the targets it suggested,” said Turner.
And of course there is the impact of weather, with the added uncertainty of what El Nino might mean to crop production in the next year.
“The biggest effect will be the Southeast Asia market,” said Turner.
Here on the Canadian Prairies El Nino should mean “a milder winter,” said Turner.
And then there are supplies. Turner said in the case of wheat there have been high carryouts in each of the last three years, and that puts downward pressure on prices.
Soybeans are much the same.
“Brazil continues to have record-sized crops,” said Turner.
That all said there are a few elements which could help hold prices, or push them higher.
The Black Sea region is likely to see production declines.
“There are very dry conditions over there,” said Turner.
Anytime an area has crop declines it can be a signal to higher prices.
So dry conditions in the Black Sea region would be a starting point, which could then influenced should North America or Australia face moisture issues, said Turner.
But that is unlikely.
In fact on the oilseeds side Turner said, “we’re probably going to see another big crop coming out of the U.S..”
The U.S. production couple with continued huge soybean numbers out of Brazil mean the likelihood of oilseeds process rebounding are slim.
It’s better news on the pulse crop side where “India is a big question mark,” said Turner. He said there have been indication India wants to import 10 million metric tonnes of pulses over the next two years in addition to traditional import levels “to address high prices” domestically for the food staple.
In a time of uncertainty Turner said farmers will be well-served by a ‘block selling’ approach selling off 10-20 per cent of crops as a risk management strategy.
“Make sales while you can, not when you have too,” said Turner.
