It’s hard to ignore that the end of November was marked by the Saskatchewan Roughriders winning the 101st Grey Cup in their home stadium. Although I’m sure many are wondering what in Saskatchewan’s wheat (and water), this was not the reason that wheat prices firmed to start a shortened trading week (due to U.S. Thanksgiving). Changing the game a bit was the Canadian Wheat Board who announced they had bought Soumat’s terminal assets, a primary elevator in Alexander, MB, and equity positions in 3 railcar loading facilities and 5 shortline railways. This includes Mission Terminal in Thunder Bay which has storage capacity of 136,500 tonnes and moves about 1.5 million tonnes a year. Ultimately, this shows the CWB.’s willingness to change to a private business model that is financially sustainable. Although the pooling options are still available, I believe that the CWB is potentially recognizing the need for more cash bid work and it’s a step in the right direction by acquiring these assets. Basically, the CWB understands that it’s another grain handling company and to keep pace with its competitors, it needs some cement.
Aside from Saskatchewan Premier Brad Wall getting in on the Roughriders dressing room champagne shower, the other big political news was Iran coming to terms on a new nuclear agreement in order to have some of its trade sanctions relaxed. The deal releases more than four billion U.S. Dollars in Iranian oil sales revenue that was in frozen accounts and lifts trade restrictions on car parts, plane parts, petrochemicals, and gold trade. In return, the rest of the world will see Iran limit the development of its nuclear program and allow for constant checks on it. Despite no immediate differences in Iran’s oil trade sanctions, oil futures fell.
The big takeaway from the agreement is that Iran can still develop some nuclear components, leading Israel to condemn the deal and Israeli Prime Minister to say “Today, the world has become a much more dangerous place.” While the likes of Britain, France, and the US have lifted the majority of their trade sanctions against Iran, Canada has not, calling for more substantiated and long-term documentation of Iran upholding the terms of this deal. Ultimately, the thawing of Iran’s frozen accounts allows them to potentially get more active in the international wheat market. For the record, Iran’s president said they’ll import 7.5 million tonnes of wheat this year (much higher than the USDA’s four million-tonne estimate).
Finally, a New York Times op-ed by Brown University ecology professor Stephen Porder points to the Mato Grosso region in Brazil as one way the world will stay fed in the decades to come. Despite encroaching on the Amazon forest, the professor speaks of how much the region has developed, including the frontier town of Canarana (pop. 25,000) having several stores on main street selling millions of dollars’ worth of new equipment. An interesting agronomic note from Mato Grosso was that due to the heavy rainfall in the region, the soil has almost zero phosphorous in it. Further, the deep tropical soils are highly efficient filters, removing excess fertilizer nutrients before they reach run-off water sources. As such, Professor Porder says that if the world is to remain fed, these areas will have to become a production champion in their own right, via increased acres farmed and the corresponding production.
Brennan Turner is originally from Foam Lake, SK, where his family started farming the land in the 1920s. After completing his degree in economics from Yale University and then playing some pro hockey, Mr. Turner spent some time working in finance before starting FarmLead.com, a risk-free, transparent online and now mobile grain marketplace (app available for iOS & Android). His weekly column is a summary of his free, daily market note, the FarmLead Breakfast Brief. He can be reached via email (b.turner@farmlead.com) or phone (1-855-332-7653).
— FarmLead Breakfast Brief