Clearly the weather trade is on as wet, snowy weather last week and this week is on the minds of not only investors but also producers. Only 5 per cent of the U.S. corn crop was planted by April 28th, compared with the five-year average of 31 per cent! While most of the U.S. arable land has gone from dry and drought-like to wet and puddle-forming, here in Western Canadian we are waiting for the snow and/or flood waters to skedaddle. At the end of the day, the moisture – while mostly appreciated – is putting a significant setback on the actual date seed gets into the soil for both U.S. and Canadian farmers.
As such, and as I’ve mentioned in previous columns, addressing how many acres for each of your crops is important. Potential yield risk, critical development stages, and the market available are all important variables to address (among others, of course). You may be on Plan B by now, but do you have a Plan C? While it may be getting more difficult to plant them, cash canola and soybean prices remain strong as old supplies are noticeably dwindling. That being said, an important note was China buying 50,000 tonnes of European rapeseed last week. This could be a trend that continues as supplies are readily available from other markets.
Staying in Europe, the E.U.-27 rapeseed production is expected to climb almost nine per cent from last year’s output to 21 million tonnes. Increased production is also expected in barley (+2.4% per cent to 55.2 million tonnes), soft wheat (+5.2 per cent to 129.7 million tonnes), and corn (+18 per cent to 65.3 million tonnes). Cold and wetter weather in March & April in major producers like Germany, France, and the UK could potentially decrease the final yield there but, all things being equal, it looks like the Europeans will be bringing more grain to market this summer and fall.
Granted, there are the likes of German entity Commerzbank who believes the market is underestimating supply threats in many areas around the world and that prices will be higher by the end of the year. I, for the most part, would have to disagree with these bankers from Frankfurt as the regions that were most devastated by drought last year have been helped out significantly recently with precipitation in spades. But has it been too much? Or has been too cold?
Let’s be honest with each other – the rains in the U.S. Midwest and the snowmelt (and slowly, flooding) across most of the Prairies haven’t allowed for too much fieldwork. Ultimately, each subsequent rain (and snow for some areas forecasted) over the next month inherently limits the ability to plant a crop the world needs. We will get the crop in and it will grow. However, as English poet Alexander Pope first wrote in the early 18th century, “fools rush in where Angels fear to tread,” patience may ultimately be the trump card to yield a good crop this fall.
Brennan Turner, President, www.FarmLead.com
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, Turner spent some time working in finance before starting FarmLead.com, a risk-free, transparent online grain marketplace. 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).