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.
鈥淲e鈥檝e seen things go downhill a little the last few months,鈥� said Brennan Turner, president, Farmlead.com. 鈥淚t hasn鈥檛 been very pretty at all the last couple of months.鈥�
Turner said prices 鈥渟aw a lot of volatility in June and July, and then started to see a down trend.鈥�
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 麻豆传媒AV 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.
鈥淐hina sucks. It hasn鈥檛 hit the targets it suggested,鈥� 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.
鈥淭he biggest effect will be the 麻豆传媒AVeast Asia market,鈥� said Turner.
Here on the Canadian Prairies El Nino should mean 鈥渁 milder winter,鈥� 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.
鈥淏razil continues to have record-sized crops,鈥� 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.
鈥淭here are very dry conditions over there,鈥� 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, 鈥渨e鈥檙e probably going to see another big crop coming out of the U.S..鈥�
The U.S. production couple with continued huge soybean numbers out of Brazil mean the likelihood of oilseeds process rebounding are slim.
It鈥檚 better news on the pulse crop side where 鈥淚ndia is a big question mark,鈥� 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 鈥渢o address high prices鈥� domestically for the food staple.
In a time of uncertainty Turner said farmers will be well-served by a 鈥榖lock selling鈥� approach selling off 10-20 per cent of crops as a risk management strategy.
鈥淢ake sales while you can, not when you have too,鈥� said Turner.
