There are several factors that are going to drive a producer's cropping decisions this spring and on Thursday those who are seriously considering a significant commitment to canola, gathered in the Days Inn in Estevan to hear about crop prospects from a market analyst. The group also heard words of advice about the prospects of bringing in a good canola harvest this year, thanks to a series of experts who addressed items directly associated with this oilseed.
Franck Groeneweg of Edgeley, a director of the Saskatchewan Canola Development Commission (SaskCanola), served as host for the five-hour program that managed to attract about a dozen participants in spite of severe inclement weather that included blowing snow, high winds and cold temperatures that made driving hazardous in southeast Saskatchewan.
Marlene Boersch of Mercantile Consulting Venture of Winnipeg was the key presenter for the morning session. She led the group into a glimpse of all crop prospects for the coming year as they related to world weather, political and economic conditions. She focused on what is driving the current commodity markets. She noted that the current world supply of farm commodities has diminished and demand will be higher next year, going up by about three per cent.
"You'll need to produce 2.7 billion tonnes by 2017," she told the gathering, referring to the total production demands being placed on domestic farmers who are now each feeding 155 people, according to world statistics.
With a 23 per cent increase in demand expected over the next seven years, Boersch said the mid-range market outlook remains strong, but cautioned that when it came to forecasting agricultural products, "nobody can do it beyond two, maybe three years." After that, it's simply guesswork.
With a global population zeroing in on seven billion with 2.7 billion of those people living in China and India alone (39 per cent), Boersch said that these two countries with an emerging middle class will be demanding more products.
"They are witnessing nine to 15 per cent growth in income, so this time around they have more solid footing. They can pay for it now and that means world grain production will have to go up because right now production is smaller than demand."
An accumulated surplus of grain is literally being eaten up and Boersch reminded producers that only a fraction of the global market seeks out the highly graded crops while the majority of the buyers are generally seeking lower grades of grain on a consistent basis.
"So here in Saskatchewan, you are sitting on a big resource. How are you going to manage it?" she asked the gathering.
"Just remember the trend is your friend. There will be occasional down slopes, but overall, the trend has to be up."
Boersch spent some time focusing on specific crops and immediate expectations for the coming year, including those for corn and canola as well as barley, wheat and flax.
Corn received some additional attention due to the additional biofuel factors that come into play for producers, although there are not a lot of commercial corn growers in Saskatchewan, she noted.
She said wheat is also used in the biofuel industry and canola is not an important factor in ethanol production in Canada, but these crops do have a significant role to play in its production in other countries where the market is subsidized. She said the important countries to watch in terms of biofuels are United States, Brazil, the European sector and China, along with Canada.
"Biofuel policies around the globe will affect the markets. For instance, it makes sense in the United States now from a fiscal point of view because they had existing support (subsidy) programs for crops. So they actually save money by not having to pay into the support system if they're paying to subsidize biofuel production," she said.
"That reduces their oil imports and increases value of their grain exports and improves their trade deficit. In Canada biofuel is less important because we are net exporters of oil which currently sells at a good price. At higher prices, it makes some sense though."
Boersch also addressed the more complex agricultural market environments and world-wide forecasts and commodity trading indexes.
She said a good benchmark to consider right now is the fact that the world's carry out (supply) of corn is down to just 18 days, the lowest it has been since 1974 and 1996.
"They say more corn, but other buyers of other commodities are saying they want more too. Oilseed production is down in China, wheat is down in North America as it is in Europe and many areas of Africa. It can still be on pace with last year, but just barely while the demand is steadily increasing," Boersch said.
Following her remarks, Groeneweg outlined some of the work SaskCanola carries on, referring to the commodity that Boersch referred to as "the Cinderella crop" for Prairie producers.
Groeneweg noted the 1.76 cents per bushel checkoff provides the commission that began in 1991 with $3 to $4 million per year to use for developmental programs in concert with the Canola Council of Canada.
"We're at 12 million tonnes now and our goal is 15 million tonnes by 2015," he said.
The development of crushing plants, usage of the meal that can be used for value added businesses after the oil is extracted, all goes toward making canola an even more valuable crop.
Groeneweg also outlined some of the promotional partnerships that have been developed with the Canola Council and the Canadian Football League, the junior hockey leagues and the Toronto Royal Fair among others.
Tiffany Martinka, an agronomist with the Canola Council of Canada, made an afternoon presentation regarding impacts on yields. She noted how getting a good stand of canola established at the start of the crop year is vital. "That sets it up for success for the rest of the year," she said.
Spacing, targeted plant populations and survivability factors all came into play during her presentation.
Also providing information at the session were Elaine Moats, crop development specialist for Saskatchewan Agriculture, and Chris Hotzapfel from the Agricultural Research Foundation at Indian Head. The two focused on local crop conditions and area concerns as they directly related to canola growing.
The Thursday program was co-ordinated by Patricia Flaten, research manager of SaskCanola from Saskatoon, who noted that this was the first such session for southern Saskatchewan with the four previous programs being conducted in the central part of the province.
