Canadian Prairie farmers like to think of what they do, in terms of crop production, having an impact in the world, and it does in the sense that much of what they produce is headed to export.
But the United States, based on its size, is a much more important cog in turning the price gears higher or lower based on production and even production estimates.
The markets pay close attention to the United States Department of Agriculture numbers when they are released and are usually primed and ready to react if those numbers are different than what the market has anticipated.
Last week, the USDA report saw markets reacting in a bullish fashion as the two primary crops, corn and soybeans, had production estimates cut more than had been expected.
The dual reduction in production is noteworthy since it ripples through both the cereal side of farm production and oilseeds.
As goes corn, so does Canadian barley and even wheat.
Soybeans are really the price setter in terms of North American oilseeds. It can be argued the oil qualities offered by canola do buffer that crop somewhat from what soybeans do, but the two must still track in the same general direction.
In this case tracking corn and soybeans is a good thing since the most recent USDA numbers sent a signal that stocks of both crops are going to tighten as a result of lower production numbers.
It is interesting that neither USDA estimate was dramatically lower, but still markets reacted. USDA's corn estimate at just shy of 13 billion bushels was only one per cent smaller than traders expected and the soybean crop was four per cent below what had been anticipated.
The only slightly lower corn production number was made more dramatic as the USDA pushed carryout numbers for the next crop year down five per cent, the kind of number markets do react to because any sort of weather event ahead could crunch carryout even lower, tightening the stock-to-use ratio, a key component in establishing longer term price futures.
While the USDA numbers haven't sent markets through the roof, they do at least suggest solid prices will remain through the fall for Canadian producers who are just now starting to seriously think about this year's harvest.
It is unlikely, given wet spring conditions across most of the Canadian Prairies, that this will be the sort of bumper crop that would create a drag on prices.
That is good news on the price side, but does mean farmers are not likely looking at overflowing bins either.
The key for farmers here will be to get quality grain into the bin. Outside of isolated hailstorms, weather since July 1 has actually been very good across a large part of the Prairie crop-growing region, but Mother Nature must co-operate through the next six or so weeks, to ensure the best quality grain is achieved for harvest.
If the weather co-operates, and with the likelihood of solid prices, 2011 could be a good year for farmers. They will not get rich based on the year, but it should pay most bills and maybe leave a bit for planting next spring, and in farming that is often the best you can expect.
