Hooray for dropping potash prices It has become clear that Potash Corp. of Saskatchewan will not be able to hold the line on potash prices. Although there are only a few major players in the world potash industry, international sales are now being made at well under the price the industry tried to maintain. Cutting production and believing that farmers around the world would have to pay the price has not worked. As a resident of Saskatchewan, this is bad news for the provincial treasury. Potash is the number one revenue source for the Province. However, as a farmer, I’m gratified. Potash isn’t used extensively on Saskatchewan soils, so the price isn’t a huge issue for most farmers here. However, I’m happy that the big potash producers have been unable to keep their prices at exorbitant levels while grain prices have dropped. Nitrogen and phosphate prices have dropped due to lower demand. Market reality is that potash should be dropping too. Even though those potash-using farmers in other countries are competitors, it’s gratifying to see that giant corporations don’t always get their way. I’m Kevin Hursh.
July 29, 2009
Can we have another open fall? August is quickly approaching and it will be a frost watch month. In the most frost prone regions of the Saskatchewan grain belt, the first frost is typically by the end of August. For other locations, the average is some time during the first week of September. Areas with the longest frost-free days don’t typically get frost until the second week of September. Over the years, there have been a number of widespread frost events in August that have caused substantial crop damage. Last year was a particularly open fall. Can we be lucky two years in a row? Crops remain behind normal development and a number of areas flirted with frost earlier this month. Frost in August would be ugly. Many people correlate frost events with the full moon. The next full moon is August 5. In September, the full moon comes on the 4th. People who have examined the full moon / frost correlation scientifically claim that there is no relationship. However, a lot of folks are convinced that the two are linked. Whether or not moon phases play a role, the fate of the 2009 crop hinges on how many frost free days we can accumulate. I’m Kevin Hursh.
July 28, 2009
Producers are lying to Big Brother Farmers are lying to Statistics Canada about their seeded acreage, their yields and their stored production. In the end, this could backfire. Brian Clancey of Stat Publishing is a well-known private sector market analyst. In the most recent Pulse Market Report written for Saskatchewan Pulse Growers, Clancey notes that this is the second year in a row that Canada will probably sell more lentils than were supposed to be available. Clancey says the sales statistics are going to show that when this marketing year started we had 125,000 to 175,000 more tonnes of lentils on hand than Statistics Canada thought. While his article in Pulse Market Report was polite, Clancey readily admits that the discrepancy is probably the result of producers providing inaccurate survey information. It appears that enough producers have been “underestimating” their lentil stocks that the lie is now apparent. The worry is that the industry will eventually lose confidence in Stats Can numbers. Stats Can is still considered the best information source available. Producers, buyers and export customers all see the same information at the same time. If Stats Can loses credibility, you can bet that industry players will make their own estimates. But those will not be shared with farmers. I’m Kevin Hursh.
July 27, 2009
Market analysts shouldn't be pansies The latest edition of the Pulse Market Report has just been released by Saskatchewan Pulse Growers. I enjoy market analysis and I applaud this effort by Sask. Pulse Growers. However, I get frustrated when market analysts ask more questions than they answer. In this report, producers are advised a couple of times to analyse the markets for peas and lentils and come to their own conclusions about market directions. Isn’t that the job of the market analyst? The market report initiative grew from a realization that Saskatchewan farmers are huge players in the green lentil market, yet we don’t exercise much market discipline. It was believed that regular analysis of the market would enable producers to make better marketing decisions. The report soon expanded to cover the other pulse crops as well. While the concept is sound, market analysts need to stick their neck out and call it like they see it. Simply reciting all the bullish factors and all the bearish factors is of limited value. Give me firm opinions and clear recommendations. No one should expect a market analyst to be right all the time, but it’s reasonable to expect analysis that comes to some sort of conclusions. I’m Kevin Hursh.
July 26, 2009
Get the combine ready In general, crops in the province have been running well behind normal development. However, pea and lentil crops in parts of southwest Saskatchewan are maturing rapidly. This may seem amazing to producers in other areas, but there are pea fields in the southwest where very little green is visible. Some producers with weed issues are starting to apply glyphosate pre-harvest to their peas. Combines will be rolling in pea crops in the early part of August. While most of the green lentils are still a ways from harvest, red lentils are showing large ripe patches. That harvest isn’t far away either. The high temperatures of the past few days have really pushed crop maturity. A lot of the cereals and oilseeds in the southwest are still quite green. There are still flowers in the much of the canola. Some crops are going to be late, but the first combining of spring seeded crops is quickly approaching. It’ll be interesting to see what this week’s crop report has to say about crop maturity in all the different regions of the grain belt. I’m Kevin Hursh.
July 23, 2009
Big drop in new crop PROs The Canadian Wheat Board has released new Pool Return Outlooks for both the current crop year and the upcoming crop year. Price projections didn’t change very much for this crop year, but there was a significant drop for the new crop year. Wheat values are down $12 to $17 a tonne. Durum is down $14 to $18 a tonne and malting barley is down $6 a tonne as compared to the forecast in June. There’s now an even bigger gap in the price expectations between the two crop years. No. 1 CWRS spring wheat with 12.5 per cent protein is expected to bring $6.34 a bushel in this crop year once average Saskatchewan freight and handling is deducted. The new crop year projection is $5.47 a bushel. No. 1 durum with 12.5 per cent protein has a price expectation of $8.39 a bushel in the current crop year, but that’s dropping to just $5.97 for next crop year. Two-row malting barley is pegged at $5.37 a bushel in this crop year and only $3.86 next crop year. The drop in next year’s Pool Return Outlook isn’t surprising given the recent drop in American futures prices. I’m Kevin Hursh.
July 22, 2009
InVigor leads the canola industry Bayer CropScience has officially opened its new Canola Breeding Centre of Innovation northeast of Saskatoon. Bayer has added a $15 million facility with air-purity controlled greenhouse space, phytotrons and a host of modern labs. This complements its existing facilities and its 560 acres of canola breeding area. With its Invigor hybrid canola, Bayer CropScience has become the industry leader. Their canola accounts for nearly half of all the canola grown on the Prairies. The breeding program is for an impressive list of traits. In addition to making sure their canola has the highest yields, they’re working on sclerotinia and clubroot resistance. They’re working on increasing seed size and there’s work on shatter resistance to facilitate the straight combining of canola. Varieties with specialized oil profiles are also being developed. The success of the program is based on Bayer’s patented male sterility system that makes hybrid production much easier. While producers can look forward to a continuous stream of improved varieties, one change they’ll notice starting this fall is that the price of a bag of InVigor hybrid canola seed will increase while the price of the Liberty herbicide that goes along with the system will decrease. The net result will be the same cost, but higher rates or a double pass of Liberty will be more economical. I’m Kevin Hursh.
July 21, 2009
U.S. going with cap and trade The Americans are in the midst of passing climate change legislation. This will have ramifications for American and Canadian farmers. The American Clean Energy and Security Act of 2009 has U.S. farm groups divided. As in Canada, there are those who question the whole greenhouse gas theory noting how cold this summer has been. The bill has passed the House of Representatives by a narrow margin. It now has to pass the U.S. Senate before President Obama can sign it into law. Observers are amazed by the speed at which this Obama initiative has moved. It could be law by the end of the year. The new U.S. rules would begin in 2012. It’s a cap and trade system. However, agricultural offsets are expected to only partially defray the extra costs for farmers. Plus some producers are unlikely to benefit from capturing methane, practicing no-till or planting trees. Included in the bill are trade provisions aimed at protecting U.S. manufacturers against imports from countries without similar constraints on greenhouse gas emissions. Thus Canada will be forced to act and we’ll probably implement a system similar to what emerges south of the border. I’m Kevin Hursh.
July 20, 2009
Seeing the future To which view of the future of agriculture do you subscribe? View number one: the growing world population and increasing prosperity will lead to a long-term uptrend in agricultural prices. View number two: on average, production will exceed demand and low prices will be the norm most of the time. You’d think that experts could analyze the situation and the trends and come to agreement. That’s not the case. A just-released report by the experts at Deutsche Bank Group subscribes to the theory that there will be a 50 per cent increase in food demand by the year 2050 with nine billion people inhabiting the earth. Meeting this demand, they say, will require huge agricultural investments. On the other side of the debate are experts such as Daryll Ray, who holds the Chair of Excellence in Agricultural Policy at the University of Tennessee. In a recent opinion piece in the Manitoba Cooperator, Ray says overproduction relative to demand will likely be the overriding problem for major crop markets during all, or most, of our lifetimes. Overproduction has been the norm more often than not during the past 30 years. For what it’s worth, I subscribe to the view that we’ll see more shortages and better prices more often in the years to come. I’m Kevin Hursh.
July 19, 2009
Dairy comparison For those of us not in the supply managed sectors of agriculture, it’s easy to be jealous. Efficient dairy and poultry producers in this country are able to achieve stable returns. Supply management has issues, not the least of which is quota values that have reached astronomical levels. However, supply management has the overwhelming support of producers involved in the system. You only have to look south of the border to understand why. American dairy farmers are in the midst of an economic bloodbath. According to a Pennsylvania newspaper called the Times Leader, it’s costing farmers in that state an average of about $30 to produce a hundredweight of milk. Producers are currently receiving around $12 a hundredweight. The losses have been going on for years. The situation is very similar to what Canadian hog farmers are facing. Needless to say, a lot of American dairy farmers are exiting the business. In Canada, selling a dairy is lucrative. The quota from is worth a small fortune. In the U.S., producers are living off their equity and if they exit, their cows and facilities are selling for bargain basement prices. I’m Kevin Hursh.
July 17, 2009
Big improvement in crop potential This past week marked a turning point for Saskatchewan crop conditions. With major rainfall in most regions, dry conditions are no longer the biggest concern. In the provincial crop report released yesterday, only 14 per cent of cropland is rated as short for topsoil moisture. The areas rated as very short have all but been erased. In the driest regions, drought has already exacted a toll, but in most cases further crop damage has been halted. The biggest concern now is that crops are two to three weeks behind in many areas and last week saw some freezing temperatures. According to the crop report, the Kelvington area reported frost on two nights and the thermometer fell below zero for three nights in the LeRoy area. Frost was also reported in the Glaslyn and Pierceland areas. I received an email from a producer in the Regina area reporting frost on rooftops early Thursday morning. It isn’t supposed to freeze in July. There could be crops that have their seed set messed up by this touch of frost. In general though, the crop outlook has improved dramatically over the past couple weeks. I’m Kevin Hursh.
July 16, 2009
Frost is a big threat While the drought in west central and northwest Saskatchewan has been the big crop-related event so far this growing season, there’s a nagging fear among many growers that frost could end up being an even bigger problem. Recent rains have been too late to save many of the crops in the drought region, but in many other areas of the province crops have shown a marked improvement. As late germinating patches start to catch up and as canola continues to branch out, crops that looked mediocre suddenly appear to have a whole lot more potential. Frosts in May and June took a toll and some areas have been flirting with frost in July. Even a light frost at this time of year can cause disappointing yields. Of course the big concern is frost in August. It’s been a cold year and crops are running well behind normal development. We’ve had devastating August frosts in the recent past. We’ve also had years when most of the grainbelt has remained frost free well into September. We need warm weather to push crop development and we need Jack Frost to stay away in August. Otherwise drought won’t be the only big cause of crop loss this year. I’m Kevin Hursh.
July 15, 2009
Hog sector faces crisis The Canadian hog industry is facing virtual extinction. For three years, hog producers in this country have faced steady losses. Many analysts predicted 2009 would be the turnaround year and it was starting to look promising until the H1N1 virus, inappropriately labelled the swine flu, squashed the emerging price rally. Canadian producers have been facing steeper, more prolonged losses than their American counterparts, so North American hog numbers still haven’t dropped enough to produce a significant price improvement. After years of losses, support from the normal farm income stabilization programming runs thin. There are some moderate-sized producers who have genuinely been assisted by the income stabilizations schemes. There are also a few producers who locked in favourable prices earlier this year when they were briefly available. In general though, most hog operations are reaching the end of their financial rope. The federal government has rejected any direct aid saying it would lead to countervail action by the Americans and make the economic situation even worse. However, unless governments do something more, most of the players are going to be lost. I’m Kevin Hursh.
July 14, 2009
Supply, demand and prices New supply and demand estimates for all the major crops have been generated by Agriculture and Agri-Food Canada. On grains and oilseeds, Canadian production is forecast to fall by 19 per cent due to higher abandonment and below normal yields. Total supplies are forecast to fall 12 per cent as large carry-in stocks moderate the production decline. Carry-out stocks are forecast to fall by 26 per cent, ending the upcoming crop year well below the 10 year average. That would sound like a prescription for higher prices, but lower average prices in the upcoming crop year are forecast for wheat, durum, and oats. Flax, canola and off-board barley are expected to see new crop prices that are very similar to this year’s. In the pulse and special crops, field pea production is forecast to be down significantly due to lower yields and lower acres, but this will be offset by record carry-in stocks. The average pea price is expected to be down a bit. On lentils, production is forecast to increase for the fourth consecutive year. The biggest increase will be on red lentils. The average lentil price is forecast to fall from the record prices this crop year, but remain historically high. Mustard seed production is expected to rise due to higher acres. The average mustard price is expected to fall slightly, but remain high by historical standards. On canaryseed, despite large carry-in stocks, the supply is expected to fall due to lower yields and lower acres. The average price is forecast to be unchanged in the crop year ahead. I’m Kevin Hursh.
July 12, 2009
Fertilizer price comparisons As we all know, fertilizer prices hit record high levels last year. Agriculture and Agri-Food Canada has just released a new report on fuel and fertilizer prices. The report estimates last year’s Canadian fertilizer expenses at a record high $5.4 billion, an increase of 69 per cent over 2007. A couple years ago, a report commissioned by Keystone Agricultural Producers of Manitoba indicated that fertilizer was often significantly less expensive just across the line in the U.S. That’s not the finding in this new Ag Canada report. A price comparison was conducted between Manitoba and the U.S. border area. Although average prices for major nitrogen fertilizers were higher in Manitoba in the spring and summer of 2008, they fell below the neighbouring U.S. prices in the fall. An overall lower fertilizer price in Manitoba compared to the U.S. was estimated to save Manitoba farmers about $74 million in their 2008 fertilizer bill. Similar findings came in a comparison of Ontario versus U.S. border area prices. If you’re checked out fertilizer prices in recent weeks, you’ll have noticed that they’ve continued to drop since seeding. Last year at this time, prices were skyrocketing. I’m Kevin Hursh.
July 9, 2009
Dry Alberta Here in Saskatchewan we hear a lot about crop conditions within the province, but we hear less about what’s happening in other parts of the country. The latest crop report from Alberta shows how the drought on the west side of Saskatchewan covers a major portion of our neighbour to the west. Subsoil moisture is poor in 58 per cent of Alberta’s agricultural area. Central and northwest regions are the hardest hit. Provincially, 55 per cent of the winter cereals are rated as poor, as is 52 per cent of the canola and 45 per cent of the field peas. Hay is rated as poor in 62 per cent of Alberta. Yields will be well below average. Pastures are even worse with 69 per cent receiving the poor rating. On top of everything, crop development is 10 to 14 days behind normal. The Alberta Crop Report isn’t as current as Saskatchewan’s. The latest report is for conditions up until July 2. However, it’s clear that the overall crop outlook is much poorer in Alberta than in Saskatchewan. Cropland topsoil moisture in this province is now rated as 57 per cent adequate. I’m Kevin Hursh.
Will canola bounce back? Canola prices have been dropping like a stone. The November futures closed Wednesday below $420 a tonne. Last week, prices were around $460 a tonne and back in early June, prices were in the $480 a tonne range. The futures price is now at its lowest level since back in March. Of course cash canola prices for old and new crop have quickly come down as well. At their peak, old crop cash prices were approaching $11 a bushel. Now they’re way under $10. Producers may assume that it’s the recent moisture in many parts of the Prairies that has improved crop prospects and caused prices to drop. While that may be one of the factors involved, market analysts say there are many external factors at work. Soybean prices are down and wheat and corn futures have also tumbled following the general downturn in the stock market and a softening price for crude oil. Canola can’t buck the overall trends in the marketplace. Many traders are commenting that with prices now below $10 a bushel, farmer selling has all but ended. There’s a general expectation or at least a hope that prices will recover. Maybe they will. However, except for the big price run in 2008, prices of over $400 a tonne have been rare and short lived. Nothing in the marketplace is ever assured. I’m Kevin Hursh.
July 7, 2009
Hay supplies will be tight Hay yields this year are going to be well below normal in a lot of areas and cow-calf producers will be scrambling for winter feed. Paul Jefferson, vice-president of the Western Beef Development Centre uses springtime weather data from 16 different sites in a statistical model to predict hay yields. He says the cold, dry weather from April through June has cut hay production. His prediction calls for hay yields to be about average around Yorkton, Lloydminster, Meadow Lake and Prince Albert. Below average hay yields are predicted for Saskatoon, Swift Current, Estevan, North Battleford, Maple Creek, Broadview and Wynyard. Well below average hay production is forecast for Regina, Moose Jaw, Rosetown, Kindersley and Nipawin. Moose Jaw is a surprise because moisture there has been pretty good. However, Jefferson says the weighting of the precipitation in the model points to hay production that’s well below average in the entire region from Regina to Kindersley. The short hay crop comes after a long, cold winter which used up more feed reserves than usual. Jefferson believes hay supplies for the upcoming winter will be tight across the province and he’s urging producers to start planning ahead. I’m Kevin Hursh.
July 6, 2009
The truth about McDonald's beef An email has been making the rounds again claiming that McDonald’s Restaurants are going to start importing much of their beef from South America. This chain letter email has probably been making its rounds for a long time, but it has landed in my email box a couple of times in recent weeks. The email urges a boycott of McDonald’s, citing a number of potential health problems with South American beef. Well, the truth is that McDonald’s currently sources all of its beef from Canada and has no plans to purchase from South America. In the past, the company admits that it has purchased small quantities of beef from New Zealand, Australia and the United States, but says it has always sourced the vast majority of its beef from Canada. In fact, McDonald’s Canada is one of the largest purchasers of Canadian beef. Only a limited supply of off-shore beef is allowed into Canada each year and for many years the federal government has not issued supplementary import quotas, so a large restaurant chain wouldn’t be able to get much of its beef from South America even if it wanted to. The message for all of us is that we shouldn’t believe all the unsolicited information that lands in our email inbox. And we shouldn’t pass along information unless we know it’s true. I’m Kevin Hursh.
July 5, 2009
Drought politics Politicians, particularly politicians in opposition, like to play cheap political games every time there’s a drought. Jack Layton stopped in Saskatoon over the weekend and he renewed his call on the federal government to come up with emergency drought money for farmers. However, the federal NDP leader doesn’t seem to have the foggiest notion for how that should happen. The best tool devised for dealing with crop failures is Crop Insurance. It provides a method to measure yield shortfalls and compensate farmers accordingly. Is it perfect? No, far from it. But the program does provide far more protection than a few years ago because the insured prices of crops are much higher. Jack Layton probably doesn’t realize it, but no one has income from this year’s crop yet. How the heck could you come up with some sort of drought payment for grain producers at this point? The more immediate problem is with cow-calf producers. Financial returns have been ugly and the drought is causing an accelerated sell off of the beef breeding herd. If Jack Layton and other politicians want to be useful, they should come up with meaningful ways to address the problems in that sector. I’m Kevin Hursh.
July 2, 2009
More weather surprises still to come? It has been a whacky spring and summer for weather. While the western Prairies are suffering from drought, there continues to be too much rain in parts of Manitoba. On Sunday and Monday, areas east of Winnipeg received a huge amount of rain – as much as 5.5 inches near the community of St. Joseph. There’s standing water in the fields. Meanwhile, in parts of Alberta, there have been reports of frost in recent days. According to the Canola Watch report from the Canola Council of Canada, temperatures of minus one were reported near Beaverlodge, Leduc and Ryley on Sunday night and Monday morning. Grain traders follow weather and crop reports very closely during the growing season. The trade factors in information as it becomes available, but the way the growing season has been going, you have to wonder if there could be some major production surprises still to come. Has the true extent of the drought been factored into production estimates? Crops are late. What if there’s a widespread, earlier-than-normal killing frost? Producers are becoming reluctant to part with grain because production prospects seem very uncertain this year. I’m Kevin Hursh.
Crop Insurance rule should be re-evaluated A lot of crops in West Central and North Western Saskatchewan are going to be terminated in the next couple of weeks. By terminating a failed crop with herbicide or tillage before July 15, the land qualifies as summerfallow for next year’s Crop Insurance coverage and that means a higher yield guarantee. Producers are talking with Crop Insurance offices and weighing their options, but it’s clear that more and more fields in the dry regions are not going to produce a crop worth harvesting. One Crop Insurance rule that has always struck me as odd is how stubble crop and summerfallow crop yields are pooled for any particular crop. Let’s say you have wheat seeded on both summerfallow and stubble. The stubble crop fails, but the chem fallow produces a reasonable crop. The summerfallow yield offsets the stubble yield shortfall thereby reducing or eliminating any Crop Insurance support. This rule affects management decisions. Some producers purposely avoid having the same crop on both summerfallow and stubble. That could be tough next year in areas where a lot of land is going to qualify as summerfallow. A simple pre-harvest inspection should be enough to prevent any fraudulent activity on summerfallow versus stubble making it feasible to separately insure the same crop seeded on both. I’m Kevin Hursh.
Archives
Kevin Hursh's daily agricultural report is heard Monday through Friday on Swift Current (CKSW), Shaunavon (CJSN), Moose Jaw (CHAB), Estevan (CJSL), Weyburn (CFSL), Rosetown/Kindersley (1330/1210), Lloydminster (CKSA) and Melfort (CJVR).
