Outside investment in the agricultural commodity markets could heavily influence crop prices in 2011.
Grain trader Stephen Kell of Parish and Heimbecker told farmers attending the recent Southwest Ag Conference in Ridgetown to pay close attention to the investment funds this year.
Kell says traditional ag market fundamentals like weather and export demand will continue to set the direction for prices. But he says the amount of investment money in the market will amplify the gains or losses.
As for what to expect in 2011, Kell says fund managers will continue to buy ag commodities, especially if they’re worried about the U.S. dollar declining or the economy overheating from government stimulus spending.
Liberal Leader Michael Ignatieff at the Comber Fair
Federal Liberal Leader Michael Ignatieff says he wants to partner with Ontario to design farm risk assurance programs.
He made the comment during a brief stop at the Comber Agricultural Fair August 8.
Ignatieff and an entourage including Quebec MP Justin Trudeau visited the fair as part of the Opposition Leader’s bus tour that has been going across Canada this summer.
“We want to design risk assurance programs from the farm gate up, as opposed to from Ottawa,” he said. “The thing I keep saying across the country is we need flexibility.”
Besides the RMP, Ignatieff said the country needs a national food policy “that puts more Canadian food on Canadian plates.”
Ignatieff’s comments on farm policy can be heard in the following clip:
Ignatieff’s informal visit to the Comber Fair lasted about an hour before the tour moved on to Windsor.
Besides the customary routine of chatting with the crowd and posing for pictures, Ignatieff started a heat for the demolition derby and presented ribbons to 4-H competition winners.
Of all the factors affecting the prices that farmers receive for their crops and livestock, the value of the Canadian dollar will be the one to watch in 2010.
Ontario-based market analysts Philip Shaw and Moe Agostino stressed the importance of the stronger Canadian dollar in their presentations at the Western Fair Farm Show in London on March 11.
Setting the scene for the cash crop markets, Shaw said the latest series of reports on March 10 from the United States Department of Agriculture has created a bearish tone for corn, soybean and wheat futures in Chicago.
For corn, the Dresden-area farmer says the USDA has estimated large supplies with the size of the 2009 U.S. corn crop at 13.13 billion bushels and ending stocks of 1.8 billion bushels. On soybeans, Shaw says the prices will be pressured by the huge crop coming from South America as Brazil and Argentina are setting production records. As for wheat’s situation, Shaw says it may be the most bearish of three, given the cumbersome U.S. carryout of 1.8 billion bushels.
While it will be important to watch how weather and planting conditions in the U.S. will change the tone of the futures market, Shaw suggests that Ontario farmers pay closer attention to the Ontario basis. In the following clip, Shaw gives his outlook for the corn market and explains the importance of the Ontario cash market.
Meanwhile, Shaw says the Ontario corn market could get a boost from more ethanol production this year. In fact, he expects the province will be able to produce enough of its own ethanol to meet the target of five per cent ethanol in Ontario gasoline by the end of the year.
The impact of the dollar also played a prominent role in the livestock market presentation from Moe Agostino, marketing commodity strategist for Farms.com Risk Management.
Agostino warned the audience that there is room for the Canadian dollar to gain even more strength.
“The dollar has been trading in this narrow range between 93 and 98 cents U.S. But we remain bullish, we have been projecting par to $1.05 since the beginning of last year,” says Agostino.
The bullish outlook is based on the relative weakness of the American economy. Agostino says investors will continue to lack confidence in the U.S. as long as the government runs huge deficits. With talk of a second government stimulus package and President Obama’s proposed health care plan, Agostino remains skeptical that the U.S. government will rein in its spending.
The potential of the rising Canadian dollar is the main negative factor in Agostino’s outlook. Otherwise, he says lower hog and cattle supplies in the U.S. and Canada and improving consumer confidence are giving the beleaguered livestock markets some hope.
Echoing Shaw’s comments, Agostino says livestock producers should look for pricing opportunities from changes in currency values. He also urged farmers to understand the seasonality of their business.
In the following clip, Agostino explains how cattle producers can use the seasonality of their markets to manage their price risks. Play:
Besides knowing the seasonality of the markets, Agostino also stressed the familiar refrain that producers – be they livestock or cash crop farmers – should know their cost of production when it comes to marketing.
“If you don’t know what (price) you’re shooting for, how do you know if you’re making money?”
Dr. Mike Brumm of North Mankato, Minnesota, at SW Ontario Pork Conference
An American swine specialist, speaking at the South Western Ontario Pork Conference at Ridgetown, says problems with moldy corn in the U.S. could be bigger than first thought. Dr. Mike Brumm, a retired professor of animal science at the University of Nebraska, says reports of high vomitoxin levels are increasing.
The problems first surfaced during harvest in the eastern cornbelt states. But Brumm says concerns about the quality are now emerging in the western cornbelt.
Brumm says there are several implications of the issue for Canadian producers. On the marketing side, he says U.S. producers will be faced with lighter weights. Meanwhile, Brumm urges importers of U.S. feed grains to keep an eye on the quality.
Another presentation at the conference highlighted the potential of China’s pork production. Dr. Dale Hendrickson, a swine veterinarian from Indiana, said China is making a concerted effort to produce enough pork to meet its needs.
Dr. Hendrickson has been a veterinarian in the U.S. for more than 40 years, and is setting up a swine practice in China.
While China lags behind North American standards, Hendrickson there is tremendous potential to expand the number of pigs produced per sow.
With China’s push toward being self-sufficient in hog production, Hendrickson says chances are slim that it will become a major export market for North American pork.
Julie Stitt explaining BIXS at Beef Industry Convention
The Beef InfoXchange System – known as BIXS - is a national, voluntary system on the web that collects and tracks useful data from the cow-calf producer right through to the processor.
The information is related to the animal’s individual tag number.
One of the program’s developers, Julie Stitt, says the idea is to use the info such as health, genetic and production facts to help producers improve their herds.
She says cow-calf or feedlot producers can also use that information to promote the value of their operations to others along the beef value chain.
Meanwhile, producers can also use the data to make management decisions to increase efficiencies.
Former Food Entrepreneur to Lead Ontario Green Party
The new leader of the Green Party of Ontario has strong ties to agriculture. Mike Schreiner, who helped establish Local Food Plus, has taken the helm of the party.
Local Food Plus is a non-profit organization that certifies farmers and processors who produce food in environmentally and socially responsible ways.
Although it’s a commentary rather than a news story, an editorial written by Steve Cornett, editor emeritus at Beef Today, reveals a remarkable lack of interest by American consumers in the U.S. Country of Origin Labelling (COOL) law.
Cornett also uses his purchase of high top red cowboy boots, made in China no less, to effectively demonstrate that certain product attributes can have more sway with consumers than country of origin.
Also of interest to Canadian producers, he believes a voluntary traceability system is a superior food safety tool when compared with a mandatory labelling regime.
Ottawa has launched a national awareness campaign for farmers to help keep animals healthy and safeguard the Canadian food supply.
As part of the Animal Health Awareness Campaign, producers across Canada will receive tips and information about biosecurity measures. Producers will be encouraged to revisit their biosecurity plans, continue to observe their animals for signs of illness and regularly consult with their veterinarians on the health of their animals.
Russia will now accept Canadian boneless beef from animals over 30 months of age. Federal Agriculture Minister Gerry Ritz announced the agreement in Moscow Tuesday (October 13) after a meeting with Russian Deputy Prime Minister Victor Zubkov.
The move, one of several agriculture-related deals announced Tuesday, builds on an earlier agreement for Russia to import Canadian bone-in-beef from animals under 30 months of age. Canada and Russia also agreed to have technical officials work within this calendar year to move toward giving Russian importers access to Canadian beef offal.
The Canada Beef Export Federation (CBEF) estimates the value of under 30-month beef and over 30-month boneless beef will be worth up to $32 million. CBEF also estimates fully reopening the Russian market to Canadian offal will be worth up to $10 million.
Beef isn’t the only product that will see improved market access. Russia is also expanding its sheep and goat production and opening market access for high-quality Canadian small ruminant breeding stock. The Canadian Sheep Federation estimates the Russian market will be worth up to $8 million over three years.
Meanwhile, the Canadian industry participated in the Moscow Golden Autumn Agricultural Fair and finalized key agreements with Russian industry to provide high-quality beef breeding stock and technical training. Hawkeye Land & Livestock Ltd. of Canada signed a deal to ship up to 10,000 head of pure-bred beef breeding stock to the Russian-owned Northern Agro Industrial Company.
Another Canadian company, Alta Exports International, signed another agreement with Inter-Regional Beef Breeding Cattle Development Fund, to support the establishment of a beef-breeding training centre to make sure Russian buyers can maximize production from Canadian breeding stock.
The Canadian government is taking the next step in the fight against U.S. Mandatory Country of Origin Labelling. Ottawa has requested a World Trade Organization panel to help resolve the dispute over the controversial law that has become well known by its acronym, “COOL”.
“The U.S. COOL requirements are so onerous that they affect the ability of our cattle and hog exporters to compete fairly in the U.S. market,” said International Trade Minister Stockwell Day, in a news release.
“Canadian farmers and ranchers produce top-quality food, and they are facing unfair discrimination because of COOL legislation,” said Agriculture Minister Gerry Ritz.
COOL is a mandatory labelling measure in the United States that requires firms to track and notify customers of the country of origin of meat and other agricultural products at each major stage of production, including at the retail level.
The federal government and Canada’s livestock producers claim the provisions impose unfair and unnecessary costs on integrated North American supply chains, reducing competitiveness in both Canada and the U.S.
The result, according to the release, is confusion and uncertainty for livestock industries on both sides of the border.
Canada’s request for a panel comes after two rounds of WTO consultations with the U.S. failed to resolve the issue. Panels are the next step in the WTO’s dispute settlement process.
Colombia is opening its market to Canadian beef again, becoming the first South American country to restore access since the border closed due to BSE in 2003.
The Colombian government has announced that it will allow imports of Canadian beef from animals of all ages. The move follows an agreement in May that paved the way for Colombia to lift its restrictions. (See earlier post)
According to a statement from International Trade Minister Stockwell Day, Canadian exports will resume once valid certificates are agreed to with the Colombian government. In addition, the Government of Canada will continue to work with Colombia to ensure resumption in trade in cattle.
The Canadian Cattlemen’s Association said (in May) the agreement is initially worth $6 million in beef and $1 million in livestock and genetics.
Canada and Colombia recently signed a free trade agreement (FTA). Once implemented, the FTA will provide duty-free access for a wide range of Canadian goods and services.
