I have been a fairly casual commodity market observer for many years, but the weather-related boom and bust nature of crop and livestock production still has me shaking my head some days. There is just so much variability around the world all due to whatever weather package Mother Nature delivers during the growing season.
In 2021 for example, Canada had one of it’s worse years for canola production due to drought, while on the other side of the world Australia, a country which in some places in 2020 was literally burning up, had one of its best canola growing years ever.
I’m not sure what the final figures are for Canada, but in mid-September the 2021 canola production was forecast at 14,749,000 tonnes, also above the average trade expectation at 14.1 million tonnes but down 24 per cent from 2020 and the lowest in nine years. Average canola yield was forecast down 30 per cent from last year, more than offsetting an expected eight per cent increase in harvested area.
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At MarketsFarm Pro, analyst Mike Jubinville says the final production figures could even be lower. “If you take the yield analysis of both Saskatchewan and Alberta crop reports did last week, [production] should be under 12 million tonnes,” he says. Alberta said its canola yields were about 26 bushels per acre after 13 per cent of the province’s crop had been combined. With 31 per cent of Saskatchewan’s canola in the bin, its agriculture department placed yields at 20 bu/ac. Jubinville says in the final analysis Stats Can could peg canola in the lower 13 million-tonne range. Whatever the final figure is, Canadian farmers had considerably less canola in the bin.
CANOLA IN AUSTRALIA
Meanwhile, Reuters news reports from Australia suggest a frenzy over canola yields and the opportunity for high prices.
“Australia is set to play a significant role in the export market for canola – also known as rapeseed – accounting for just under one third of the world trade estimated at 14.21 million tonnes in 2021/22.The nation is expected to ship more than four million tonnes in 2021/22, up from 3.1 million tonnes a year earlier.
The first canola truckloads for the season have been sent to port storage weeks earlier than usual after warm and wet growing conditions lifted yields, especially in Western Australia.
“We are trying to prioritise getting the canola off first because of the value in it,” said Levis MacKenzie, a farm manager at Viridis Ag’s The Grange farm in Western Australia.
He said the farm added an extra “couple thousand hectares of canola” during the planting window due to high prices.
While canola prices were already strong during the Australian planting window early in the year, they have since climbed to record levels due to a drought affecting top producer, Canada.
November canola contracts there have gained more than 70 per cent this year to trade over C$900 ($724) per tonne. At the start of 2020, prices were below C$500.
Demand for Australian canola is so strong that some farmers have started forward selling next year’s crop at A$800-A$850 a tonne ($590-$627 a tonne), one Australian-based analyst told Reuters, compared with average prices of A$500 a tonne.
This season’s anticipated strong harvest, forecast to deliver the country’s second biggest ever wheat take, comes just when Australia needs it, with an extended lockdown in the country’s two biggest cities disrupting the economic recovery https://www.reuters.com/world/asia-pacific/australias-economy-slowed-q2-ahead-lockdown-downturn-2021-09-01.”
TOO MUCH PORK
Aside from canola, supply and demand and prices are crazy in several other markets too.
Again, according to Reuters news agency, “China’s third-quarter pork production surged to its highest in three years, official data earlier this week showed, after producers built thousands of large breeding farms last year to rebuild a hog herd decimated by African swine fever.
Pork output for July-September was 12.02 million tonnes, up 43 per cent compared with a year earlier, according to Reuters’ calculations based on official data, and the highest since the third quarter of 2018, before China began feeling the fallout of the swine fever epidemic.
China’s pork output jumped 38 per cent in the first three quarters of 2021 versus a year earlier to 39.17 million tonnes, the statistics bureau said.
But the dramatic increase in pork production resulted in prices plunging by 65 per cent so far this year, prompting some farmers to sell their herds and exit, while others took the opportunity to get rid of less productive sows.
Some producers were losing as much as 1,000 yuan ($194 CDN) per head last month, when live hog prices fell to under 11 yuan per kilogramme. Prices are currently at 13.08 yuan (that’s about $2.50 CDN).
CRYING OVER ONION PRICES
Here’s a commodity that isn’t even on the radar of Canadian households, but for consumers in India there has a been a rapid rise in the cost of everyday essentials, from cooking oil to sugar and now onions, a basic ingredient in most Indian food.
“After the cost of fuel and edible oils hit record highs, Indian consumers are likely to be further squeezed by a rally in onion prices after heavy rainfall in the country’s key growing regions damaged the summer-sown crop and delayed winter crop planting.
Onions are also a politically-sensitive commodity, with price spikes contributing to the fall of more than one state government in the past.
India is also the world’s biggest onion exporter and the price rise could prompt New Delhi to restrict shipments, potentially lifting prices further afield, especially in Bangladesh, Nepal, Malaysia and Sri Lanka, traders said.
“Too much rainfall in September led to disease attack and stunted growth of onion bulbs,” says Samadhan Bagul, a farmer from Dhule district, nearly 325 km north of Mumbai, who expects to harvest just one tonne of onions from an acre of land instead of his usual five tonnes.
Key onion producing states such as Maharashtra, Madhya Pradesh, Gujarat and Karnataka received as much as 268 per cent more rainfall than normal in September, according to the weather department.
The crop damage limited supplies, more than doubling wholesale prices at India’s largest onion trading hub, Lasalgaon in Maharashtra, to 33,400 rupees (about $550 CDN) per tonne in just a month. Retail prices in metro areas such as Mumbai have jumped above 50 rupees a kilogram (about 82 cents Canadian).
Little news items like these always serve to remind me, no matter where you farm there is always something.
Lee Hart is a field editor with Grainews based in Calgary. Contact him at 403-815- 3719 or by email at [email protected]
