Grain market difficult to predict
As the picture of the global economic situation continues to run through ups and downs, one burning question in the minds of farmers is whether the current downturn in commodity prices is a new reality or a short-term 'adjustment'. Columnist Kevin Hursh provides his insights.
October 29, 2008 By Kevin Hursh/Regina Leader-Post
October 29, 2008
In his regular contribution, this one printed by the Reginal Leader-Post, agricultural columnist Kevin Hursh poses several hard questions regarding commodity prices, and whether farmers have seen the end of the boom.
Is this end of the highly publicized grain boom or is this just a lull before the gravy train resumes?
Six months ago, there were analysts predicting that the good times for grain producers were here to stay. Increasing consumption in China and India and growing use of grain to produce ethanol practically guaranteed a bright future, some analysts said.
Other observers were more cautious, saying the next two or three years should be good, but beyond that it was difficult to tell what might happen. Some said the new demand from ethanol might mean a floor price for grain, meaning we wouldn't see a return to bargain basement values.
Faster than anyone predicted, grain prices have come crashing down.
It started before the stock market plunge, but the world economic crisis has taken a big toll on the grain sector. Even the dropping value of the Canadian dollar and plunging ocean freight rates haven't been enough to stop the price erosion.
It will still be a good year for many producers. Production was above average in most areas and some producers locked in favourable prices on at least some of their production well in advance of the collapse.
To read the remainder of Kevin Hursh's column, go to: www.canada.com/reginaleaderpost/news/business_agriculture/story.html?id=f11a8735-dcfe-4a48-b2eb-35dd1974be8e