Saturday August 23, 2014

Weather makes looking ahead tough

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With a new year upon us, it’s natural for most of us to look ahead to what might occur in our given world.

Predicting anything for farmers is perhaps as difficult as prognostications can get.

There are too many factors which are beyond control, and any prediction can only base some broad guesses on.

For evidence of just how difficult predicting the farm situation is, we need only look at the year just past.

In early May there was a very real possibility that the 2013 crop might not get in the ground at all. It appeared like winter was going to simply hang on through spring, and leave no window to get a crop in the ground.

As winter began to linger we grew to fear the prospect of a quick thaw which would hold the prospect of widespread flooding.

We were generally prepared for a bad year.

And then the snow left, and the weather held, and farmers hit the fields.

There remained a fear some crops went in rather late, setting up fears of what an early frost might do, but the crop still went in.

Through the summer we never seemed to get overly hot weather, nor did we see cold summer days either. The temperatures were basically nice, day after day, after day.

Rains were not excessive, but those that came always seemed timely in terms of crop growth.

And the crops, late planted, or not, responded to what ultimately turned out to be near ideal growing conditions.

When the combines started to roll they found the bounty of what would become a bumper crop. Quality was good, the bushels record setting.

In May a crop we would have predicted might not even be planted would end up producing more bushels than any previous crop on record.

Weather is always a determining factor in agriculture. Not only does it determine exactly how many bushels, and what quality will be harvested here, on a world scale weather very much impacts prices.

A glut of grain in a major exporting country puts downward pressure on markets.

Crop failures from drought, frost, and other weather conditions, if across a large enough producing area can signal for prices to rise.

So what does that all mean for 2014?

Simply put, the only one who probably knows what farmers might expect is Mother Nature, and she has never consented to reveal her secrets ahead of time.

Generally, it’s pretty safe to assume crops will not be as productive as in 2013. The past year was after all record-setting, and the likelihood of repeating that seems remote. It would call for another ‘near perfect’ year weather-wise, and on the Canadian Prairies that just doesn’t seem possible, especially in the face of a colder than desired December.

Once past the vagaries of weather, farmers still have to wonder what an American debt in the trillions means to the sector? The American dollar is stronger than it has been in months, but is that sustainable for a country awash in debt at the federal, state and municipal level? Or has the world psychologically written off the debt knowing it can never be repaid, and simply chosen the U.S. as the country to hang its financial future on in spite of that country’s obvious bad fiscal management?

And of course we have to factor in market demand too.

Can China, India and Korea continue the growth which has buoyed commodity demand in recent years? The growth rates have softened, although are out-stripping most of the world. Any positive economic growth, when added to continued population growth in those countries are good news in terms of agricultural product demand.

In the end 2014 remains pretty much a mystery, as it has always been for farmers, although if weather is anywhere near normal, it should be at worst another average year for producers, and ultimately that is probably the best we can ask for over the longer term.

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