Louisville Farm Show: The Super Bowl of Agriculture
I’ve got an idea. Next year let’s hold an Ontario style farm rally at the Louisville Farm Show. That’s been home to me for the last couple of days. However, it didn’t take long to notice I wasn’t alone. There were Canadians everywhere including some of my neigbours. I even had some vendors mention to me about the number of Canadians roaming “Louisville’s aisles.”
I also had the pleasure of meeting DTN’s Editor-in-Chief, Urban Lehner and DTN’s Refined Fuels Editor Brian Milne. They were there as part of a very large DTN presence at Louisville. They joined DTN’s Senior Analyst Darin Newsom in an agriculture and energy seminar I attended on the Thursday afternoon. I even asked a question about the Chinese currency unit, the Yuan and how its regulated value might affect the grain markets going forward. I thought that a safe bet versus asking them whether the threat of Quebec separatism might affect the value of the loonie or the sanctity of the Canadian Wheat Board going forward. Here’s to you guys!
Anyway, I knew I was in the land of the free when one American farmer asked the panel “what would happen if Saudi Arabia demanded to be paid for their oil in Euros”? All my Canadian sensibilities wanted to get up and say, “Euros, hey Canada is the biggest supplier of crude to the US, why don’t you ask about us?” However, as I’ve aged I’ve learned to channel my energy in more constructive ways. The Chinese Yuan seemed more appropriate.
However, after two days in Louisville it seems everybody’s mind is on the Chinese Yuan and the Indian Rupee. You’ve heard me say it before. I don’t get it. Everybody at Louisville is making gobs of money. Everybody is saying there is going to be less corn, with some saying a lot less corn. Further to that everybody is saying fertilizer is going up, up, up. Everybody is a price bull but there are a few around who are margin bears. Then you’d have me saying with fewer corn acres there should be less demand for corn fertilizer and price should go down. However, before I get that line out everybody in unison says, “China and India.”
Throw in the oligopoly power of the big fertilizer companies like a certain Potash company in Saskatchewan and the hype machine just keeps building. Clearly though our grain markets are moving in directions which none of us have witnessed before. Everybody wants to know whom that guy is at the Minneapolis Wheat exchange that is buying wheat. Some of you in Western Canada might guess it’s the Canadian Wheat Board. Of course nobody knows, but Cinderella volatility just keeps rolling. It all adds to the hype concerning our agricultural markets.
Keep this in mind. In 2007 and 2008 the American farmer is making big profits. I talked to one Illinois farmer who grew 1426 acres of corn last year. He averaged 185 bushels/acre and the cash price in his county is currently $5/bushel. I talked to another Indiana farmer who told me he had his best crop ever last year and the best price ever and the driest corn ever and so on and so on.
Needless to say it’s a bit of a different story in Ontario and Quebec and parts of Western Canada. It’s not that we’re doing that badly, however our high Canadian loonie has taken much joy out of our “biofuels revolution.” When you combine that with a livestock industry dependent on a burgeoning American market, things haven’t quite worked out the way we had envisioned. Flat cash prices are flat cash prices. It would seem on our Canadian landscape, it is our destiny to accept that going forward into 2008.
In Western Canada the drama with our Canadian Wheat Board continues. Agriculture Minister Gerry Ritz wants to provide “marketing choice” for western farmers. However, the CWB has decided that it’s about done even talking to Minister Ritz. At the same time there are several “confidence votes” scheduled in Ottawa where the government could fall at any moment. The best bet for that is a confidence vote on the budget February 28th. Maybe that’s why the CWB has ditched talks with Ritz. Maybe they’d rather put their money on a new Prime Minister with a mandate to sustain the CWB.
Something tells me that’s going to “be the story” come the end of this month. However, the story this week has been Louisville, India and China. Through good luck and a yearning for travel I’ve been to all of those places. Little did I know when I scampered over the rice patties of South Asia, I’d hear about it years later in Louisville.
The bottom line is “Louisville” is the super bowl of North American agriculture. It just so happens India and China are this year’s buzzwords that are partly responsible for the demand driven grain market making those Louisville cash registers ring. If you farm in Canada you must go there at least once in your life. No, it’s not Mecca. However, it’s a place where agricultural dreams are made. Many Canadians have already found that out.