Bullish on 2010? In Canadian Farm Country The Loonie Is Key
So are we bullish on 2010? Believe it or not in 2010 I will be going into my 25th year of writing this column. At one time in my career I was looked at as a young buck on the block. There weren’t many people in there 20s writing about agricultural marketing and agricultural policy. So I’ve been around the block more than once. I’d like to say I’ve seen it all before. But if there is one constant in agriculture it is change. Sure it helps to have a little experience but you can bet 2010 will be different than 2009 and 2008 before that.
The big story in Canadian agriculture this past year was one of three choices. It is no secret that the global recession cast a dark cloud over agricultural demand for much of 2009. Getting out from recession and still to this day wishing our American friends could get their economy going made it difficult for Canadian agriculture in 2009. The second big story of 2009 had everything to do with the cold weather. It is true if you were in Grand Prairie Alberta or other places north it was a warm summer. However in the American Corn Belt and eastern Canada it was the summer that wasn’t. With frost coming early there were more than a few problems in eastern Canadian cornfields. Lastly, we cannot forget the continued depression in the Canadian hog sector. Its complete rationalization will have a lasting effect on both feed demand and the culture in Canadian farm country.
Getting over the recession has been no easy task. It is true that the Canadian economy has gone back into positive economic growth over the last two quarters. The problem is we fell so far in 2008 and getting it back has been very painful. Of course the bigger problem has been getting our American friends back on their feet and seeing positive economic growth rates. As 2009 ends we are still not there. Simply put, sustained and consistent, strong American economic growth is paramount for Canada as well as Canadian agriculture. With it, we get our gravy back. Without it, I cannot see a robust year 2010.
Weather of course is a different issue. Near Dresden Ontario where your loyal scribe farms 860 acres it was a cold cool summer. I was lucky to get the crop I did but I must emphasize that I was lucky. The majority of Ontario and Québec had real problems with their corn crop and most producers faced large discounts when they sold. That’s what a cold summer will get you especially if you don’t have an open October and November. My own feeling is that the law of averages might make it so dry and hot next summer we will look back on 2009 as the good old days. That’s a reality of making this career choice. You never know what you are going to get.
In the winter months I generally have a few speaking engagements across the province which mainly concentrate on market conditions. This year is no different. Typically, I get a question about feed demand as it relates to hog production in Ontario. Typically my answers are all negative as the Canadian hog sector was being crushed by severe market conditions. As I write here on the last day of 2009 we are still walking through that. Can I offer any hope for 2010 for Canadian hogs? I dunno. Saying anything positive about Canadian hog’s with regard to predictions is generally an endgame. However, at a certain point it will be back. It might take an $.80 loonie to get there.
I suppose the great hope for 2010 for Canadian farmers lies in the currency markets flickering on your DTN monitors. If we get good weather and the global economy goes into resurgence and somehow that $.80 US loonie comes to pass, Canadian markets will swell, employment will rise and farm prices will rise with them. The great question is, will this scenario come to pass?
I’m predicting in 2010 we will get two out of those three things. Nobody can predict the weather but compared to 2009 I think our chances are better in 2010. I also think the global economy will show a resurgence which will spur agricultural demand. That leaves the loonie and of course if I knew what that was going to do I’d be laying on a beach somewhere with a cell phone. I will wish for $.80 US but if it goes to $1.08 US, you don’t know my name.
Thank-you for your indulgence in 2009. Happy New Year. Let’s be bullish looking into 2010.