Grain and oilseed market analysis should boil down to two questions: How much did farmers produce, and how much was consumed? This leaves a residual, which is the gap between total supply and total demand. The larger the residual (ending stocks) the more pressure on prices and vice versa. A fundamentals-driven analyst would look closely at the magnitude (big/little) and direction (up/down) of ending stocks and be able to discern price direction. Unfortunately, for farmers and consumers, macroeconomics and geopolitical aspects matter and often dominate the determination of prices.
While crop yields have reached previously unheard of levels, the coronavirus pandemic has elevated the importance of food security. For the farmers who ably grow the crops that feed the world, the central concern is income security. It is often the marketing of their products that is troublesome. Farmers increasingly need to be connected to find avenues to market the bounty. Access to information is a key component in making effective marketing decisions. A perennial critique of western Canadian agriculture is a significant information disequilibrium exists between farmers and line companies. How can the gap be bridged?
BY IAN DOIG • PHOTOS COURTESY OF UNIVERSITY OF MANITOBA PRESS A senior scholar at the University of Manitoba’s Asper School of Business, Paul D. Earl is the author of The Rise and Fall of United Grain Growers: Cooperatives, Market Regulation, and Free Enterprise. His extensive industry experience includes having worked for United Grain Growers […]