Today, AI and its corollary of machine learning have recently become buzzwords everywhere, including agriculture. The implementation of both requires data. It is readily available but, in the area of harvest data, sorely lacks veracity.
The market, defined here as the elements that converge to establish the price for any given commodity or service, has always been hard to discern. Its inscrutable nature promotes the dream of building a “black box” technology that removes human fallibility and emotion from the equation.
Grain and oilseed markets have not been boring in 2022/23. In the run-up to spring seeding, the war in Ukraine sparked substantial price increases. Simultaneously, inflation sprang from the embers of the COVID lockdowns and accompanying public policy. Already vulnerable populations faced increased concern about food shortages. Input costs soared due to logistical problems and supply concerns.
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.
Export markets prefer CPSR because it is affordable, high-quality wheat with good protein strength and extensibility. Farmers like it because it yields well and is especially reliable in making grade.
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?
Farmers near High Level have reason to celebrate as Richardson Pioneer is set to begin accepting grain at its all-new high-throughput elevator by mid-November.
It’s unsettling to even contemplate the possibility of breakdowns occurring within our agricultural system, but the industry is now actively working to avert disaster on a daily basis.
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 […]
Through the Keep it Clean! program, partner groups communicate a clear and consistent message to farmers about on-farm practices that will help reduce market risk.
