ESSENTIAL NEWS FOR AGRI-RETAILERS
The CAAR Communicator

April Issue – See All

2022 Crop Market Outlook

LeftField Commodity Research founder provides an overview of the 2022 Canadian crop market as a thank-you to joining CAAR as a Perk$ Partner.

We Need to Talk About Mental Wellness

A frank discussion by the Honourable Mike Lake MP on mental wellness issues that need to be discussed and not ignored.

Changes to Pesticide & Fertilizer Container Collection Programs in Alberta & Manitoba

Cleanfarms’ empty pesticide & fertilizer container recycling program undergoes a big change in Alberta and Manitoba.

The Fertilizer Market – What Happened and Where It Is Going

An examination of the fertilizer market provided by Josh Linville of StoneX Financial looking at the global markets, political intrigue, weather, and, yes, Covid.

By The Numbers

 

3 - A three-person panel discussed the MRL challenges, changes and government actions during CAAR’s 2022 conference. This article provides an overview of the discussion between stakeholders Gord Kurbis of the Canada Grain Council, Teri Stewart of CropLife Canada, and ADM Manon Bombardier of the PMRA.

5 - The number of suggestions from HR guru Derek Rolstone of Stone HR Strategies, on how your agri-retail company can ensure employee retention coming out of the pandemic.

11 - The number of Canadians dying every day by suicide. The Honourable Mike Lake MP provides his views on mental wellness issues that need to be discussed within the farm sectors and agri-retail workplace.

23 - The pesticide and fertilizer jug size (23L) that the provinces of Alberta and Manitoba state that agri-retailers must now collect after customer use for proper disposal by Cleanfarms.

42 - A percentage of ag businesses that have reported normal sales—a peek inside the disruptive presence of Covid-19 on the Canadian economy.

384 - This is the percentage increase NH3 fertilizer saw over a 15-month span. Josh Linville of StoneX Financial provides a detailed analysis of the global factors that drove the price of nitrogen fertilizers through the proverbial roof

30,000,000 - This number reflects tonnage of Canadian crop production lost in 2021 over the previous year due to drought, heavy rains, etc. For the western economy, this resulted in a loss of ~$11.5-billion.

 

The A, R and E of Employee Retention

The good, the bad and the ugly—how COVID-19 has affected the way we run our businesses.

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2022 Crop Market Outlook

LeftField Commodity Research founder provides an overview of the 2022 Canadian crop market as a thank-you to joining CAAR as a Perk$ Partner.

Standing front and centre in our fields, LeftField Commodity Research Inc. provides detailed economic feedback for Canadian crop farmers.

Started in 2010 and headquartered in Winnipeg, LeftField is the brainchild of Chuck Penner, a company that offers research and analysis for Canadian crop markets to provide farmers with support and confidence in their decision making.

“We offer regular weekly market analysis for 16 Canadian crops,” stated Penner via Leftfield’s Farm Market Letter, Special Crops Letter, Canola & Soy Letter, and the Small Grains Letter. “Leftfield also conducts tailored economic research projects for our clients.”

Leftfield recently joined CAAR as a Perks$ Partner. “Leftfield wants to assist agri-retailers in providing added value to their customers and to strengthen client relationships,” Penner explained.

He recently participated in the CAAR Conference held February 9-10, 2022, presenting his crop market analysis: 2021: Short-term Impact & Lasting Results. For those unlucky to have missed it, Penner has provided an updated overview here:

“Every year, a whole lot of unknowns and variables go into farmers’ decision-making processes. For 2022, this uncertainty is amped up even more, with more unanswered questions and extreme price volatility. The historic 2021 drought in Canada and the northern US is extending its influence well beyond this year into 2022/23. At the same time, numerous geopolitical events are causing large ripples in Canadian markets.

The 2021 drought was unparalleled in recent history in terms of severity and breadth, with few areas of the prairies escaping its effect. Beyond just the lack of rain, the extreme heat in 2021 drained any available moisture out of the prairies. Yields for most crops were 30-40% below average and for crops in the worst hit areas, yields were cut by more than half. Compared to 2020, crop production dropped by over 30 million tonnes, representing a loss of roughly $11.5 billion from the western Canadian economy.

The biggest concern for many farmers in 2022 is that there hasn’t been any improvement in the extremely low soil moisture, raising the risk of drought conditions again. Over the winter, parts of the eastern and northern grain belt have received above-average snowfall which should provide a good start to the year but hasn’t entirely fixed the problem. Then there are wide sections of the southern prairies that have seen no moisture relief to speak of yet and will need even more in-season rain.

The lost production from 2021 caused crop prices to shoot higher, with all-time records set for some crops, far beyond the old highs. For others, prices reached heights that hadn’t been seen for years. This was great for those who managed to get a decent crop but for farmers hit the hardest, high prices only partly offset the low yields.

High prices aren’t just a feature for the 2021 crop. New-crop bids available for farmers to forward contract the 2022 crop are, in many cases, far higher than they’ve ever been before. That means much more intense competition for acres in 2022. Supplies are short for almost every crop, and buyers are looking to lock in tonnage from the 2022 crop. These high prices have improved farmers’ profitability outlook, but only “on paper” for now. In part, that’s because farmers are understandably reluctant to sign contracts, given the negative experience with trying to fulfil contracts in 2021. Concerns about moisture this Spring are front and centre.

These strong (potential) returns make some crops look more attractive than others, but a whole set of other factors go into decisions about crop rotations. Some of these are the usual items such as issues about plant diseases and herbicide resistance but other factors have become much more prominent.

Issues related to planting seed are more important than usual. Prices for many crops are up 80-100% from last winter and even for common seed, a similar increase has occurred. Those crops where seed is a higher portion of the total input bill have seen the largest impact. And because of tight supplies for many crops, seed availability is just as serious of a concern.

Other agronomic factors going into farmers’ planting decisions include drought tolerance, with certain crops performing better or worse under severe moisture stress. Differences in performance were regional and were also affected by timing of planting, seed depth and other local situations. Because the extremely dry soil conditions haven’t seen any improvement in many areas, herbicide residues are complicating matters further.

This year too, non-drought related issues have become more prominent. Big increases in fertilizer prices with much more volatility have caused farmers to re-examine their rotations and consider crops with lower fertilizer requirements. Availability of fertilizer and other crop inputs due to supply chain issues and geopolitical disruptions has also become front of mind as farmers make crop decisions.

The high degree of uncertainty means the 2022 acreage mix is still in flux.

Among the acreage winners this year, we would expect canola, durum, oats and pulse crops to make gains. These acres would most likely come out of spring wheat and barley. The first official forecast will come out of StatsCan in late April. Of course, pedigreed seed growers would already have a fairly good handle on which crops are in demand and which ones aren’t. In the end, it’s possible farmers will stick fairly close to their regular crop rotations and not try to chase certain markets.

Even more than shifts in acreage, yields in 2022 will be the largest market mover. In some areas, heavier snowfall has improved the immediate outlook, but we’re still cautious with our yield projections. Normally, we use average yields in our early crop outlooks, but history shows that after extreme droughts such as 1988 and 2001, yields the following year (or two) were unable to recover fully. As a result, most of our forecasts are based on sub-average yields for 2022.

This outlook for lacklustre yields this summer means that for most crops, supplies in 2022/23 won’t be able to bounce back to pre-drought levels. Partly, that’s because inventories at the end of the current crop year will be running on fumes and a bigger crop is needed just to counteract the tight old-crop supplies. Essentially, average or above-average yields would be needed just to get supplies back to a normal level, and history shows that outcome is less likely.

If crop supplies in 2022/23 don’t recover fully, it means prices will remain elevated again next year. That’s not to say prices will be able to get back to the extreme highs of 2021/22, but above average pricing is the most likely scenario for many crops. And the ones that experience acreage losses in 2022 would see the most upside.

As always, Canadian crop markets don’t exist in a vacuum, and there are many developments in other parts of the world that will shape next year’s situation. Weather conditions in South America, the US and Europe are front and centre right now but events—both good or bad—elsewhere can show up at any time.

Besides the weather, geopolitics has become an even bigger factor lately. The conflict in Ukraine is clearly causing waves in grain and other markets but the overall impact will depend on how long the fighting lasts, and that’s unclear at this point. Trade tensions and disruptions with other importers such as China and India have also become more frequent in recent years and there’s no guarantee those will subside.

Other trends and developments are also influencing the market closer to home, with more favourable effects on markets. One of the largest has been the expansion in domestic processing in western Canada. There have been several announcements in recent months, with increases of 6-7 million tonnes of canola crush capacity expected, including additional biofuel production. More processing capacity has also been rolling out for peas and other pulses. Oat processing hasn’t received the same attention, but output has been expanding for the past several years.

These developments are all very positive as they reduce Canada’s reliance on exporting raw crops. And for farmers, these processors also tend to be the strongest buyers of their crops, with steady volumes needed every year.

This outlook covers a whole range of issues and developments that we can foresee, some with greater and others with less clarity. But every year also brings about events that simply can’t be predicted and 2022/23 will be no different. That’s why at LeftField, we like to describe our role as providing reconnaissance, not trying to predict the unpredictable.”

For more information on LeftField Commodity Research, Inc., visit: https://www.leftfieldcr.com/.

For a complete listing of all CAAR Perk$ partners, please visit our website at: https://caar.org/resources/caar-perk

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