Grain Market Outlook
« Livestock Outlook | Home | Consumer Group Gives Canada’s Food Safety Regulations a D- »
Image: Danilo Rizzuti / FreeDigitalPhotos.net
Wondering what the future holds for grain producers? Here are some of the factors that will be influencing the markets this year:
- Supply and Demand:
Market values are so inter-connected that each product ends up being influenced by other products on the market. Tie in external factors like weather conditions and harvesting issues, and you’ve got rather a precarious model upon which to make predictions. For that reason, advisors say they’ll be watching the following factors closely, to determine how the market will be shaping up for grains this year:- South American crop numbers. Set to be high this year, the amount of grain coming out of South America will influence prices and quantities world-wide.
- Energy markets will determine the demand for products like corn and canola
- Meat consumption: if it declines in the face of the economy, feed demand will decrease as well.
- And finally, some parts of the country are experiencing warm conditions thanks to El Nino. If that pattern holds, it could impact grain growth.
- Market Volatility:
Economists predict that market volatility will remain high, with world supply of grains remaining tight. If there are any disruptions – real or perceived – to the supply, prices could fluctuate dramatically.
The good news is that this could be beneficial to farmers who act quickly to follow market trends, as there will likely be some opportunities to sell crop at high profits. - The Dollar:
Whether it strengthens or weakens will have a major impact on how Canada plays on the international market. Although the economy is recovering, according to economists, it’s still hard to predict whether the dollar will remain strong into the end of the year. There are pros and cons to both possibilities as well. - Inflation:
Inflation and interest rates are very uncertain now as countries make adjustments to their budgets to deal with the economic downturn. The Bank of Canada has set Canada’s interest rates at a significant low that they promise will be maintained through to June. Economists predict that China will be pulling back on its lending pace this year, for example, and that impact on world commodity demand is unknown. Lenders are expected to be much more conservative this year, so if you need a loan, make sure you have an airtight plan.
