High quality, demand — but falling prices — tell crop tale

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This article was published 23/11/2024 (656 days ago), so information in it may no longer be current.

With crops now in the bin and any remaining fall field work shut down by winter’s arrival, farmers have more time to digest the good news/bad news story emerging out of this year’s growing season.

As it turns out, the 2024 crop tale has more good in it than bad.

Manitoba farmers, for the most part, produced a high-quality crop with average to above-average yields, thanks to a growing season that was warmer, wetter and longer than historical norms.

However, the timing of that heat and moisture created some challenges, especially for canola producers. Canola, now Manitoba’s largest crop by seeded acres, yielded a range of 25 to 65 bushels per acre, according to the last provincial report of the season. The five-year average yield for the province is 39 bushels per acre.

The high moisture and humidity that characterized much of the growing season fuelled higher disease losses and higher quantities of smaller, lighter seeds that are discarded as “dockage.” The summer heat was particularly hard on the later-seeded fields, but even so, most of the crop achieved the top grade.

Meanwhile, cereal crops thrived under this season’s conditions. The province reported yields on spring cereals, such as wheat, oats and barley, were above the five-year averages. Canadian red spring wheat is famous globally for its high protein and bread-making qualities, and this year’s crop didn’t disappoint.

In its annual wheat crop report, which is distributed widely to customers in more than 80 countries, Cereals Canada reports the bulk of this year’s harvest across Canada is in the top two grades. Protein, which often sells at a premium, was also in the upper range.

Soybeans, the province’s third-largest crop by acreage, also came in with yields of around 40 bushels per acre, well above the five-year average of 35. Other pulses, including peas and dry beans, are grown on much fewer acres but are typically high-value crops in the farmers’ rotation. Once again, the story there is generally positive.

Market demand has been solid and despite the short-lived disruptions caused by labour disputes, export movement has been relatively smooth. Interest rates have also fallen.

It’s when we start talking prices the story goes dark. Farmers have a big crop in the bin that’s of marketable quality and good demand, but it’s likely they’ll be pocketing less money.

Prices for the big three crops — canola, wheat and soybeans — have dropped significantly from last year, which were already down from highs of a couple of years ago.

“Although yields are still quite good, they are lower than last year and you’ve got this 15 to 20 per cent drop in prices on top of that and that’s creating the cash-flow crunch,” said Bruce Burnett, Glacier FarmMedia senior editor for weather and markets.

U.S. corn and soybean prices, which set the tone for commodity markets, are significantly down on reports of large crops coming from South America. While there may be some opportunities for a rally, “a rebound from these levels may be tough,” he said.

The prospect of less money in farmers’ bank accounts is already having a cascading effect on the businesses that support the sector.

As just one example, major equipment manufacturers are already feeling the pinch and adjusting their forecasts even lower. Farm Credit Canada issued a report this week predicting a sharp decline in new equipment sales for the remainder of 2024.

“New farm equipment unit sales are projected to remain soft through 2025, as farmers feel the pressure of low commodity prices, high equipment prices and tighter profitability,” it says.

“Farms have placed a greater emphasis on their per acre equipment costs with delayed purchases and plans to further reduce spending on equipment as a cost-saving measure.”

Farmers are also bracing against other uncertainties, such as the looming prospect of trade wars following the U.S. election results and the ongoing war between Russia and Ukraine.

The industry-wide belt-tightening isn’t over. Not by a long shot.

Laura Rance is executive editor, production content lead for Glacier FarmMedia. She can be reached at lrance@farmmedia.com