VIDEO: Canola is weak today, but hope glimmers on the horizon

The Western Producer's Ed White talks with the SciBabe, one of the speakers at the Canola Council of Canada's annual conference in San Diego

Day one of the Canola Council of Canada’s main program in San Diego was threaded together with concerns about weak crop prices, volatile markets, food politics and the management skills needed to run businesses in industries that not only involve changing technologies, but also disruptive factors and different expectations.

And as always in recent years across agriculture industries, China came up again and again.

Here are some of the themes that seemed most interesting to me from day one:

Prices are weak; commodities have been routed. Where do we go from here?

Canola prices aren’t terrible, but they aren’t great. The recent sell-off hasn’t made growers any happier about the outlook, although Canadian producers are in a much better situation than American farmers due to the slump in the loonie and the surge in the greenback.

Economic analysts Bill Lapp and Glen Hodgson focused on many of the same themes in their outlooks, with both offering optimism for the market situation a year or two in the future, but both seeming to see this year to be likely stuck in the doldrums.

The rout in overall commodity prices has weakened the ability of crops to rally by themselves, and with big stocks of most crops around the world there’s little reason for a big rally to occur.

As has been common at farm and industry meetings throughout the winter, one of the first matters dealt with has been currency volatility, which has such a massive impact on relative returns for farmers around the world. American farmers have been clobbered as the greenback has soared, Brazilian and Russian farmers have had a great year as the real and ruble have plunged, and Canadians sit in the middle, with a nicely devalued dollar that makes selling Canadian canola more fun than selling U.S. soybeans. Lapp thinks the U.S. dollar is more likely to weaken than strengthen over the medium term.

Both economists discussed the aftermath of the “Commodity Supercycle” and where things are likely to head from here. Lapp thinks commodity prices are probably now building a bottom to the market and that lays the foundation for better prices in coming years, although likely not anything nearly as dramatic as during the supercycle. Most analysts – and most people in the room at the convention – expect crude oil prices to find a range of $35-$75 per barrel in coming years, Lapp noted, and that increase in value from recent prices should offer more support to vegetable oil prices.

He also doubts future crop prices will fall back to the old price ranges of the pre-supercycle era. A new plateau has probably been created, but what that is will take time to see. He’s guessing average prices in coming years of $4.00-$4.25 per bushel for corn and $9.00 per bushel for soybeans.

Hodgson also thinks commodity prices are reaching the bottom, or bottoming now, but thinks there could be further weakness into 2017 before things begin strengthening. He also thinks a higher plateau of commodity prices has probably been reached.

Lapp said the China situation today, with the country threatening to interrupt imports, and its general economic weakness have cast a dark shadow over today’s canola market, but in the coming years until 2020 the outlook is actually relatively bullish, with demand continuing to grow and stockpiles not likely to be onerous.

China worked its way into almost every market element the analysts discussed, with its slowing economic growth and lessening demand for commodities underlying the entire world commodities market. As with currency volatility, China is one of those mega issues that affects everything else.

Food Politics

The canola industry always has to deal with all the craziness of food fads, miracle cures, claims of toxicity in food, attacks on farmers and general misinformation about the safety and risks of food, and to address that situation The SciBabe – Yvette d’Entremont – took the stage and told her tale of how she tries to counter food myths (see my video interview at the top of the page).

While she includes hardcore science in the arguments underlying her responses to food antagonists like The Food Babe, she dresses her responses in an outfit of wry humour and projects them in the media that most people seeking food information get their info from: places like Facebook.

“This is where you guys should be remembering where your audience needs you,” said SciBabe about social media platforms like Facebook.

Consumers are smart and open-minded, but only have limited time to inform themselves and make decisions, so food industry people and farmers need to make their points simply and effectively if they want to counter some of the false information perpetrated on the internet.

Managing an evolving business and society

In recent years effective management has become a much greater concern across the agriculture industry, from the corporate towers of the giant companies to the on-farm operations of growers. Two speakers at the conference addressed critical issues for business managers, one focusing on digital distraction and the other on negotiating effectively.

Curt Steinhorst laid out a disturbing picture of modern workplaces being rife with productivity- and focus-wrecking intrusions that mobile devices and digital communication bring. Digital technology like emails, texts and social media are great for connecting people and allowing communication to flow in many forms, but humans always have trouble focusing, and constant interruptions and stimuli – like notifications on mobile devices – have a much greater impact on productivity than many realize.

As a new generation has grown up spending much less time in face-to-face talking, it is actually becoming harder for people to interact in-person, with many becoming what Steinhorst called “in-person averse.”

Business managers and employers need to lead by example with digital restraint, he said, and communicate in ways that improve workplace productivity and morale. Being able to focus for long periods of time is a crucial element of a productive workplace, but it’s getting hard to achieve that.

Misha Glouberman tackled the subject of negotiations and how they so often go off the rails and fail to achieve their goals. He laid out common mistakes in beginning negotiations, such as laying out hard positions without discovering what the other side’s underlying hopes were. When two bargaining positions clash, sometimes resolution gets impossible, with the parties digging in without really assessing whether “options for mutual gain” are possible.

People also often seem to feel that there is a tradeoff between having a good relationship with somebody and achieving one’s goals, leading either to failing to achieve goals or ignoring the value of the relationship in order to achieve the goal. Instead, people should try to find a way for both sides to benefit and end up with an improved relationship.

A big part of that is “LISTEN,” he said.

“It is in your interest to listen.”

Not only does listening allow you to understand what the other side really wants, but also makes the other side of a negotiation more likely to listen to you.

Ed White reports for The Western Producer, a member of the Glacier FarmMedia network. Follow Ed on Twitter at @EdWhiteMarkets

About the author


Ed White

Ed White is a reporter with Glacier FarmMedia and has specialized in markets coverage since 2001 and has achieved the Derivatives Market Specialist (DMS) designation with the Canadian Securities Institute.



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