Lots of people make predictions. Journalists write them down so there’s no escaping when you’re wrong. Combing through my predictions of the past year, I got a few things right. On other issues, I was out to lunch.
One of the biggest misses came on the Canadian Wheat Board. The CWB’s single-desk sales authority is intact and under no immediate threat, despite my predictions from before the federal election.
For a while, it looked like the Harper Conservatives were on track to win a majority government. That would have put them in a position to make legislative changes to the CWB Act, as they continue to promise. Of course, they didn’t win a majority and unlike the last Parliament, the opposition parties are tired of being pushed around.
The other threat to the CWB marketing monopoly on barley and wheat came from the producer election of directors. Despite a strong and orchestrated campaign by market choice supporters, four out of the five directors elected this fall favour the single desk.
Even a cat eventually runs out of lives, I reasoned back in early October – but for now, the cat is alive and well.
I wish I could take credit for predicting the nosedive in grain prices. I did chronicle their amazing rise through the late winter, spring and summer and I did point out the attractive pricing opportunities.
But like most producers, I would have priced a lot more grain a lot sooner if I’d have known the magnitude of the price drop that was going to occur. Hardly anyone was predicting such a nosedive. Of course, there weren’t many analysts predicting $40 oil either.
Something I did call correctly is the drop in fertilizer prices. All through the summer and early fall, retail fertilizer prices in Western Canada stayed stubbornly high even as grain prices declined. Fertilizer salespeople and many analysts were saying prices would continue to go higher.
When fertilizer company share values started dropping even faster than the rest of the stock market, the writing was on the wall. Investors knew that soft grain prices would mean dropping fertilizer demand around the world.
Producers who bought fertilizer during the summer for the 2009 crop are out a lot of money. At the time, most analysts were calling it a wise move. Since then, nitrogen fertilizer prices have dropped as much as 50 per cent.
Monitoring the price drop has become a spectator sport. Larry Weber of Weber Commodities in Saskatoon is providing a platform for producers to compare and monitor fertilizer prices. Producers can log onto www.fertilizerbuddy.blogspot.comto leave information on fertilizer price quotes they’ve heard and to see what other producers report.
There’s no way to monitor the truth of what’s being posted, but most of the quotes for urea, 46-0-0, range from $430 to $500 a tonne, compared to the $900 or more per tonne being charged during the summer.
On 11-52 phosphate fertilizer, the quotes range from $700 to $875 a tonne. That’s down from highs of over $1,300 a tonne.
Some observers are saying there’s even more downside potential. A few say we’ve seen the bottom. Some say logistical problems could make fertilizer supply a problem in the spring. Others say there won’t be any more problems than normal.
I’m going to withhold any further predictions on fertilizer, preferring to quit while I’m ahead.
One thing is for sure. The big drop in fertilizer prices is a welcome break, considering the nosedive that grain prices have taken.
– Kevin Hursh is a consulting agrologist and farmer based in Saskatoon.