Geopolitics and Global Recession Fears Continue to Impact Canadian Agriculture

I read a tweet the other day about fertile stripping. I only had a slight glance at the tweet, which talked about 325 bushels per acre of corn. That was quite impressive, but I had no idea what fertile stripping was. I assume it is a new buzz phrase in tillage, which I’m always the last one to know. Needless to say, the tweet went on to say you could get 325 bushels per acre of corn with half the fertilizer.

I did a quick Google search on what fertile stripping is and I regretted that search request. It looks like I’ll have to search a little bit further to find out what that tillage method is. I am hoping for good yields this year despite the toughest spring of my career. It is interesting looking at the Pro Farmer tour in the United States and the Ontario yield tour here, as both are getting pretty decent yield projections. Give us that wide open warm September and October in Ontario and we might be in better shape than I had expected earlier this year We shall see. There has been adequate moisture in and around my farms. However, there are still dry areas throughout Ontario. It is one of those years. It would seem that the weather has bailed out the 2019 US crop, but we’ve still got a good 6 weeks before harvest will begin in Ontario.

Interestingly enough I’m a bit tired of watching the weather. However, it is still the biggest factor for our market prices, so I better regroup quickly. That is quickly being replaced with geopolitics as the weeks go by. Not only do we have the Canadian election coming up on October 21st, but we also have all the geopolitics that is been going on since last July when the Chinese imposed tariffs on American soybeans. We are over 13 months into that now and the machinations for a trade solution continued to swirl in our market.

It took a bit of a dark turn this past week during the pro farmer tour in the United States. The USDA pulled out its staff from the tour after receiving a threat. That was distasteful to hear about and to think that it came out of American farm country. Sure, American farmers are upset with their own government, but I don’t think it’s linked to that incident. Needless to say, it would seem that the American political equation within farm country is reaching a tipping point. There is a lot more criticism being hurled toward President Trump from American farm leaders especially as it concerns the ethanol waivers.

I really have no way of proving that other then my impressions on social media, where I’ve seen Trump loyalists waiver over the last few weeks. There were reports this week the President have become aware of the discontent in US farm country over the erosion in biofuels policy. Who knows, maybe it will be changed by the end of the week. Corn prices are testing their lows.

Unfortunately, the specter of global recession has showed its ugly head this week. Last week we had the US bond yield inverted for a couple of days. In other word, the 10-year treasury bonds were trading at a lower interest rate than two-year loans. When this happens, it usually means that the US recession is close. Add all the tariffs that are being leveled against each other around the world and it shouldn’t come, as a surprise a global recession might be next. Of course, that is bad for grain demand.

Back in Canada our political leaders are trying to invent terrible things to accuse each other of in the lead up to the October 21st elections. As a journalist I used to care deeply about our politics at election time because of the agricultural implications that might come our way. However, over the last 13 years the agricultural policy between the Liberals and Conservatives is exactly the same at the federal level. I don’t like my choices this time around, but realistically I haven’t liked them for quite some time.

Case in point was the dairy compensation announced last week by Canadian Federal Agriculture Minister Marie Claude Bibeau. She announced a 1.75 billion-compensation package for dairy producers negatively impacted by the CETA and the CPTPP agreement. This compensation was long in coming, in fact, it was promised under the Stephen Harper government to the tune of $3 billion. In other words, the Liberals and Conservatives agreed on compensation and the Liberals ended up being more conservative with the compensation than the Conservatives on the issue.

It is what it is. That’s probably not a bad thing as we move ahead, because we’ve got some major Canada, China, US geopolitical problems affecting Canadian agriculture and it probably makes no difference who handles them in this current political climate. I only hope our political leaders can keep it respectful.