This week your loyal scribe found himself in Tobermory Ontario, which is at the tip of the Bruce peninsula in southern Ontario. It is about a 5-hour drive from my farm near Dresden and it not only provided the opportunity for some good swimming but also a good crop tour through the heart of Midwestern Ontario.  What I saw were a lot of soybean crops turning yellow and a lot of corn crops suffering from tar spot.  Every year is different.   It won’t be long before we see some combines rolling in those fields.

Interestingly enough my crops look to be a month away. I think a lot of that has to do with the large replant acres which are still green.  I can only hope for a wide-open warm autumn season to get those soybeans in the bin.  Constant rain this year has certainly been a challenge.  I had one farmer tell me tonight at a grower meeting that the ground still isn’t fit to plant and of course it is September.

Along with our crop canopies which are changing rapidly we did see a bit of change last week in our greater Canadian economy. The Bank of Canada actually decreased interest rates by 25 basis points, a welcome reprieve for many homeowners renewing their mortgages and farmers borrowing money.  It’s also an indication that the Canadian economy is doing better.

The Bank of Canada gave indication of that in their announcement on Wednesday. They said that the Canadian economy grew by 2.1% in the second quarter being bolstered by government spending and business investment. This was a stronger indication than their July forecast, which made the rate cut a little bit easier.  The inflation rate also had slowed to 2.5% in July.  The bank also said that their core inflation was averaging around 2 1/2% and the share of components of the consumer price index growing above 3% is close to the historical norm.

At first glance you would think that this would be negative for the Canadian dollar, but it was a trading above $0.74 last Thursday which is at the top of the range for this year.  Of course, we always know that anytime the Canadian dollar gets a little bit of buoyancy it makes Ontario and Quebec farmers nervous. It has been one of the only redeeming factors for Canadian cash prices this year. I still look at the lower interest rates as being negative for the Canadian dollar but of course at the end of the day nobody knows.

At the same time, we had a little bit of political intrigue in Canada last week which will surely lead do some uncertainty for the country. What we had was the end to the “supply and confidence agreement” between the fourth placed party the NDP and the governing Liberals.  This essentially makes the minority parliament a bit more untenable and might lead to an election sooner than we expected.  The minority Liberals will have to depend on the Bloc Quebecois to sustained them for the rest of their mandate.  However, let’s just say this situation is becoming a little less stable.  That should lead to some interesting times ahead.

As the week got started all of this news added a little bit of intrigue to our situation. However, we also saw a bit of a turnaround in grain prices with several up days. I know everybody would like me to say this is a trend but of course we’ve got so much grain on the ground.  In other words, those big crops aren’t going away, and some big private crop forecasters have been putting out big corn and soybean yield numbers. This will surely be weighing on our futures prices for the significant future. There still seems to be no Black Swan on the horizon.

I’d be remiss to not mention what happened with regard to Canadian canola this past week. You will remember that last week I was talking about the possibility of Chinese tariffs on Canadian agricultural commodities because of the new Canadian tariffs on Chinese EVs, steel and aluminum.  Well, it didn’t take long. This past week China announced a probe on Canadian canola imports talking about dumping in the international trade sense. Canola futures dropped the limit on that day. Generally speaking, I don’t predict one week what might happen and then have it happen the next week. However, the Chinese action might result in the tariffs being applied to Canadian canola in the future and it wasn’t good news. Needless to say, I wasn’t surprised.

So here we are headed into mid-September and the winding road is just growing more complicated.  Next week we will also hear from the USDA with their latest crop numbers. I don’t expect any surprise, unless it’s to the upside again.  To top that off, we also get parliament returning in mid-September. That will surely create some fireworks in this new political environment. Let’s hope somewhere within that there is some good news for Canadian farmers. Our markets need fresh news and so do we.  Let’s hope the weather stays kind.