by BETTER FARMING STAFF
Canadian farmers received 14 per cent more on average for the commodities they produced in February compared with the same month last year, says a Statistics Canada report released Wednesday.
But those numbers only tell half the story, says the president of the Ontario Cattlemen’s Association.
The price of cattle might have increased 11 per cent in February compared to the same time the year before, “but I’ll guarantee you that corn prices have increased significantly more than that,” says Curtis Royal.
Rising prices have helped the province’s cow-calf producers. For beef feedlot operations that acquired livestock before replacement cattle prices began to rise, there may also be a gain. And there’s no question better prices have helped boost morale in the province’s cattle industry, he says.
Yet Royal, whose Creemore feedlot has the capacity to finish 1,000 to 1,200 cattle, says rising prices haven’t increased his profit margin. Not only has the cost of feed and replacement cattle risen but also the price of fuel. Then there’s the strong possibility of rising interest rates.
Royal says his risks are heightened because he’s handling more money to deal with his overhead but retaining the same profit margin.
Richard Smibert, president of London Agricultural Commodities in London, credits United States Department of Agriculture supply and demand reports for grain prices’ continued climb. Statistics Canada figures in its farm product price index report indicate the prices growers received for their field crops were 21 per cent higher in February compared to the same month in 2010.
Oilseeds, grains and potatoes experienced the greatest increases (potatoes were 16 per cent higher than the previous year due to a seven per cent drop in North American production in 2010). Estimates for oilseed stocks “continued to tighten, fuelled by growing demand from emerging economies and biofuels,” the report says.
It also notes that the International Grains Council predicts global carryover grains stocks (the amount left over from previous harvests) will fall to their lowest level in three years.
Smibert says if problems emerge with this season’s growing season prices could go even higher. But if the growing season is uneventful, prices will likely stabilize and start to back off closer to harvest.
“I think Ontario at this time continues to be an exporter of corn,” he says. “At some point through the summer we expect that will become an importer and we will see that reflect in the basis that we pay our local farmers; we’ll see the basis level strengthen as that happens.” BF
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