Canadian farmers have spring in their step from strongest commodity prices in years
by Ross Marowits, The Canadian Press
Published: May 16, 2021
Growing demand as the global economy recovers from the COVID-19 pandemic, coupled with supply shortages from droughts in some areas of the world, have created the chance for Canadian farmers to earn more money in a cyclical industry.
Depending on the crop, agriculture prices have increased between 10 and 75 per cent from last year, says Brandan Leslie, manager of policy and government relations for the Grain Growers of Canada.
Prices started to increase about 12 to 18 months ago, then underwent a big jump in 2021. Canola recently hit a 13-year peak after stubbornly low prices, gaining 52 per cent year-to-date. Corn has surged 50 per cent in the past four months to reach its highest level since 2012, Soybean prices are returning to levels not seen since 2013-2014 and Wheat prices are the best since 2012.
“All of the benchmark crop prices are back to the highest they’ve been since that very severe drought that they had in the Midwest back in 2011-2012,” said Aaron Goertzen, senior economist for the Bank of Montreal.
The big exception was corn, which was affected by reduced fuel consumption because of its use to produce ethanol that’s mixed with gasoline. Prices for the corn-based fuel derivative are up 63 per cent in 2021, mirroring a recovery in gas prices.
China is always a driver of commodity demand, but the world’s second-largest economy has taken a renewed interest in feeder crops after purchases were hurt when about 30 per cent of its hog herd was culled in response to a mass outbreak of African swine fever starting in 2018.
China has significantly increased its purchases of U.S. soybeans since a boycott during trade tensions under former president Donald Trump. China is the biggest consumer of soybeans, accounting for about 60 per cent of global sales.
“As that herd is now coming back, China’s increasingly buying feed products on global markets and of course now with the trade war also over, it’s buying them also from the U.S. and so that’s been supportive of pricing as well,” said Goertzen.
Lumber prices are up 85 per cent in 2021 on robust U.S. housing construction and renovations. Copper is up 34 per cent, iron ore 45 per cent, steel 40 per cent, aluminum 24 per cent, lithium 91 per cent, cobalt 39 per cent and tin 45 per cent.
“We’re an exporter of raw materials, a ‘hewer of wood and drawer of water’ as they historically have said, so it’s a plus for Canada when we’re getting more for those commodities.”