Glacier FarmMedia | MarketsFarm — The potential for tariffs from the United States and the implementation of those from China towards Canadian products have created a cautious approach in the feed grains market.
Susanne Leclerc, owner of Market Master Ltd. in Edmonton, said China’s decision to place levies on Canadian canola oil and meal, as well as peas, hit crop markets hard. However, the feed grain market in Western Canada has not seen too much damage yet.
“Shockingly, (feed grain) prices are steady. No one seems to really know why,” she said. “We haven’t seen the feed complex change much as of right now. It was more the shock of the Chinese tariffs coming in that has rocked our markets this week.
Read Also
U.S. grains: Wheat futures rise on supply snags in top-exporter Russia
U.S. wheat futures closed higher on Thursday on concerns over the limited availability of supplies for export in Russia, analysts said.
“Demand doesn’t seem to be very high right now because of what’s happening with cattle … It’s going to be one to watch over the next couple of weeks how everything does change. (We’re) just continuing unknown situations at this point.”
The new tariffs imposed already complicated the ongoing issue of Canada’s declining cattle herd, resulting in fewer head at feedlots and reduced demand for feed grains.
“That just means purchases are being made for contracts going at this time right now,” Leclerc added. “Cattle numbers are not where (feedlots) have anticipated at this time of year.”
After seeing pea and canola prices come down after China announced its tariffs on those two crops, Leclerc wonders if the same fate will fall on wheat and barley.
“We saw a bump up in wheat. We saw export programs previous to this time for barley and that all held up the pricing. Could we see (feed grain) markets collapse? That’s a question that we’re watching,” she said.
“Is there a point where markets could drop? There is the potential. But we’re also in the time where we see road bans coming down and spring seeding initiatives. (Those) could be holding (prices) up.”
Most growers will likely stick with their regular crop rotations this spring, Leclerc added, but they would need to evaluate their feasibility at current price levels. Right now, the typical factors affecting prices and acreage are not at the forefront.
“Politics are driving our market more than reality right now,” Leclerc said.
