Genesus Global Market Report: June 21, Canada – Planting & Road Trip

Ontario has experienced like apparently large parts of North America what most producers would deem a “backward spring“ at least from the experiences of the last number of years where we’ve come to believe corn is suppose to go in April.
calendar icon 23 June 2017
clock icon 4 minute read

Bob Fraser – Sales & Service, Genesus Ontario
[email protected]

This spring has been wet and cold at least to begin but perhaps a little closer to normal than we’ve come to think. According to the OMAFRA Field Crop Team as of June 6th approximately 40% of soybeans are planted with 90 – 95% of the intended corn acreage planted. Edible beans are rolling in pretty much on schedule with no real loss in yield at least up to June 20th. Winter wheat that rounds out the typical three crop rotation of Ontario looks quite good and in most areas is all headed out.

This brings me to the road trip to Des Moines Iowa for the World Pork Expo. A totally unscientific crop tour of what you can see from the car along I-69, I-94 and I-80 appeared to be showing a similar picture. Although there was signs of perhaps too much rain and delays most of the crop appeared to be in and although perhaps delayed from some years looked on balance quite good and not far from “normal”. Appreciate those without crop in won’t appreciate this assessment but that’s my take from driving the countryside. Also the market at least for now seems to support that view as there has been no significant movement in response to any talk of “plague and pestilence”. This bodes well for margins as though Ontario producers are conflicted as many grow crops as well as feed hogs it appears for now at least grain prices and hence feed prices are going to remain relatively stable.

This coupled with a rebounding hog price seem to be contributing a relatively upbeat mood at World Pork Expo and was reflected in the entire Ontario producer I spoke to at the show. Ontario seems to like the USA be experiencing some expansion but it is a little difficult to fully assess. I spoke at the show to one associate who works for a company building swine barns and selling hog equipment. He said he wasn’t sure why he was at the show as the last thing he needed right now was more work for the year. Stated that the wait for slats was now 3 months, on ESF equipment 4 months. Although this was for the US I’ve heard similar stories in Canada. On the surface this type of demand would seem to indicate expansion and perhaps major expansion. However one needs to consider whether it’s also a reflection of supply. In both Canada and the US because of challenging times of the previous decade to 2014 many builders and equipment suppliers moved to focusing on other species. Builders also moved to commercial, industrial and even residential opportunities with a corresponding drop in capacity for the swine industry. Therefore full books and delays in equipment and building materials perhaps don’t translate to the expansion we may have normally thought from these signals. This along with increasing regulation, capital and labour requirements appears to put at least some governor on expansion. However like the crop “time will tell” as the year continues to unfold.

Here courtesy of Bob Hunsberger, Wallenstein Farm Supply shows the driver of the upbeat mood. Projected profits currently for the next 12 months of $24.75 and present margins with average production of $44.88 and with excellent production of $63.30. Even with the suggested governors this makes expansion seem inevitable. Hopefully slated packer expansion particularly stateside continues to run ahead of the curve. However getting the pig dead may be the easy part. You still have to sell the meat. Here’s to exports continuing to roll!

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