Farm Credit Canada says trade tensions between the U.S.. and China are going to be a net negative for Canadian farmers in 2018.
Farm Credit Canada has launched its latest series of outlooks for the agriculture and agri-food sectors. J.P. Gervais, FCC’s Chief Agricultural Economist, says one of the biggest factors affecting profitability is some of the global trade tensions that hadn’t been anticipated earlier in the year.
For example, on the crop side, a lot of the price declines that we’ve seen, if you think of soybeans for example and even some of the grains and corn, a lot of that is the result of how we’ve seen the U,.S. relationship with China evolve. On that front, pricing we get here on this side of the border is actually a function of the trend in the U.S. price but, overall, I think we have a decent outlook for Canadian crops in 2018.
For livestock, I think the second half of 2018 is going to be a little more difficult than the first six months. One of the positive signs has been feed prices coming down for livestock producers but overall. if you’re looking at margins for hogs for instance, we’re looking at some negative margins or barely break even on average for the remainder of the year and that’s mostly the result of increasing supply.
If there was theme overall in the entire ag industry, I’d say this is really a trend of growing supply so the most positive thing we have going for the Canadian agricultural sector in 2018 and into 2019 I would says is definitely the fact that demand for the commodities that we sell remain extremely strong both domestically and in foreign markets and I think that will allow us to have a decent year in 2018 overall.
~ J.P. Gervais, Farm Credit Canada
Gervais says where these trade tensions are taking us in terms of profitability need to be monitored because we’ve seen margins come down going into 2018.
