2013: A Global Commodity Slump?

[mbratrud]

Errol, does the bear in you never go into hibernation? LOL you are dedicated I will give you that. Its the "Risk Manager" in you coming out. I hope you not right.

[TOM4CWB]

ado89,

1999 had 6B people... now just under 7B.

http://galen.metapath.org/popclk.html

Not till 2100 is population predicted to stop growing.

[bucket]

mbratrud

He will be right eventually, he hasn't put the horns on yet.

[TOM4CWB]

Errol,

"Throwing out an opinion that nobody wants to hear but . . . . "

I want to hear a good logical discussion of why you are going to be right.

Isn't there VERY little Canola left to sell...?

Does anyone have an accurate estimate of what has been sold of the fall 2012 crop?

I have few neighbours with anything left to sell... hail... aster yellows... drowned out patches... wind... you name it; lowered yeilds.

So Errol... what accurate numbers can you bring to this discussion about how much Canola is committed/sold... to average?

I have a difficult time with this market falling apart before 2013 southern crops have been determined... which is 3-4 months away... even then a record crop is needed to keep folks fed!

People globally fed is now JOB 1... not as in past... and the enviro spookers have not gone away... I see Obama winning... don't you?

Denmark was is on the green energy track... EU is copying them... and US right behind. China and India are not objecting too much....

[bucket]

TOM

Yep, and as long as there is a market to find better ways to make this planet environmentally friendly, the money will keep flowing and people will have to be fed.

And as long as the people realize plants are not only food but energy as well, things look good for farming. We hit a hiccup with the lower production the last few years but it just means when we do grow a bumper crop - it won't be taken for granted. Better storage globally is becoming more important so less is wasted.

[checking]

I could (lol) not help but notice all the could(s) in Errol's post. Well, I say fudge on a view until that person says "shall".

Too many unknown x's in the world to go with anyone's chart.

[ado089]

Tom, even with some population growth
you need to dig into where that is
coming from. In the west that will come
from immigration and longer life
expectancy. Old people don't spend like
young families, building houses, buying
vehicles, paying for education and
spending on entertainment. China is
projected to top out by 2025 and India
at 2040, with the remainder coming from
Africa and parts of S. America. China
has a similar demographic shift as the
west. These growing populations are
coming from areas of economic distress
due to politics and culture, any
advances in those barriers will undoubtedly come with reduced birth
rates. Tying that back to agriculture,
the poor will still be poor and we as an
industry will continue find ways to
produce more food. Even with tight
supplies if the rest of the economy is
sluggish it will bring the price of
everything down with it. In my opinion
we are in for 20-30 years of choppy and
volatile economics until the distressed
areas of the world become more affluent
and the children of the boomers hit peak
spending in their 40's and 50's in the
west. If I were 45 plus I would be
cashing in my chips right now or plan on
holding them for another 20 years.

[ado089]

In fact my farm bushiness plan has
$20/ac/yr land value loss built into it
for the next 15 years.

[cottonpicken]

I see canola making 100$'s in 5 years.

[errolanderson]

My concerns about commodity markets stem
from China.

The World Bank has forecast that China's
growth will slow to 5% by 2015. And
growth below 6.5% is effectively a
sunken economic ship for the Chinese . .
. they will again experience hard times.

And hard times for a communist country
mean lower food prices. In other words,
'deflation' is a risk.

To me, 20013, 2014 and 2015 may be (for
lack of better words)'a bag of crap' in
the commodity world. No doubt there will
be rallies, but given this global mess,
these rallies won't hold (IMO). Global
conflicts may offer temporary relief.

My apologies for being so opinionated,
but in my mushy brain this is as clear
as it gets . . . . If China goes down,
Vancouver and the rest of Western Canada
goes down. Our engine is directly
attached to their engine.

Then stir in a broken U.S. and Europe's
depression.

That's why I'm pounding the risk
management drums. Our markets now offer
solid opportunities, but the problem
with bull markets is that when they are
over; they are over very fast.

Errol

[hedgehog]

communist or not, low growth or not, the chinese need to eat.
they will buy what they need, otherwise a revolution will follow.
there is no real connection between growth and food consumption, it is inelastic, driven by supply(variable) and demand(rising).

[sumdumguy]

China and India have fueled this whole bubble.
Vancouver realtors are all shaking in their boots.
Canola has been a Cinderella crop but yellow
fields touching yellow fields may generate too
much disease to continue. Canola for fuel is not
sustainable.

Where are we going to make margin? Flax- how
much flax can be absorbed. agri-stabilty?
Keep paying the high cash rents, buy lots of
metal on credit. This pattern is just like the
governments

[bucket]

errol

So what is the answer?

Sell out to the highest bidder, send back the machinery and be unemployed in a couple of years because of a shitty economy?

Watch the money become worthless because the chinese farmers in canada need 1000 bucks for a loaf of bread?

[TOM4CWB]

Ado089,

We have been here farming in northern AB since 1881... and cashing 'chips' in; not in the rule book.

Interesting times... will be no doubt be coming our way!

Cheers!

[Hopperbin]

The World Bank has forecast that China's
growth will slow to 5% by 2015. And
growth below 6.5% is effectively a
sunken economic ship for the Chinese . .
. they will again experience hard times

I still don't get how growth like this durring these times and at the stage China is in is bad at all. Its normal they have to slow down. Everything is good. They are eating more meat that meat must be fed via soybeans. I think a lot of farm land investment companies will dissagree with Errol and I am inclined to side with them at the moment.