A lot is happening globally that has a direct impact on our agriculture markets from the Russia-Ukraine war to the war in the Middle East.
Brad Magnusson with Magnusson Consulting Group was one of the keynote speakers for this week's Ag Outlook 2024 event.
In giving the global economic outlook, he noted that the United States has a more service-based economy and has done better than Canada.
"It's stronger in GDP growth and employment, while we are heavily based in commodities meaning we'll struggle more."
He feels that the strength in the U.S. is going to keep the interest rates higher than expected with a potential increase that may stick around even longer than expected in the United States.
There are several things that producers should be monitoring including what's happening in other countries ( like our key competitors ) with the weather, and their planting and harvesting operations.
"We are now in a situation where we're getting very large, large crops of wheat out of Russia. This is the second year in a row where they have now produced around about 91 million tonnes of wheat. That means they are exporting between 46 and 51 million tonnes of wheat into the global market. That's putting pressure on the wheat market."
When it comes to canola and soybeans, Brazil has had another record crop at about 153.5 million tonnes put together with a significant soybean crop in the U.S. that puts a lot of downward pressure on our canola.
The wheat market is interesting, Ukraine is having some challenges moving wheat but we're still seeing around 13 million tonnes coming to the global market.
He says Russia no doubt would like to reduce, slow down, and eliminate Ukraine's exports of wheat which would make their wheat more competitive.
"One of the impacts that we're maybe underestimating is the Middle East. We're a bit concerned that conflict is possibly spreading which could affect particularly shipping. To give you an idea in the Red Sea and through the Suez Canal, approximately 13 per cent of the world's global goods go through the Suez Canal. That's approximately 22,000 ships per year."
That's about $1 trillion worth of goods moving. So if there's any slowdown, if there's any stoppage of vessels, be it oil, be it any of the world's commodities or goods, that's really going to create some questionable economic times."
Overall, he says we've seen a pretty significant change in the commodity markets.
"We are on the back side of a global cycle where we can anticipate larger supplies, and with larger supplies we know that's going to mean less price. That's something we're going to struggle with for the next foreseeable future."
Magnusson spoke at the Ag Outlook 2024 event in Swift Current, sponsored by Innovation Federal Credit Union and Stark and Marsh.
To hear Glenda-Lee's conversation with Brad Magnusson on acreage and what we could see happen with the commodity markets click on the link below.