Thriving on Chaos, that's how Agricultural Consultant Brad Magnusson describes the last couple of years in the ag sector.
Magnusson was the keynote speaker for the 10th Annual Ag Outlook.
During his presentation, he focused on the drought and its impact on production.
Globally, despite reporting the largest wheat crop ever, the drought had a big impact, with Spring Wheat acres down 38 per cent last year in Canada.
"With very little high protein bread wheat available, it's really affecting wheat prices."
He notes there's also tight durum supplies as key growing areas around the world were dry, the Canadian Prairies, Northern United States, North Africa, Italy and Spain.
Oat production was down 43 per cent, while barley production was down about 35 per cent and canola down 35 per cent.
"So significant crops that are really the basis of our profitability in Canada, we've seen those drop. So again, having a big impact on international prices, and of course profitability."
Magnusson added that we've seen incredible demand adding that the global goods trade, even with all the problems we had in shipping goods before Christmas and now with the trucking industry and COVID were still at pre-pandemic levels
He's anticipating that 2022 will continue to be very volatile, but he expects in July 2023 we'll start to edge into a recession, which is typical after seeing such a strong market.
He also noted that producers can expect to see an increase in shipping costs the cost of moving grain to export are going to go up probably by 20, 30, 40 percent or more.
Magnusson says we can expect to see challenges when it comes to moving product to port, especially with the trucking and container situation, adding that rail is also a challenge,
When it comes to the Canadian dollar and inflation ... he's surprised the Canadian dollar isn't higher given the price of oil, but he doesn't expect to see it changing radically.
He notes we have strong inflation 4.8 percent higher than it's been in 30 to 40 years, adding that he expects interest rates will increase by 1.5 per cent in 2022 and another 50 basis points in 2023.
And a note for producers this Spring, he expects the situation with Russia and the Ukraine to impact Global Ag Markets, especially when it comes to fertilizer and fertilizer prices.
The 10th Annual Ag Outlook event from Innovation Credit Union and Stark and Marsh took place this week with about 180 participants.