Prospects still good for North American agriculture
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CHICAGO – North American agriculture should fare well in 2013, according to an analysis by BMO Economics. United States farmers are in a better position now compared to a year ago, and Canadian farmers continue to enjoy high prices for the fruits of their labor.
Planting season in the US ended late because wet conditions delayed progress. Northern Illinois, Southern Wisconsin and Nebraska are in better shape than other parts of the Corn Belt.
"The general consensus for the US agriculture industry in 2013 was that, coming off of the drought, we'd see a big crop this year; this, in turn, would lead to lower feed costs, as well as other food prices coming down," said Sam Miller, managing director and head of agriculture, BMO Harris Bank. "While we're not getting the start we wanted - the heavy rainfall over the past 45 days has put some plantings behind schedule — the prospects are still there for a good year."
The US Department of Agriculture noted in its Crop Progress report released June 17 that corn, soybean and spring wheat producers have come relatively close to five-year averages while crop conditions did not suffer. Additionally, USDA said growers are on track for a record year of agricultural exports. The 2013 outlook is currently projecting $139.5 billion in exports this fiscal year, according to BMO.
"While grain farmers seek improved crop yields, livestock producers and other grain buyers anticipate these higher yields will lead to lower feed and grain prices, as well as improvement for stressed margins," Miller added. "The challenging start to this year will again make it a just-in-time year — adequate growing conditions, appropriate moisture as the summer progresses and a later first freeze will all likely have a hand in how the year turns out."
Meanwhile, Canadian farmers are still seeing higher than normal prices for a number of crops due to increased demand and higher prices after drought in the US depressed crop yields. Stable crop prices and good yields are good news for crop producers and the Canadian livestock industry.
"Adequate supplies of reasonably priced inputs will be welcome news for Canada's cattle and hog producers. This, compounded by plenty of hay-spurring rain, leaves livestock producers better poised for 2013. Together, Canada's agriculture industry should be looking forward to a well-balanced year," said David Rinneard, director of Agriculture and Agribusiness, BMO Bank of Montreal.
Seeding is reported to be complete or nearly complete, with the pace of overall planting being broadly in line with historical norms.
Floods that have devastated parts of Alberta and some agricultural producers were affected. However the impact has been relatively limited compared to the massive damage sustained in communities and on public infrastructure in the province. Floods have mostly impacted producers in the immediate vicinity of affected waterways, though some meat processing plants were temporarily closed to allow employees to tend to their private property. Overall, crop emergence in Alberta is reported to be noticeably ahead of last year, according to BMO.