Farm commodity markets may be facing a time of volatility based on a number of factors, but there are positives for Canadians farmers too.
Two positives at present are the Canadian dollar and interest rates, offered Craig Klemmer, Principal Agricultural Economist at Farm Credit Canada, speaking at the FCC Young Farmer Summit in Yorkton last week.
Klemmer did note, and the Summit was pre-the major announcements regarding COVID-19 in this country, that Canada鈥檚 gross domestic product (GDP) is slowing, with a likelihood of negative growth in the second quarter of 2020.
鈥淭he reality is Canada鈥檚 economy is slowing. The world economy is slowing,鈥� he said.
The slowing was likely to be made worse by the day鈥檚 announcement that COVID-19 was a pandemic.
On the farm side, the rail blockages, while ended, left the system behind.
鈥淚t will take a while for the backlog to be cleared up,鈥� offered Klemmer.
The impact of lower oil prices plays on all commodities too, said Klemmer, adding the current 鈥渙il war is a battle of egos right now,鈥� between Saudi Arabia and Russia.
Buffering the negatives are interest rates with a downward trend in 2020, with the biggest question being how low interest rates may go, said Klemmer.
鈥淩ight now interest rates are going to be favourable,鈥� he said.
The combination of lower oil prices and lower interest rates leads to 鈥渁 softening of the Canadian dollar,鈥� said Klemmer.
With oil being Canada鈥檚 biggest export 鈥渨e鈥檙e expecting the Canadian dollar to trend lower,鈥� he continued.
The softening of the Canadian dollar 鈥渞eally is a good thing for the agriculture sector,鈥� said Klemmer, adding it makes Canadian exports more affordable to other countries.
