5 highlights from Farm Forum

I heard a lot of interesting and useful things today at Agri-Trend’s Farm Forum in Saskatoon. I can’t possibly mention them all right now, but you’ll read more about them over the next few months in Grainews. Meanwhile here are some highlights:

1. Curt Vossen, CEO of Richardson, spoke after supper. His closing comment will interest you. Fertilizer prices are down precipitously, but fertilizer production is scaling back as retail sales storages fill up. Once production slows, it might not ramp up again in time to improve the supply situation by April or May, he says. “With prices coming down, it’s getting to a point where I’d look to fix supply,” he says.

2. Watch the Baltic Dry Index. Gary Pike, CEO of PMG, recommends you go to Google and enter “Baltic Index” in the search box. Find a site that tracks the index, and check it daily. I found this Baltic Dry Index chart at InvestmentTools.com. (Click on it to enlarge.) Blue is the daily index, red is the 20-day average and green is the 200-day average. The Baltic Index shows what is happening to ocean freight rates, and the index has tanked 90 per cent or more from its peak of just a few months ago. The rapid drop in the Baltic Index indicates a total lack of significant trade, Pike says. “When the index moves up, that’s a sign that credit and liquidity are improving, and trade is coming back.” For those companies managing to move some grain and find markets these days, low freight rates are a big bonus. Marlene Boersch, managing partner with Mercantile Consulting Ventures, says the ocean freight rate for a shipment of peas from Vancouver to Mumbai, India, dropped from $145 per tonne in July to $35 in November.

3. Ah yes, the credit crunch. Marlene Boersch says grain exports are slow because “buyers’ attitudes” are down, and they’re down for three reasons. One, buyers are having trouble getting letters of credit. Without credit, they can’t buy shipments. (Hence the low Baltic Dry Index, as noted above.) Two, buyers don’t think there will be sufficient domestic demand to buy up what they bring in. And three, they fear buying above tomorrow’s prices. They got burned bad on that this summer, buying too high and being forced to sell low. The result, she says, is that until buyer’s attitudes improve, we’re in a transition period of “spot buying only.”

4. Lots of ideas were thrown around on how to best apply phosphorus fertilizer. Geza Racz, soil fertility specialist and now senior Agri-Coach with Agri-Trend, takes it back to the basics. “Phosphorus advice is simple. Apply as much as the crop needs, and put some of it with the seed,” he says. When asked what type to buy (dry, liquid, MAP, Alpine, etc.) he says, “Phosphate is phosphate. Buy based on cost per pound of P2O5.”

5. My last highlight is one of my own observations. Farmers are bombarded with so many new fangled ways of doing things “better” or “saving money” or “improving efficiency.” And most farmers are willing to try new techniques once in a while. Yet when I asked farmers at the show if they ran test strips to see if these techniques worked, they said they did not. Granted, this wasn’t a scientific survey, and I only asked about five farmers. But still, I was surprised they weren’t doing their own tests to see if these investments paid off. I know why they don’t test strip. It’s a pain in the butt to bugger around with test strips when you just want to get the crop in the ground. But at the same time, if you’re spending all that money on a new input product or a new technique (say top-dressing micros), it would make sense to know that it works better than your usual system before you make it part of your regular program. I’d love to get readers’ opinions on this, so feel free to email me or better yet, click the comment button above and share your thoughts here and now.