J.P Gervais at FCC Ag Outlook 2018 conference in Chatham. February 27, 2018. (Photo by Sarah Cowan Blackburn News Chatham-Kent).

2018 A More ‘Volatile’ Year For CK Ag Business

An agricultural economist says 2018 will be slightly more volatile for Chatham-Kent than previous years, but overall, the outlook is fairly positive.

J.P Gervais, Farm Credit Canada vice-president and chief agricultural economist, spoke at theĀ Farm Credit Canada Ag Outlook 2018 conference in Chatham on Tuesday.

He says when you look at economic trends in the agricultural industry you have to think about cash crops first. These include grains, oils, seeds, corn, and soybeans.

“There is quite a bit of upside when it comes to soybeans. I mean profitability is there for sure in 2018. Corn looks as if it’s going to break even. I think one of the wild cards is the new ethanol mandate in Ontario and how this it would affect basis levels in Ontario,” explains Gervais. “Overall, I think it really is a game about a market that’s dictated by soybeans.”

Looking at the global market, Gervais says there is strong demand coming from China that’s lifting prices in the United States. Also, Argentina going through one of the driest years on record is expected to lower the soybean yields.

“With strong demand and then supply that appears to be a little bit limited or very little upside when it comes to supply, we have some decent pricing right now in Ontario,” says Gervais. “Thinking of 2018, one of the biggest takeaways for me would be thinking of marketing plans and the fact that we may actually have a bit more volatile year in 2018 than what we’ve seen in the last three or four years.”

From a marketing and risk-management standpoint, Gervais says there is a lot for producers to think about, but overall the outlook is fairly positive.

He does not think this past week’s flooding in Chatham-Kent will put too much of a damper on farming.

“As much as this will have some impact for the local people, I think overall the county and the producers will be able to get through that. Those most affected obviously will probably see some lasting impacts into the growing season, but I think overall they’ll be able to get past that,” says Gervais.

He says the last few years have been great for the agricultural community in Chatham-Kent and farmland values have been going up.

“I think it’s going to be a volatile year, but overall a pretty good year,” says Gervais.

One thing Gervais says he is keeping an eye on this year is the Canadian dollar, which is expected to be volatile as well. He is confident the dollar is going to stay under 80 cents though and it may even stay at 78 cents on average in 2018.