U.S. shutdown hurting farmers in Canada
Delayed release of vital reports hinders crop planning, marketing decisions
The shutdown of the United States government has halted a key flow of data to Canadian farmers, adding to existing trade uncertainty as they prepare plans for the upcoming planting season.
The shutdown — now the longest in U.S. history — entered its fifth week Monday as U.S. President Donald Trump continued to reject any spending bills that don’t include US$5.7 billion to build a wall on the U.S.–Mexico border. A weekend offer from Trump to extend some protections for immigrants brought into the country illegally as children failed to bridge the impasse with Democrats, who oppose the wall.
With thousands of government employees furloughed or working without pay, the U.S. Department of Agriculture (USDA), has delayed the release of a range of reports considered vital to marketing and crop planning by farmers on both sides of the border.
The missing publications include closely watched statistics on weekly exports, U.S. grain stockpiles, final production and sales for 2018, and forecasts for crops likely to be planted by U.S. farmers in the upcoming year, said Ron Davidson, executive director of Soy Canada.
Also delayed is the market-moving World Agricultural Supply and Demand Estimates report — considered one of the best sources of data on both U.S. and global markets, analysts say.
“Basically everybody’s in the dark,” said Davidson. “We’re in the middle of January now and farmers need to start making decisions. What seeds are they going to buy? What’s their cropping plan for the year? Those are tough choices without this information.”
In addition to hobbling planning, the data gap frustrates producers’ day-to-day marketing decisions for existing crops, said J.P. Gervais, chief economist for Farm Credit Canada, a major lender to the farming sector.
The lack of data has made it impossible, for instance, to confirm speculation that China is ramping up purchases of U.S. soybeans — a development that could significantly impact pricing, he said.
“If that were true the price would go up but we don’t know, because the market doesn’t know because the data isn’t there,” Gervais said. “If you have grains to sell in your bins, this is a very big deal because a few cents on some sales can really make a difference to your income. Producers really need this information to know where the market is going so they can make choices about whether it’s better to sell their grain now, or keep it in storage. And the information isn’t there.”
Canadian and U.S. farmers are already coping with heightened uncertainty amid the U.S.-China trade dispute, in which Beijing has responded to U.S. tariffs by imposing hefty levies on American soybeans and pork. Indeed, Canadian hog and soybean farmers have become collateral damage in the dispute as Canadian prices are pulled down alongside those south of the border.
Domestic farmers have also seen some benefits. With U.S. producers effectively shut out by tariffs, Canadian soybean exports to China have increased — though a massive surplus of U.S. soybeans has also pushed Canadian product out of other markets, Davidson said.
U.S. President Donald Trump has set a “hard” deadline of March 1 for a deal with China, seeking a narrower trade deficit with the economic superpower and an end to controversial Chinese practices related to intellectual property theft and other matters.
“Everybody is watching those bilateral talks,” said Davidson. “It has a major impact on what market prospects are for the coming year.”
For instance, a Chinese commitment to buy most of its soybeans from the U.S. could make planting corn a better choice for a Canadian farmer, he said.
“This is a much more complicated year than we’ve ever had before for trying to assess all the shifts in world demand and buying patterns,” said Ken Ball, a senior commodities future adviser at PI Financial Corporation in Winnipeg.
The U.S. trade and data issues have only added to challenges in reading a market already complicated by weather issues in South America and an outbreak of African swine flu in China, he said.
“Once they get the government restarted we’re going to have four or five weeks of accumulated data to deal with, maybe more. It’s going to be interesting when it all floods into the market because there could be surprises in either direction. It’s a very complicated environment out there right now.”