Crop Planning for 2015 from the Market’s Perspective

There are no obvious or simple answers to crop planning for 2015, according to Jonathan Driedger, risk management portfolio manager at FarmLink Marketing Solutions. “Deciding on what to seed in 2015 will vary from one farm to the next,” he says. “What we advise is that growers have a really good understanding of their costs – variable costs, fixed costs, and depreciation costs. Without that, a budget for 2015 cannot be developed with any degree of rigour or confidence.”

Driedger uses soybeans as an example. “Soybeans at $9.50 to $10 per bushel is likely to be unprofitable for a lot of farms,” he says. “However, for areas where yields are higher it might pencil out pretty competitively to other options.” Soybean prices have declined over previous years as supply was replenished to more comfortable levels in the U.S. last year. “South America is poised to take off a big soybean crop,” says Driedger. “That said, soybean demand continues to see strong growth in the global marketplace.”

“Growers need to know what works on their farms,” he says. “In areas where durum out yields spring wheat year after year, you’d need a really strong case to not put in durum. Or if you consistently grow high quality spring wheat, that’s where you try to leverage your farm’s strength.”

Some crops are seeing strong prices, good demand, and good export pace this year. “Lentils and peas look good for 2015,” explains Driedger. “New crop contracts are very attractive and even if acres do increase, demand will absorb a lot of supplies. But a huge jump in acres could be felt by prices as well.”

Driedger also still sees canola as a good option for 2015. “Canola demand remains strong,” he explains. “While prices are not where we’d like, and perhaps new crop forward contracts are not thrilling growers, there isn’t a big over-supply of canola pressuring the market and it still needs those acres in the pipeline.”

“There is no clear home run crop I could tell growers to consider for 2015,” says Driedger. “This is a very balanced year in terms of supply, demand, and growth potential. Some years it makes sense to push rotations to get a few more acres of something in, but not this year. Keep some flexibility, yes, as much as is practical knowing seed, fertilizer, and new crop contracts need attention, but I would say we will not be making any significant changes to our recommendations at this point in time.”
Take care of the basics in terms of sound agronomic management. Ensure the financial picture is crystal clear – understand cash flow requirements, risk management strategies, and debt rations. “Really understanding what works for your farm is key,” says Driedger.