YORKTON - With a new year upon us it’s rather natural we look ahead to see what the grain and oilseed market outlook for 2024-25 may be.
One recent article suggests it will come down to whether big world demand is matched by big supplies – which really is to suggest markets will be back to the core mechanism of supply and demand to determine prices.
That of course is almost the default setting of potential grain and oilseed market pricing. If supplies shrink for any reason it typically pressures prices higher as markets are shorted. Over production can create a market glut and prices tumble.
The question headed into 2025 is what sort of production pressures are likely, and then veering from traditional supply and demand influences what outside forces are going to kick the traditional market underpinnings out of whack?
Production pressures always start and end with Mother Nature and with global weather patterns clearly in a state of flux -- read that as more volatile – guessing what crop conditions may be is at best an educated guess when looking six plus months down the road.
But what about forces such as the ongoing war in Ukraine, which impacts crop production in that war torn country, and has to have an influence on things in Russia too. That is a rather large wild card in terms of crop production in Eastern Europe for 2025.
Then there is the ‘joker’ effect that could be soon to be installed, U.S. president Donald Trump. He is already talking massive tariffs on imports – and that will mean at least some agriculture products. Now some think his initial threats will end up tempered, but his party has almost carte blanche control in Washington for the next four years, and it’s just as likely he goes full bore, bull in the China shop, in terms of tariffs.
That will not be good news for trade within North America, and China is involved in his tariff vision too, meaning some major importers and exporters of agriculture products are going to face pressures not remotely related to supply and demand economics.
Trump has also been confrontational in terms of how the Panama Canal is operated and who controls the important waterway. It’s not too difficult to envision passage disrupted before he is through blustering.
Trump’s early stance on Greenland – an autonomous country within the Kingdom of Denmark – he is suggesting the US could annex, which will not win him many fans among European countries either. When countries end up in political spats trade sanctions all too often follow.
The best hope for ag trade in 2025 is supply and demand setting markets, but is seems far more likely markets will be buffeted by other forces including the ‘Trump effect’.
