Volatile markets are always difficult to navigate, especially when driven by geopolitical events. Weather is unpredictable but at least a person can track potential impacts if it rains (or doesn’t) and the possible yield effects. When grain market volatility is caused by money flow tied to war, the fundamental connection is loose (at best), making it unrealistic to try predicting ‘the day’ when markets will peak. 

Some things that help us think through markets like this are keeping focused on the fundamentals and avoiding getting caught up in the noise. For futures-traded crops, basis, futures spreads and good old-fashioned S&Ds keep the focus on the bigger picture, even if they don’t ‘fine tune’ short-term turning points. Non-futures traded crops are less volatile and may be a better reflection of on-the-ground realities.

There’s no magic formula that allows you to ‘see around corners’, in a normal environment or a noisy one. But markets eventually drift to where the fundamentals suggest they should, even if events cause them to deviate for a period of time.

The month of May is always exciting as seeding kicks off with all of the potential of another crop. May is also the month when LeftField was planted, 15 years ago. Every year when our anniversary rolls around, we’re thankful for how the business has developed. This includes all our clients, whether long-standing or just joining us. We appreciate all your support. Thank you.

Over the past 15 years, we hope we’ve learned a thing or two. There have been some very good crops and very poor crops, huge rallies and serious downturns. Throw a bunch of assorted trade disruptions into the mix. Some have come out of “left field”, while others we could see coming. Each event is a learning opportunity and helps us apply that experience to current developments. There’s always more to learn though.

Having 15 years under our belt also allows us to use the mounds of data we've gathered to help shape our market outlooks. One example is using our price histories to build seasonal charts and other marketing tools. We plan to do more of that in the coming months and years. Stay tuned. 

A few tweaks to StatsCan’s acreage numbers might be in order due to late planting adjustments but for the most part, its estimates seem reasonable. Now that this report is behind us, we can focus on yield prospects. That’s always tricky, but this year’s weather is making it a much bigger challenge.

On one hand, crop ratings from Sask and Alta Ag have been very positive early in 2024. Other reports and pictures show some very good-looking crops with high yield potential. On the other hand, a large swath of the prairies was hit by heavy rains in the past week. No doubt, there’s been a lot of crop damage, with pulses probably taking the brunt of it. Plus, late crops due to planting delays and cool temperatures add to the risk.

The extremely variable conditions and risks from delayed development will make this year’s yield estimates very “guessy”. The challenge is balancing the good against the bad or the ugly. That said, we still have to put a  yield stake in the ground somewhere. Just bear in mind estimates will be a lot more tentative this year and a delayed crop means they won’t be “known” until much later than usual.

This week marks LeftField’s 14th anniversary. Over those years, we’ve tried to keep improving what we’re doing for our clients and we’re looking forward to better things in year 15 and beyond. Most of all, we’re thankful to all our clients, new and old. We appreciate the confidence you’ve put in us.

We’ve learned (and relearned) a few things over the years. Markets have a way of keeping us humble. Just when you think you’ve got something figured out, something comes out of left field (one reason we chose the company name). The weather and trade policy are the two biggest unpredictable factors, but there are others. And as we’ve said in the past, if events are not predictable, the best we can do at LeftField is provide reconnaissance.

Our business model is based on data, but we’ve also learned that despite some on-line claims, there’s no magic bullet for figuring out when to buy or sell crops. Yes, there are indicators like seasonal price tendencies, and we’ve built new measures like our market strength scorecard. We think these are helpful clues but it will never be a perfect science. We’re just trying to add more structure to making decisions.

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Here’s to getting better at that!

A new calendar year is a good time to start something new. We started 2024 by introducing the Market Strength Scorecard, a data-driven tool that combines several key market indicators to generate a score for each crop. 

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The scorecard doesn’t cover all possible market factors but tracks four measures we think are most useful:

•    Seasonality – A measure of the price patterns that tend to show up in most (but not all) years.
•    Price Momentum – An indicator of how strongly prices are moving (in either direction). 
•    Historical Context – A measure of the current price in relation to its history. 
•    Fundamental Signal – A way to show the strength of the supply & demand situation.

The scores aren't predictive and they're not marketing recommendations. This tool isn't the be-all-and-end-all, but we think the Market Strength Scorecard offers objective data-driven analysis for better decision-making.