Under the Agridome

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The news is hard to watch these days for obvious reasons. It is one thing to see news about wars and rumors of wars, but of course it's another thing to hear anti-Canadianisms coming from south of the border. We all have to watch the news which affects our businesses, but the events of the last month with the leader of the free world talking about Canada being the 51st state has been numbing. With Mark Carney being sworn in March 14 as Canada's new prime minister, I'm hoping for better things ahead.

That's no swipe against outgoing Prime Minister Justin Trudeau. Remember, I don't do politics here. He led this country for almost 10 years, and he did what he thought was right. I certainly disagreed with several aspects of his agricultural policy, but I never doubted his love for Canada. We move on.

This week, the United States imposed 25% tariffs on Canadian steel and aluminum. Canada struck back on a dollar-for-dollar approach with a 25% reciprocal tariff on list of steel and aluminum products. In addition to that, more tariffs were put on another $14.2 billion of U.S. goods for a total of 29.8 billion dollars of counter tariffs. This is in addition to the 25% counter tariffs on the $30 billion worth of goods Canada had announced earlier.

It is what it is, probably the biggest news from an agricultural perspective during the past week was the Chinese action of 100% tariffs on Canadian canola oil and meal. This was in response to the Canadian imposition of 100% tariffs on Chinese EVs. You might remember that I wrote about that at the time fully expected Chinese retaliation. Everybody expected canola to open up limit lower on Monday.

What we have seen is a $1.75 per bushel decrease in the cash price of canola in about three days. For those still holding old crop, that was certainly a hit. New crop prices were not as affected, but they were still down $1.10 a bushel in rural Manitoba. What we're talking about is real money here. The cash price for canola in central Manitoba at the moment is approximately $12.50 a bushel. Back in 2022 it reached a record price of $27 a bushel, but the average price for a period of years is more like $13.75 a bushel.

So, the fire alarm is ringing for sure, it's not like we did not expect it, but it's never any fun when you have a price drop like that. You could also make the argument that it's easy for China to put on these tariffs on canola meal and oil when they weren't going to buy it anyway at this time. It certainly is a long story, but I hope at the end of the day cooler heads prevail. It is not the end of the world, even though it feels that way for canola this week.

To complicate matters further, China also imposed tariffs on Canadian peas. This is a crop that you could shift into on a limited basis. However, keep in mind the shifting acres will likely not be a big deal as rotation is always a big part of the equation. Without this, we were still expecting lower canola acres for Western Canada this year. We also have Indian tariffs on lentils, so it just makes for more interesting times.

In Eastern Canada, there has not been as much impact on the crops we grow in comparison to the problems for farmers in Western Canada. However, I don't know what's going to happen to Canadian sugar beets grown here but shipped to the U.S. each year. For grain and oilseeds, we utilized quite a bit here, especially with corn, but the rest is shipped out or fed. At the present time, we are exporting corn and soybeans into Europe from Quebec, and this will surely ramp up in Ontario very soon. However, items we need, like parts and other things coming in from the U.S., are subject to Canadian tariffs, especially after April 2. That's the day we expect the U.S. administration to ramp it up even more. It's making for higher prices and less choice for Ontario and Quebec farmers.

As the week closed, the Europeans responded to U.S. tariffs by putting a 25% tariff on many U.S. goods which included U.S. soybeans. Of course, China had imposed retaliatory tariffs earlier the same week on the United States. At first glance, this would make Canadian soybeans a preferred destination to Europe over American soybeans. However, any tariffed soybeans from the United States will likely find themselves getting into traditional Asian markets for Canadian soybeans as we move ahead. It's complicated; "cheap" continues to be the great equalizer even in a trade war.

At the end of the day, well, that is the problem, isn't it? From here, it looks like there is no end to this day. We know that there are no winners in trade wars and the reasons for it will become muddled as we go on. The challenge will be to manage our farms and find a path forward.

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The views expressed are those of the individual author and not necessarily those of DTN, its management or employees.

Philip Shaw can be reached at philip@philipshaw.ca

Follow him on social platform X @Agridome

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