Big Picture More Important for Canadian Farmers: Gervais

 

Trade and possible currency battles aside, Canadian producers should keep their eye on the bigger picture – the state of the global economy, according to Farm Credit Canada chief economist J.P. Gervais.

 

In a website post Tuesday, Gervais said the relative strength of global economy matters more for Canadian agriculture than does the potential for the U.S. and China to engage in a currency war amid the larger ongoing trade war between the two sides.

 

Indeed, Gervais noted that despite the U.S.-China trade tensions, the demand for agricultural commodities is projected to remain strong in 2019-20, with the USDA projecting a 3% increase in total worldwide wheat consumption, a 0.5% increase in global coarse grain usage and a 2.1% increase in oilseed consumption. Additionally, global beef consumption is also projected to increase in 2019 by 1.4%, while pork consumption would also likely climb if not for the African Swine Fever outbreak in China, he added.

 

Gervais admitted there are signs the U.S-China trade war is taking its toll, noting the German economy contracted in the second quarter and many central banks (India, New Zealand, Thailand) have cut their policy interest rate as an insurance against a weaker global economy.