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Lower commodity prices have not affected attendance at DTN/The Progressive Farmer Ag Summit held this week in Chicago. If my memory serves me correctly, there are some 770 attendees, including 500 farmers and a wide array of industry personnel. Attendees are here from coast-to-coast in the United States as well as from at least four Canadian provinces. This year's theme is Strategies for Ag's Super Cycles: Reassess Your Strengths, Weaknesses, Opportunities and Threats.

The Canadian Grains discussion table over breakfast resulted in an interesting discussion as producers and industry people from both sides of the border learned about each other's industries. One thing that struck me was the history behind some of the U.S. farming operations. One producer from a southeastern state suggested that his family farming roots can be traced to the late 1700s. Also interesting, his operation farmed 4,500 acres, of which 50% was rented which meant dealing with 72 landlords!

One of the earlier presentations came from a Canadian, Derek Boudreau, managing director of operations for John Deere Co. in Russia. He presented a view of the impact of sanctions on that country. Bondreau joked that things went downhill in the country since he arrived, but the company sees potential in Russia. Boudreau refers to Russia's disproportionate ratio of arable land per capita, with 9% of the arable land in the world and just 2% of the global population. He suggests that 30% of the land is in summerfallow and has been for over 20 years. Despite having some of the lowest yields in wheat and corn among the major global producers in the 2008 to 2012 period, the country has rapidly grown exports over the past two decades.

DTN Senior Ag Meteorologist Bryce Anderson pleased the crowd by suggesting the end to the high latitude blocking pattern that brought colder weather in November and was also behind the polar vortex which brought us an extremely cold winter last year. While both U.S. and Australian governments have indicated the chance of an El Nino event exists, Anderson suggested there are signs that it may be already here.

Brian Milne, Energy Editor for DTN, talked about the challenges faced by the ethanol industry. Challenges range from over-estimated demand for blended fuels and a resulting overcapacity of ethanol production, to more fuel efficient vehicles and reduced consumption, to changes in demographics. He also mentioned the recent price war which has been started by OPEC's attempt to maintain current production levels while driving prices lower. Canada was listed as the top export market for U.S. ethanol production.

Ken Ericksen, senior vice president for transportation, Informa Economics, presented an extensive list of the challenges and threats faced in the U.S. transportation system. Current movement of goods is suggested to be at an all-time high, viewed as a leading indicator signaling a strengthening economy. This list of threats included: labor unrest on the West Coast; a national shortage of 250,000 truck drivers; a rail system that sends 50% of all rail traffic through a bottleneck in the city of Chicago; trains moving slower overall while facing increased regulation; and hundreds of billions of dollars and decades needed to upgrade infrastructure, including roads, bridges and river locks. Stocks on the Dow Transportation Index have performed well, with Eriksen suggesting that the market likes capacity constraints, which ultimately lead to higher rates and profits.

DTN Senior Analyst Darin Newsom posed the question "do we believe what we hear, or what we see?" He went on to suggest that despite the bearish fundamental situation facing corn, soybean and wheat markets, a number of positive technical signals are presenting themselves which would suggest the situation may not be nearly as bearish as one would expect, if not even potentially bullish! Record domestic and global production is being met with record levels of demand. Meanwhile, a comment was made by a moderator in the conference that Farm Credit in the U.S. is expecting the worst, asking customers in the U.S. to brace for $150/acre losses in corn and $70 to $80/acre losses in soybeans for one and perhaps even two years.

The DTN/The Progressive Farmer Ag Summit takes place every year in Chicago in early December.

Cliff Jamieson can be reached at cliff.jamieson@dtn.com

Follow Cliff Jamieson on Twitter @CliffJamieson

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