USDA In the Rear View Mirror: Planting Next Up

The beginning of April started for me with rain showers all day.  I had just taken delivery of a new compact tractor and had to update the software on another, while dodging raindrops almost all day.  It’s not the start of April that I would like to see.  I was hoping for a dry beginning after a terribly cold winter to get myself into the fields early.  If I’ve said it 1 million times, I’ll say it again, I want all my corn planted this year in April.  Getting my crops planted late into June seems to always catch up with me in the fall.  Of course, we don’t want to remember that terrible fall of 2014.

Of course in front of me I have several tractors, augers and planters to make ready to go in a few weeks.  Little did I know in my early days on the farm, before computers that one of the biggest jobs would be updating my software for the coming spring.  Needless to say, that job is in the rearview mirror.  I only hope the firmware gods of modern farm machinery can talk to each other.  Sometimes I wonder if this is real progress.  I digress.

Of course my machinery and production management isn’t the only thing I’m concerned about.  Like every farmer in Ontario we are watching the volatile Canadian dollar and our futures market, hoping for a marketing opportunity for greater profits.  Last week we had our friends at the USDA chime in with the 2015 acreage estimates.  We also got the latest in the quarterly stocks report from the USDA regarding old crop inventory.

The USDA surprised the market in more ways than one. They said American farmers were going to grow a little bit more corn than expected and quite a few less soybeans than the trade expected.  The USDA said American farmers would grow 89.2 million acres of corn and a record 84.6 million acres of soybeans.  The soybean number was seen as slightly bullish, despite it representing record acres.  The bearish sentiment had been so strong in soybeans, that this record acreage projection caused the soybean market to go up.

The corn market suffered because of the bigger than expected acreage number, but also because corn quarterly stocks were higher than expected.  The March 1 corn stocks came in at 7.745 billion bushels, which was above what the trade expected.  On the other hand the soybeans quarterly stocks came in at 1.334 billion bushels, which was below expectations.  From my perspective, the March 31st USDA report agreed with many of my hunches.  Of course, that was all about luck.  Nobody knows what the markets are going to do and that never changes.

The futures market gyrated for a few days, heavy losses in corn and wheat at the beginning but other concerns like dryness in the Midwest brought the market back after.  That’s the futures market for you, almost constant noise to a Canadian farmers psyche.  Of course the other extra layer of grain marketing management in Canada has to do with our Canadian dollar.  Is been fluttering between 78 and $.80 US over the last few weeks which is adding two large positive basis values in Ontario and Québec.  Where this will end up in 2015 will ultimately affect farm profits significantly in Eastern Canada.

It got even more interesting last week when my lost twin brother Bank of Canada governor Stephen Poloz said that first quarter results on the Canadian economy performance was atrocious.  That is particularly unusual for a Bank of Canada governor to say and the loonie wobbled on those comments.  Needless to say, with the oil price retreating and our Bank of Canada governor not showing a lot of confidence, it doesn’t bode well for our loonie.  It’s hard to imagine the loonie going down even further after such a precipitous drop.  However, a drop further down to the 71 or $.72 level would lead to significant advancement in cash prices for both Canadian grain and livestock.

Having standing grain orders placed is something that I truly believe in.  Picking a price or a series of prices as part of my marketing plan works for me.  Sometimes I never reach those target levels, but sometimes they are reached while I sleep at night or even on unexpected Tuesdays, when the market goes up sharply or the loonie goes down.

So our marketing challenges will continue.  However, if I no crop to sell at the end of the day by not maximizing my profits through efficient production, then I have a real problem.  So that means over the next few weeks I’ll be busy preparing to plant.  It is a time that can pull your hair out making sure all the machinery is ready to go.  Then once planting actually starts; it always seems to be so much easier.  If only marketing our crops worked the same way.  Hopefully, we’ll all get there.