August sometimes is called the dog days of summer. I’ve usually spent part of August finishing wheat harvest. However, this summer so much different for me with no wheat planted last fall. It is been compounded to some extent by this bizarre election call in Canada, where we find ourselves with the longest campaign in Canadian history. It is almost like it is slow motion getting to harvest time this year. In fact, I’ll probably have all of my soybeans harvested by the time we boat in the federal election. That is how far this thing is away.
It is also the week before what is shaping up to be a pivotal USDA report on August 12th. Markets have been in a bearish mode especially since the July 4 weekend. Yes, we were inundated with heavy rains all through June and that did have an impact on the Eastern corn belt. However, things have settled down since then and the market has responded appropriately between the garden of Eden conditions in the West and the rain damage crops in the East. On August 12th we should get a indication of lower yields possibly, but also a adjustment of the planted acres. If those acres are much lower either corn or soybeans, prices may be headed back up again.
For the record we are standing right at the moment at 88.9 million acres of corn and 85.1 million acres of soybeans in the United States. We have prospective yield numbers of 166.8 bushels per acre for corn and 46 bushels per acre per soybean. The smart money says that we will lower corn and soybean yields and possibly a big acreage surprise downward and soybeans.
The challenge for Canadian farmers is to position themselves in front of the report. It is no secret and I made mention of it many times that the value of the Canadian dollar adds another layer to our grain marketing. We cut down into the $.75 range this past week reaching an 11 year low for the loonie. In my small mind this means that standing orders in front and after the August 12 USDA report are extremely important. This might represent a point in time to capture rare basis and futures opportunities.
The rest of the challenge for many of us is getting crop to the finish line. Last week across Ontario we had some pretty heavy weather, with a tornado touching down near Teviotdale Ontario. On my own farm I received a very much appreciated 1.5 inches of rain. My corn in my estimation is at least 20% better than last year. It was getting dry just in front that rain, so I’m expecting quite a benefit.
I’ve often said that soybeans are the great liars. That is many times you don’t know what your soybean yield is going to be until harvest time. My soybeans after a very rough start in the spring do look better and did appreciate the moisture that they got last weekend. In August, in southwestern Ontario is always a bit of a dance between robust soybeans and white mold. I usually win that war because my soybeans don’t get too rank on heavy clay soils. As it is now, I’m expecting 20% less yield for my soybeans than in 2014.
Of course all of this is taking place within the current election campaign and as they said before my soybeans will be harvested by the time it’s over. However, increasingly I’m hearing from my farmer colleagues about our changing politics and how that may affect our farming practices ahead. Specifically, I’m hearing about increased environmental regulations depending on the election outcome that will put a strong crimp in our production agriculture. For instance, in Ontario we’ve already lost neonics and there is speculation regarding losing other pesticides. Much of the debate is taking place within the current Canadian political environment. There is a lot of fear going around.
Simply put, it is just another thing. Over my almost 30 years of writing this column I’ve seen that fear before. However, that does not negate the very real feelings in the countryside. However, complaining about politics is a lot like complaining about the weather, at the end of the day it doesn’t matter.
So as we move ahead we need to position ourselves in front of that August 12 USDA report. That should be the priority at least for the moment. Politics will come and go, that will never change. Marketing our crops will always be above that fray. Daily market intelligence remains key.