Ontario Soybean Harvest: Will Those Beans Tell the Truth?

Grains fall 510
It has been a hot September on my farm near Dresden in southwestern Ontario.  In the deep south west of Ontario, we have some of the hottest summers in Canada.  Count 2016 as one of the warmer ones.  As you all know I was lucky with the rains this year, unlike many of my other farmer colleagues in Ontario.  I had expected soybean harvest to start about the same time as last year, but that’s not happening.  With the hot weather this past week things have actually accelerated.  I do expect to be taking off soybeans late next week, which is a few days later than last year.

In any case, I have a good crop this year.  However, I am no soybean yield champion.  I read with interest the article on DTN about Brazil soybean yield competitions.  I’m also aware of the famous American soybean growers who commonly get over 100-150 bushels per acre every year.  So with the USDA average of 50.6 this year and the Statistics Canada average at 44.1 bushels per acre, some of the soybean growers have a lot of work to do.  I count myself as one of those.

Today, I surveyed my fields to see if I could pre-harvest burn down this week, in order to harvest next week.  I grow non-GMO soybeans so weed control is always a challenge.  Needless to say, it is no greater than it was 40 years ago when I was a teenager.  The weed spectrum has changed, but of course technologies moved on.  I can spray the soybeans using auto steer on my tractor and I can kill those weeds now.  That makes harvest a little bit more palatable from a quality perspective.  At least, that is the plan.

My soybeans will be in very good company this year as we have a huge crop in United States.  The USDA in their September 12th report increased their yield estimate to 50.6 bushels per acre for a 4.2 billion bushel crop.  In the past, we’ve often seen the USDA raise soybean yield into the January report.  However, with a yield of 50.6 bushels per acre, I don’t know if that is going to happen this year.

It is a huge supply, but we also have an inverted futures market where commercial buyers want those soybeans now.  Soybean demand remains insatiable.  As we look ahead that is always good to have in your back pocket.  In South America soybeans will begin to be planted in October.  That will be the post harvest soybean theatre for people looking for reasons for the soybean price to bump up.

In Ontario, the soybean crop will be generally better than the corn crop.  Ontario corn is already being priced on what we call the import basis.  There is corn being imported into Ontario and this is likely to persist throughout harvest and into next year.  Simply put, the Ontario corn crop was compromised by at least 20 bushels per acre and maybe more this year.  Our hot summer really hurt corn at a critical time.

Ontario soybeans on the other hand received rain at the right time.  This saved a lot of people who had a compromised corn crop.  I’ve often said that soybeans are the great liars.  Sometimes they look good all year but don’t yield well.  2016 might be the year that drought starved soybeans, which caught August rains surprise everyone.

Of course the saving grace for Ontario soybean prices remains the low Canadian dollar, which is now at approximately $.76 US.  However, this past week it actually acted like it might want to break under $.75.  If the US Federal Reserve finally raises interest rates in December, this will be bullish for the US dollar and bearish for our Canadian loonie.  That’s just another cash price variable that will impact us here in Ontario possibly later this year.

Yes, it sure would be nice to have a soybean black swan event.  However, in lieu of that, the basics of demand for soybean oil and soybean meal are always important.  The price of December soybean oil has been going up lately and as my DTN colleague Todd Hultman said earlier today, soybean crush is still slightly bullish.

As my combine heads toward its first soybean field this week, I’ll take that.  Soybeans harvest can seem endless at times and a bit frustrating too, usually followed by a wheat drill here in Ontario.  All my soybeans will be shipped to Asia for human consumption.   Every day in East Asia, somebody sits down for a little soybean milk or curd.  I’ll take that market dynamism.  Sometime we forget.  In our production fields, soybeans can be the great liars, but in the end always tell the truth.  Over the next month, we’ll see how good this Ontario crop is.