It is hard to believe we are here, but 2019 is coming to an end and for many farmers across the great North American corn belt, it can’t come soon enough. It’s been a difficult year. As I write this, there are still many farmers in the fields across Ontario and Quebec getting the last of a difficult harvest. Incredibly, the week before Christmas provided some of the best harvest weather this year. Things are drawing to an end. 2020 is a week away.
Its almost science fiction writing that. For instance, I’m going into my 34th year writing this column and so much has changed. It seems spacey, that I was writing this piece 20 years ago and I was talking about something called Y2K. 20 years later, I’m sure there are some of you who don’t know what that is. Needless to say, typing the year 2020, seems Orwellian. Time keeps marching on.
As 2019 ends, it’s good to look back at where we have come from and where we might be going in 2020. Last year at this time, the US government was about to go into shutdown which put a damper on the USDA announcing the final crop number in January. However, that finally came in February as the USDA pegged final 2018 corn yield at approximately 176.4 bushels per acre and soybeans at 51.4 bushels per acre. Corn futures a year ago were approximately $3.74 for corn and $9.18 for soybeans. Last week we had prices putting corn at $3.88 and soybeans at $9.37.
At first glance, that would tell you nothing much happened last year. However, we know that wasn’t true as a very wet spring in the Eastern Corn belt prevented farmers from getting in the field, ultimately resulting in a record US prevent plant acreage of approximately 14 million acres. Both corn and soybean prices gained on this news, but producers were in a quandary. How much crop should be contracted when you couldn’t get into the field?
I felt this pain too. In SW Ontario, the wet weather which caused so much prevent plant acres in Ohio and Michigan was only slightly better across the border. I struggled with corn planting ultimately switching acres out of corn instead of planting into mid-June. At the same time, it kept raining, pushing soybean planting into July. It was the most brutal spring of my career and as planting ended on July 1st, yield expectations were low. Everybody had their eye on the crop insurance guarantee. Grain futures gained on all of this planting angst.
At the same time, we waited for some type of trade peace between the US and China to free up the trade of soybeans. However, that was the poison pill of 2019. Almost every week there was news of a trade agreement, that never came. As the year ends, the Americans are saying they have a phase 1 agreement with the Chinese to purchase $50 billions of agricultural commodities. However, nothing can be confirmed by the Chinese side. The grain futures market has gained on the news, but after so many false starts, it’s still a bit numb to the news.
We had our own problems in Canada. The Chinese stopped buying our canola, pork and whatever else they chose, plus they jailed two Canadians in response to the House arrest of the Huwaei CEO. In essence, the Canadian China policy was in shambles, with our Prime Minister actually musing that the Americans might help by not signing any trade agreement with China without the release of the two Canadians. It was weak, but emblematic of the frustrations we had with China this past year. We got back to selling the Chinese pork products, but canola remains out in the snow. Farmers have been left in the lurch.
Of course, in October, we had a federal election with the Liberals returned with a minority mandate with the Bloc holding the balance of power. This surely caused some anxiety in Western Canadian farm country, but it is what it is. We move on.
The 2019 Ontario corn yield is likely in the high 160s, even possibly 170 bushels per acre, which is amazing considering such a difficult start. Soybean yields were a bit more normal considering the same problems. Of course, all of our crops when they go into the export market face the same competition from places like Brazil, the Black sea and the United States. Thankfully, the Canadian dollar still muddling around the 75-76 level US has helped domestic grain pricing.
As we move into 2020, we await where the USDA places final crop yields. In November, USDA pegged corn at 167 bushel per acre and soybeans at 46.9 bushel per acres. On January 10th, we’ll learn the truth, or at least the truth of the day, as USDA often changes the numbers into the following September. We wait for lots of political solutions to our trade problems. We wait for new technological innovations to make farming easier and safer. We await the next new thing.
Thank you all for your indulgence this year. Happy New Year. Let’s make 2020 a year to remember.