It is a new year, but as hard as I try, it hardly feels like a new day. As 2021 dawns there is faint light at the end of the tunnel which we are all hoping is 2021. Covid 19 dominated 2020 like we could have never imagined. I started the year off in Bangladesh and at night I watched on TV as the Chinese were dealing with a terrible new virus. Little did I know by March the world would be locked down and our world would be changed forever. As the year ended, we were solidly into the second wave with over 15,598 people dead from it in Canada and 344,000 deaths in the US.
Vaccines are on the way and that gives us hope for a better 2021. It all points to better times ahead. When I say that, keep in mind, March corn closed at $4.84 today and March soybean closed at 13.11. If I had told you that was going to happen a year ago, you would have said I was on drugs. The grain rally into the end of 2020 was spectacular in breadth and scope and it continues into 2021. As we move into 2021, it’s our job as farmers to stay safe first, but also market our crops to capture even greater profits in 2021. The ground has shifted a bit even since August.
Last week I got a letter from Walter Mytz who farms near Mannville Alberta. Walter is a DTN subscriber who was commenting on the differences in canola bids in western Canada in response to my column on “orderly marketing” I wrote a few weeks ago. He had real concerns about the differences in price levels and we talked on the phone about it in depth. However, we both agreed, canola prices are at healthy levels, which is a very good thing. Somehow in the conversation, I learned Walter was 87 years old. That in itself gave me inspiration.
I guess I’m not so old, but maybe not as enthusiastic as Walter. Needless to say, both of us find ourselves in a very different world as 2021 gets older. Are we both in “unsellable” markets? In other words, the bulls are eating hay, and we got here through the most unexpected way. An agricultural economy battered by Covid 19 gets even worse last spring as supply lines are cut and prices plummet. It all turns around in late summer as China starts committing to buying soybeans and grain prices are on the march. Add in some bad weather in South America and prices have kept going up. Yes, in retrospect (as of the last trading session), it seems unsellable. However, we all know, we live in the real world and we have to sell sometime. Knowing where that will be in 2021 could surely be the challenge.
Let’s take corn for example. As the year begins, we have May corn at a contract high of $4.84, which is the 14th consecutive day of gains. The Dalian exchange today traded corn at its highest level of 2020. We got here based on 82.5 million harvested acres in the US with a projected yield of 175.8 bushels per acre. At the same time, African Swine Fever seems to be kicked down the road in China, within 10% of pre-pandemic levels. You’ve got to believe looking ahead, there will likely be more corn acres planted in 2021.
Soybeans might have something to say about that. We all know it. In Ontario right now, you can contract 2021 corn for about $5.35 bushel, but for soybeans, it’s about $13.60 a bushel? In other words, at the moment, soybeans will get more acres in 2021. We don’t know if prices will continue to keep going higher, but soybeans will be making a play for more space on American farms. It will be interesting to see which crop wins that acreage war when the dust settles on planting.
So, what does this mean for Ontario and Quebec farmers in 2021? Simply put, its shaping up to be a very good year on farms. Covid 19 labour issues at kill plants might still rear its ugly head. The same could be said for offshore foreign workers who are the life blood of the horticultural farming sector. However, farmers and agricultural workers might not be at the head of the line for vaccines, but the Ontario government last week announced they will be part of the first stages. That would certainly help to smooth out problems in the Ontario and Quebec livestock sectors.
As January grows older, I’m hoping that faint light at the end of the tunnel grows brighter. It’s a strange situation for farmers. As it stands now, we’re looking at a pretty good year. However, we are embarking on that in one of the darkest winters imaginable. Covid19 is brutal. The first priority is to stay safe and embrace the public health protocols. After that, it looks from a price standpoint this year, we’ll do fine. Hopefully, by this time next year in 2022, the future planning horizon will look so much more positive.