With Corn Planters Ready to Roll, Soybeans Say Not So Fast

A few years ago I planted corn in the snow.  In fact, it always seems that every time I plant corn I freeze to death.  Yes, I am old enough to remember planting corn and oats with the Massey Ferguson 165 tractor pulling the planter.  The order of the day was dressing up as warm as you could, but basically you froze to death.  I thought that was normal.

Of course now I plant my corn with a bigger planter and a tractor with a modern cab, satellite radio, air conditioning and the best climate control.  Gone are the days where I stopped to eat lunch and thawed out in the truck.  I have thought of those times this spring because of the very unusual weather we have had in southwestern Ontario.  The only thing that is stopping me from planting corn is the calendar.  The temperature is about right.  It’s cold out there, just right for planting corn.

This year in Ontario, some corn went in the ground in March.  Who knows whether it’ll end up ok?  ” Ultra” early planting is a lot different than planting in late April.  In 2010, I started planting on April 19th and finished on April 23rd.  About 2 weeks later all the corn was frozen, but luckily it came back to life.  Needless to say, it got so cold that I was probably only within a degree or 2 of a total wipeout.  I suppose that’s one reason nobody recommends we plant corn in March.  However, our American friends have been going at record pace.  It’s almost like you can see corn mountain building.

I say this without a single kernel planted on my farm.  Ditto across much of Ontario farm country.  There are lots of risk ahead, lots of hills and valleys for market watchers.  With corn planters rolling in the United States it would seem our American friends are well on the way to building corn stocks back to 1.6 billion bushels.  Based on where we see things now, that’s about where corn-ending stocks will be a year from now.  So let’s say altogether, laugh out loud. (LOL)

That’s how it looks from the agricultural classroom.  The only problem is with the South American soybean crop being lowered almost every day, there aren’t enough soybeans around especially in our new crop world.  The soybean market has rallied over the last few weeks trying to make that argument.  So you would think that 95.9 million acres of 2012 US corn will grow smaller into June 29th when USDA releases its actual plantings report.  Even with fewer acres I cannot see a 164-bushel trend line yield.  That’s why so many people are skeptical about the 2012 corn acreage figure.

This has turned me into a soybean bull.  I cannot see a bearish scenario for soybean prices.  Our American friends despite the run-up in soybean futures prices will likely be reticent to switch large acres into soybeans.  Our South American friends have had some bad luck with dry weather and their crop is much smaller than projected.  More importantly, when South America gets in trouble, typically their crop gets smaller.  Will this time be any different?  I don’t think so.

The lens on American 2012 crop production is definitely clouded because of their insurance program, which favours planting corn.  Many US producers have signed up for this and will grow corn regardless of new crop price.  The prognostications in Ontario are much different.  Last year, Ontario had 1.88 million acres of corn, 2.44 million acres of soybeans, while harvesting 1.095 million acres of wheat.  Going into the 2012 planting season, we’ve got about 650,000 acres of wheat in the ground after the wet fall of 2011.  With new crop soybeans prices around $13/bushel and new crop corn at $4.70, I see a big switch to soybeans.

Earlier I had thought we would see about 2.3 million acres of corn in Ontario.  I no longer believe that, thinking it will be very difficult to get to the 2 million acres mark.  However, with new crop soybean prices the way they are in Ontario, I expect a big jump in soybean acres.  I’m thinking will have record soybean acreage in Ontario this year; possibly close to 2.6 or 2.7 million acres.  Prices are a great fertilizer and clearly, new crop soybean prices are winning the day.

So give me another 10 days or so and I’ll start putting corn in the ground.  Ditto for many other Ontario farmers.  It may still be cold as ice, with snow flurries fluttering around us.  I’ve seen that many times in April.  The big question will be when these corn planters stop and when soybeans drills begin to roll.  That’s the quintessential question that will need to be answered by the market this spring.  We’ve got to have those soybean acres.  But the coast is clear.  Those corn planters are ready to roll.  Get out of my way.  This is the biggest wild card of the spring of 2012.