June 2020 Grain Pricing Window Wasn’t like June Pasts

I have yet to put my no-till drill away. With Canada Day staring me down next week, you’d think it would be time. Every year, it seems I have to replant some soybean acres and this year was no different. However, flash rain showers, which dump rain in 15 minutes continued to inundate me over the past few weeks. Crops look like they have gone through a wrestling match. I’m hoping for good weather ahead to make everything look a little better. Spraying for army worms in wheat this past week seemed power for the course. Good thing I got corn sold for $6 and soybeans for $15. Right!

Of course, I’m kidding. The last few years have been challenging to lock in any type of decent prices. I’m a big believer of standing marketing price orders, and I’ve had them hit at very opportune times in the past. However, often times, when I look back, those standing prices I was looking for happened once a year and only for minutes. Simply put, Canadian grain farmers haven’t had good opportunities to price grain, and it continues. With our American friends farming the mailboxes in overdrive, it has many of us crying wolf. If it wasn’t for the Canadian dollar fluttering around in the 73 cents US level, our world of hurt would be so much worse.

It’s time for better prices, but it’s not lost on anybody that these are different times. Nobody saw Covid19 coming six months ago. That combined with the US and China trade war has completely undercut markets since 2018. Covid19 doubled down on all the bad news. As I write this, December corn is $3.27 and November soybeans $8.68. We’re getting slapped good at a time of the year, when new crop prices traditionally are at good price levels. With USDA coming out with their actual planted numbers next week, we should get a little bit more clarity. In fact, in past years, the June 30th USDA report can be explosive for prices. This year, it looks more like a wake.

Needless to say, nobody knows, its always darkest before the dawn. I know, I’ve been at this for over 40 years. The old March USDA numbers still stand at 97 million acres of corn intended to be planted in the US and 83.5 million acres of soybeans. On June 30th, we get new numbers. All spring, everybody has been expecting a lot less corn acres and more soybean acres partly based on the lower price expectations for corn. The trade guess now for the upcoming USDA is sitting at an average of 95.2 million acres for corn and 84.8 million acres of soybeans. I think that is fair.

We’ll also get a look at grain stocks on June 30th, which are always telling about demand. With Coronavirus numbers again spiking in the United States, it may shake things up again. Sure, we’d like to see those ethanol numbers coming back up, but a Covid spike may shut down part of the country again. This is the pandemic that just keeps on giving. On top of this the weather forecast is good for the next two weeks. We are to expect adequate moisture and benign temperatures leading into corn pollination. It all points to a corn crop for the ages.

In Ontario and Quebec, it’s not as straight forward. Generally speaking, despite the toughness of crops in my own area, everything looks pretty good for corn and soybeans. The antithesis of that is in Eastern Ontario and Quebec where drought has been very tough on crops. However, this got alleviated to some extent over the last few days and Quebec is expecting good rains this weekend. As one farmer from south of Quebec City told me the other day, it will save crops in his area. That points to good crops in both Ontario and Quebec, which will be needed to be exported out this fall and into 2021. Basis will determine where it will all go.

It is all so straight forward. You think? Well, it sure looks that way, but keep in mind nobody knows and keeping your marketing mind open to new developments shouldn’t be out of the question. A dry August in the United States might shave off 2 bushels an acre sending ending stocks down into the 200 million bushels range. That will raise soybean prices. Then have China fulfil their Phase 1 commitments. It just gets better. If I could only think of a similar fantasy for corn. I will work on that. Keep in mind, I don’t know and nobody else knows for sure either.

In the grain pricing environment, June 2020 wasn’t like June pasts. Frankly, it’s always my “go to” period for pricing grain. However, 2020 is a different year. On the grain pricing front, it’s been a complete outlier. Keep in mind though, it’s not over. I might not have been down this trail before, but I’ve been down others. There will be grain pricing opportunities ahead. We will get through this. Mother nature won’t always play nice. Grain prices will get better, and yes, someday, we’ll even kick Covid19 to the side of the road.