This week I joined the corn harvesting party. There was finally some good weather that helped put my soybeans behind me. It’s been a frustratingly weird season here in southwestern Ontario, I’d say wetter than normal which always causes problems. However, I would be remiss to mention the preponderance of double crop soybeans that are making it to maturity here in Ontario. Planting soybeans after winter wheat almost never works well in Ontario but this year many of these fields are being harvested successfully.
Is it global warming? I’ll leave that for another day. I can just hear it now, many of my readers will be wondering if I can recreate that double crop soybean magic in my future. The last thing I need is more work. However, if this year is any indication next year there will be even more attempts at double crop soybeans being planted in Ontario.
Amid all the hubbub of changing over from soybeans to corn we had another USDA report last week. If you were afraid that some of these double crop soybeans were going to show up in the revised USDA soybean numbers, you would be sadly disappointed. Soybeans provided about the biggest surprise in the report. USDA cut back US soybean yield by .3 bushels per acre to 51.2 bushels per acre. This put US domestic soybean production down 23 million bushels to 4.425 billion bushels of soybeans. Soybean ending stocks came in at 340 million bushels, which is still a healthy figure based on projections but 20 million bushels below the Dow Jones pre report estimates. Soybean prices took off after the report.
I was surprised by the report because soybeans were showing a lot of bearishness over the last few weeks. Since July we’ve lost about $1.80 in the futures price. Chinese demand has not been what was expected. At the same time, I was taking off my soybeans my Brazilian friends were planting them, and things look good down there. Soybeans prices on China’s Dalian exchange have been falling. It just seemed that everything was going the wrong way to get any type of a bullish surprise from the USDA report. There must be something to soybeans being the great liars.
On the corn side of the ledger, we saw higher yields and production. The USDA is now projecting 177 bushels per acre up half a bushel with production moving to the whopping level of 15.062 billion bushels. You know, sometimes you get numb to these big production figures in corn. I remember a few years ago writing about a huge 8-billion-bushel corn crop. It makes me think that in a few years I’ll be talking about a 20-billion-bushel corn crop with improved science and genetics. The USDA didn’t say too much about the wheat market that we didn’t already know other than the global supply is getting tighter. Wheat prices have been going higher.
I’m sure many Ontario wheat farmers will be lamenting the fact that higher wheat prices might not translate into better wheat profits. In Ontario on a good year will get us over 1,000,000 acres of wheat in the ground, but this year an incredibly wet October means we might have half of that. Despite that, this past week there were several drills in the field planting wheat past the crop insurance deadline, the ultimate Hail Mary pass. For those growers who managed to get a wheat crop this year, they will likely be able to take advantage of some pretty good prices. A much smaller captive supply in Ontario will make a difference.
Initial impressions on the Ontario crop are quite good. I had heard earlier that many of the yield maps in southwestern Ontario mimicked denitrification maps as heavy rains damaged the crop this summer. That surely might be the case as I noticed in my own crop this afternoon areas which had been severely impacted by 6 inches of rain in one event in late June. Despite that, yields seem good. The battle will be to get the right weather in mid-November to get this crop into the bin.
As we peer into the near future the market will likely focus on South American weather, Chinese buying and the USDA final report in January. Any hiccup in South American weather combined with renewed Chinese buying of American soybeans will help soybean prices. Corn prices are taking advantage of a bullish market structure, despite the fact we have huge supply. Having said that, it might be wheat that has the last laugh in 2022. With stocks shrinking on a global basis and a short crop in Ontario, there are real possibilities here.
There will be challenges with the US dollar index at its highest level in months. This often can serve as a break on upward grain futures price movement, but it also can make the loonie drop. The loonie is stubbornly hanging in and around the 80 cent US level.
The challenge for farmers is to continue to measure all these market factors. Sure, we’ve had great grain pricing opportunities this year. That’s not to say it’s all in the rear-view mirror. There could be many profitable grain marketing opportunities ahead.