Somebody knocked me over with a spoon. It is August and it seemed to have come this year quicker than ever before and with that we have some of our crops in their critical growth stage. It just so happens that your loyal scribe finally got some rain which broke a pretty devastating drought, which damaged both corn and soybeans.  Hopefully, the soybeans will find some redemption in August, but I’m afraid it’s too late for a corn crop that looked very promising at one time.

We all know what drought looks like. The corn is like pineapple, fired up from the bottom and when it hits the crop at an early stage, typically corn is very short while it tries to tassel out. It’s hard to look at when you drive by the field. It almost feels as negative as it feels positive when you drive by the same crop in another year where weather’s been outstanding making the corn crop as super healthy and tall.  At the same time, soybeans tend to like slightly dry conditions but when it gets too dry, they often look weak and dusty. We all know that rain in August makes a soybean crop so hopefully last night’s rain was a harbinger of good things to come in southwestern Ontario.

Of course, we know that the drought ends when the rain comes.  However, in 2022 we also know that there is not drought everywhere and it is reflected in our agricultural commodity markets, which have been up one day followed by the next day where it’s a reverse process. Of course, the weather is one factor as well as geopolitics and the lack of non-commercial interests currently sitting on the sidelines.  Needless to say, they are not worried about a drought in southwestern Ontario.

The geopolitical situation continues to boil. This past week we did see grain move out of Ukraine, but it was a trickle mainly for the mainstream media cameras. The war continues in Ukraine, and it is terrible, people are dying everywhere. At the other side of the world, we saw the speaker of US Congress go to Taipei, Taiwan against the wishes of China.  After she left, the Chinese military had live ammunition exercises surrounding the island of Taiwan.  Agricultural commodity markets marked every move.

I don’t buy in to the narrative the China will invade Taiwan. However, you hear that from mostly American grain analysts. I have always said that the view from Asia is much different than it is from here on almost every topic.  China and Taiwan have a strained history and I don’t see that changing anytime soon. I have a good friend who is moving to Taipei, Taiwan this week. He is working for a very large software company and I’m sure the invitation to go visit him will come someday. I fully expect that to be in a free Taiwan.

I simply do not see a lot of upside to China invading Taiwan. I think that there are benefits for the status quo. However, I do understand that many of you are saying the same thing about Putin and Ukraine. There hasn’t been a lot of upside to that either. It is also true if there was a wider conflict between China and Taiwan it would definitely affect global soybean trade. Needless to say, I do not see it happening anytime soon or in the years to come.  Hopefully someday I will be writing this column from Taiwan, and I’ll tell you more about it.

You might think with so much tumult in our geopolitical world grain prices might be surging again, but that has not happened. The crop looks fairly normal in United States and our Brazilian friends are planning on harvesting 143 million metric tonnes of soybeans this coming year.  It’s all a theory now, but that is one reason why grain prices have retreated over the last several weeks. The drought over Dresden Ontario hasn’t been everywhere and grain supplies are expected to increase.  Of course, we know how fickle that can be.

Back in Canada our own federal government often can be mistaken for being more concerned with Ukraine versus some of our goings on domestically.  A few days ago, our foreign affairs minister Melanie Joly toured a grain complex in Montreal with the German foreign minister.  They also toured the place where the big gas turbines were being repaired on their way back to Germany. I chafed during the news conference when Minister Joly talked about Canada increasing grain production to meet the challenge brought on by the evil Vladimir Putin. This is the same government that raised tariffs on nitrogen fertilizer directly taxing Canadian farmers, while Russian exporters got away Scott free.  Considering that, you can see how unstable geopolitics around the world affects agricultural directly, whether it is here or on the Black Sea grain shipping corridor.

This is not meant to be an overt criticism of the federal government because, although legitimate, I don’t think it would make any difference who was in office politically.  Threatening geopolitics sometimes find strange scapegoats and in this case Canadian farmers have been one of them. Currently, in Ontario nitrogen prices are half what they were this past spring.  None of that was fair.

Fairness though is not a constant in farming.  In fact, unfairness is almost the constant we can depend on.  Needless to say, that’s where our risk management comes into our management equation.  Hedge that risk, whether it is $20 soybeans or fertilizer prices.  Hedge that risk, whether the water needs to be drained or is running up hill.  And of course, never say never.  Our road ahead in 2022 will surely be eventful, but I for one vote for a bit of a reprieve in August.  Just give me more rain and the sounds of soybean pods filling.  It will make this farming game so much fairer.