Considering Eastern Canadian Corn Prices

I have always said that it is a long time between when you place your seed corn in the ground to the time when you run your combine through the field.  In other words, when you place that seed in the cold ground of Ontario in late April you never really know what the world’s going to be like when October turns into November. Today, your loyal scribe fired up the great green monster to once again tackle the standing corn.

In my case the corn that I placed in the ground last April got out of the ground without a hitch. Then during May the corn grew feverously and headed into June looking fantastic. After that, there was no rain till mid-August and the corn crop has been labeled compromised ever since then. As I ran my combine through it this afternoon, I’m approximately 30 bushels per acre less than last year, not a disaster, but way below average Thankfully, corn sold off the combine in SW Ontario right now is approximately $8.60 a bushel.  Historically, that’s a pretty good price, but of course nobody knows what the future holds.

I say that because although the growing season is long and we face all kinds of risks along the way, the pricing for corn is just as long or longer. For instance, some of you might have priced 2022 or 2023 corn two or three years ago at prices that aren’t as good as they are today. Some of you may not have, some of you may be in between, it doesn’t really matter. The journey to get that corn in the combine is an exercise in risk management. As we look into the rest of harvest and into 2023 there are a myriad of factors that are affecting the price of corn now which we have to give considerable attention.

Keep in mind the price of corn that I quoted above. $8.60 corn sold off the combine is very rare in Ontario but it’s there for the taking as of October 27th.  Ontario is a big province where corn is grown from Windsor all the way to the Quebec border and farther north. There are diverse cash markets throughout the province, and it grows especially dynamic as you get closer to the Quebec border.  Within these diverse Ontario cash markets there is a wide diversity of opinion on whether the present price of corn is the good one.

There is much going on. We have seen December corn at initial support of $6.74 on October 19th facing resistance on October 26th at a high of $6.89. You would think at these price levels you would see some type of Black Swan event happening within markets. However, that is not the case.  In fact, American corn exports are down 53% below last year’s levels. There are a few reasons for that with one being a 15% discount for Brazilian corn versus US corn.  We also have the Ukrainians getting rid of as much corn as they can before a possible grain blockade coming back in November. On top of that we have low water levels and barge restrictions on the Mississippi River which have contributed to the corn export pace. Needless to say, the price of corn is still good.

It’s still good because there is also a bullishness to corn prices.  If you look at futures months, we still have an inverse going out into July.  At the same time cattle feeders are bidding up prices for corn in the US southern plains to levels of $1.75 over December futures. In fact, corn interior basis levels in the United States are the highest they’ve been in about 10 years.

It begs the question, what will be the cash price for corn come January 1st, 2023, and June 1st, 2023, in parts of Ontario and Quebec?   Will it be higher than $8.60 a bushel? The answer to that question probably has much to do where you find yourself from Windsor ON to Drummondville Quebec.  In a place like Windsor, we can import corn from Michigan or Ohio on the same afternoon and ship some back. In Drummondville QC, it’s more of a captive market where corn in the hand means quite a bit versus shipping it in from the United States or eastern Ontario. It’s all a question of basis and how willing cash buyers are willing to pay.   A 73-cent loonie helps, but who knows what lies around the next corner.

A stray nuke is something that would really shake the corn market, but let’s hope that doesn’t happen over in the war-torn regions of Ukraine.  Brazil is set to produce a record corn crop of 126 MMT this this coming growing season. Ontario will likely plant another 2.1 million acres of corn in 2023.  The challenge for all corn growers is to measure all of the market factors swirling around us.