Spring is getting closer in southwestern Ontario, but the latest forecast is talking about 15 centimeters of snow for tomorrow night. So, your loyal scribe might have to wait a little bit longer. Today I found myself at the London Ontario farm show pretending to be interested in tractors bigger than my imagination. I was most fascinated by the solar powered planting unit which planted sugar beets down the road from me last year. It was beyond my imagination then and it surely will be this spring. The young man in charge of the unit told me he was hoping to use equipment like this in his farming future.
I’m sure the well-spoken, well put together young man, thought I must be a bit of a relic, but that changed when a farmer reader passed by interrupting our conversation to ask if I was Phil Shaw. He just wanted to meet me after reading my column for over 30 years. He was very kind and I thanked him for his patronage. Turning back to the young man, our conversation soon turned to why this older gentleman had interrupted our conversation. Needless to say, our discussion veered off into the grain marketing realm. Lately, that hasn’t been as exciting as a solar powered sugar beet planter, but we still need to talk about it.
It’s no secret that markets have been down into 2023 and they took quite a dive today. Our Canadian dollar sitting at .7293 US is helping, but prices surely aren’t what some people had expected only a few weeks ago. In fact, our wheat futures markets are simply hard to figure out. How bearish can we be? It seems in the wheat market despite fairly tight fundamentals price rallies have become scarce. As we look into the warmer weeks to come many of us will be asking the question of what price direction, we will see in the weeks to come.
The USDA tried to help us out with that yesterday when they released their latest WASDE report. This report is a precursor to the much bigger numbers at the end of the month. In the March 8th report the USDA reduced corn export demand by 75 million bushels and at the same time bumping up corn ending stocks by 75 million bushels. This put corn ending stocks at 1.342 billion bushels which is still the second lowest ending stocks in corn over the last nine years.
On the soybean side of things, the USDA reduced US soybean ending stocks down to 210 million bushels. They left the Brazilian production at 153 million metric tonnes but cut aggressively the Argentinian estimate by eight million metric tonnes down to 33 million metric tons. The Brazilian number as forecast this past year is a huge number, but many private forecasters have actually cut it back. We will see if the USDA gets on that train, but the bottom line is the South American crop despite the problems in Argentina is more than adequate for the demand that is out there.
I don’t really want to even talk about wheat prices. We know that may Kansas City wheat and the May contract in French wheat both hit their lows today and Chicago wheat is no better. Let’s just say that wheat continues to be the “cockroach of grains.” If it wasn’t for the Canadian dollar sputtering around $0.72 US at these futures price levels, it’s pretty clear to me that next fall many Ontario farmers will be choosing not to plant wheat under such a scenario.
Last night 80 Russian missiles and a smaller number of exploding drones rained down on Ukrainian residential buildings and other critical infrastructure. At one point a Ukrainian nuclear plant was targeted. It is under this barrage of hypersonic missiles that Ukrainian farmers find themselves either planning their spring cropping plans or actually doing it. In a nutshell, this continued war play in one of Europe’s biggest breadbaskets will continue to play a wild card in our grain market complex. The latest market action almost seems like these trading algorithms have the worst dialed into them.
We shall see. As I walked the halls at the London Ontario farm show today, there was optimism. Essentially, that is the nature of farmers anyway in the worst of times. There is always a better way, which takes me to closing wheels. I’m always surprised at farm shows how many displays of closing wheels I see. For those that don’t know, on planters and seed drills, there are usually a closing wheel or a set of closing wheels behind the planting opener which helps seal the ground where the seed is buried. Essentially, it helps firm the soil over the row in a way to optimize germination. I have always been surprised by the variety and differences of closing wheels available within the marketplace. They are all on display at your different farm shows.
I’ve never understood this as I’ve often thought closing wheels are closing wheels and don’t have a big impact on the bottom line. In fact, maybe that’s one reason why the closing wheels I have on my corn planter are the same style that they were 40 years ago. However, I listened to a 20 something salesman today tell me about the virtues of his companies closing wheels. That was just after he asked me if I was still farming!
So, is there a better way of marketing our crops in 2023 just like there is for closing wheels? I would like to think so, but maybe as a compromise I’d say that our marketing acumen must continue to evolve just like all of those closing wheels I see on the market. However, having a closing wheel is better than not having a closing wheel at all. We need to have those standing marketing orders all set for this year. This market is acting like it is taking no prisoners. As the weather grows warmer grain prices likely will become even more volatile. The algorithms likely have it all dialed in, but remember they aren’t human, they don’t understand what closing wheels are for.