Your loyal scribe got finished planting soybeans today. In southwestern Ontario over the last few weeks, it has been good weather for planting both corn and soybeans. Typically, I am never done planting soybeans until sometime in June and oftentimes I plant them a second time in June. However, we don’t want to go there this year. Needless to say, the last few weeks have been mostly bright and sunny, although the last few days have been quite cold.
That led to some excellent planting conditions with little rain in the forecast. Of course, now it would be good to get some nice rain showers to make sure that every soybean comes. I say that with memories of last year when three inches of rain in about 45 minutes translated every field into a lake. It’s just an example of how weather trumps everything that we do.
While planting soybeans the seedbed was dry, so dry you could only go so deep Looking for moisture. Sometimes it’s like that on the farm. There’s not a lot of in between what you can and can’t do to make things better. However, give me that good weather and adequate rainfall and I can do wonders.
For my sake, let’s hope that that is this year. As it is, the US climate prediction centre is currently giving the global climate event El Nino, a 62% chance of developing in May and July of this year and an even greater chance of 80% settling in from July to September this year. Generally speaking, as discussed in these pages before an El Nino event means good crop growing weather for North American agriculture. We’ll also get more rain to Argentina and southern Brazil. However, as discussed here in the last few weeks, parts of Asia can dry out. And then come of course there is all that in between.
The in between is what can really get you. For instance, just because the development of El Nino means good crop development for North America, it might not necessarily happen in your area. That’s what happened last year in my little pocket of southwestern Ontario which essentially had no rain all summer. Meanwhile, there was good crops almost everywhere else. With the developing El Nino, this is supposed to be even better for 2023 and 2024.
El Nino can also have the effect of raising global temperatures and accordingly there is a chance that the world might be breaking through a key 1.5 degrees C global warming limit in the next few years. For cold countries like Canada, that can garner yawns in some circles as we’ll take all the global warming, we can get on cold days. However, it represents something much worse in more southern climates with extreme weather and heavy rainfall. In this environment, the economic costs of dealing with the global weather phenomena can be very high.
In fact, my friend and DTN colleague Bryce Anderson cited some of this economic impact in his latest, “El Nino Cost Study Points to “Have†and “Have Not†World Regions. In the piece Bryce cites a Cambridge University study which found past “El Nino†events found the US and Europe had growth enhancing effects, while countries in the global south like Australia, Chile, Indonesia, New Zealand and South Africa were harmed my such events. Clearly, it’s a mixed bag.
However, I did get my soybeans all planted in May this year, and if that’s an effect of the developing El Nino, I’ll take it. Of course, the focus of many Ontario Quebec farmers is not necessarily El Nino as a weather pattern but its effect on corn, soybean and wheat prices. While that is a function of many things, it also could be a function of El Nino providing good weather. As of May 21st, 81% of American corn had been planted, 12% ahead of last year’s pace. 66% of American soybeans have been planted a full 19 percentage points ahead of last year’s pace. Of course, our grain futures prices have acted accordingly and slumped as this all has taken place over the last few months.
If you read my column last week, you will know that I’m waiting for that spring rally to start in grains. Needless to say, many of you are still waiting, including myself. Soybean futures prices have declined about $2.00 this year. Corn futures prices are down just over a dollar a bushel from January and of course we know the cash wheat prices are about half of what they were last year. So now, El Nino is set to emerge to make everything better.
I guess I’ll have to hurry up and wait. It is so hard to say. Clearly, history tells us that El Nino means better crops for the greater American corn belt, and we all know what that means. Keep in mind that within that paradigm, it’s not the end of the story. There is lots of opportunity on the road to getting 250 bushel per acre corn or 90 bushel per acre soybeans. Bring on the El Nino. I’m sure I find my path through somehow.