The July Grain Marketing Window Can Be Both Exhilarating and Deflating

It is that time of year again when your loyal scribe rears back and blows off the dust on his combine header. What was a very dry spring in southwestern Ontario has turned into a much wetter scenario limiting my action in the fields this past week. I was hoping to get some soybean sprayed before getting my combine ready to go into wheat, but rain drops over the weekend stopped that cold. At one point I measured 2 1/2 inches of rain in about 90 minutes on Sunday.

Luckily for me the 3 1/2 inches that I received in rainfall over the weekend was not widespread across many of my farms. However, intermittent showers the rest of the week have put the brakes on. Today, I drove to Windsor Ontario and back and I did see dust blowing out of the back of a John Deere combine near Windsor. In other words, the Ontario winter wheat harvest has started, and I shouldn’t be very far behind. I just hope I don’t have to push water in front of my combine.

Precipitation has been variable across the province. I am wet where I am but even in southwestern Ontario there is a wide disparity of rainfall amounts. Ditto across the great American corn belt. In the past week since the June 30th USDA report we have seen a big run up in soybean prices and a big drop in corn prices. This had much to do with the different surprise acreage projections that came out of the USDA report. However, at this time of year weather is so important and the projection of more rain in droughty areas of the Midwest have helped keep the damper on corn prices.

By the end of trading today we saw December corn bounce up from its lowest closes in 2023 and November soybeans encounter resistance near the $14.00 level. You would think that it’s raining everywhere but that is not the case. In fact, in the United States good to excellent ratings for corn increased by one percentage point but at the same time they fell by one point for soybeans and two points for spring wheat. The bottom line is, there is still many areas of the United States that are going through drought and the market is increasingly nervous on exactly what that means.

I will be very interested in the July USDA report where we should see the first indication from USDA about a lower yield in the United States versus what they have been saying since March. However, market action of the last few days is coming close to telling me that the algorithms that drive the trading think the crop is made in corn.  In a week or two they might feel the same way about soybeans.

After the last week or two all of this frenetic market action might make farmers feel a little bit off kilter. I can understand especially since many of us have got used to much better prices over the last three years. Keep in mind, that we have put the pandemic behind us and that there should be a little bit more stability going forward.  However, it is hard to say exactly what will happen especially in the global economy which does not seem as strong as it once was.

For instance, we got somewhat surprising news this past week that Canada’s trade balance for goods produced the largest trade deficit since October of 2020. Canada actually posted a $3.4 billion merchandise trade deficit in May down from a revised $894 million surplus in April. (Globe and Mail) At first glance when I read that I didn’t think it was very good. It is a barometer of the strength of our Canadian economy. Lower exports in energy and agricultural products help push this deficit wider.  Of course, this brings up the spectre of recession and/or a slower US and world economy.  This is something that we don’t need especially when Canadian exports depend on demand from foreign countries.

I don’t want to be the purveyor of bad news, so let’s hope that that doesn’t happen. However, we can choose to look away from the reality that the DTN national index of cash corn is $1.45 lower than it was on June 21st!  Or we can choose that our farm management cup is half full and that maybe better times are just around the corner.   We do have those Laser Scarecrows!

What do you say? I read last week that a researcher from the University of Rhode Island actually designed a laser scarecrow which projects green laser light. Birds are sensitive to the colour green and this light which isn’t visible by humans in sunlight can’t project right across the field startling birds before they destroy crops!  I also read this week that AGCO is developing autonomous retrofitting kits for any brand of farm machinery hoping to expand their market share.  These two refreshing pieces of farm news, one eccentric, one more mainstream helps keep my mind much more optimistic about these 2023 agricultural economics times.

So, as we move ahead, keep your chin up and keep those marketing plans fluid and engaged.  This early July time slot within the crop year can be both exhilarating and deflating at the same time.  Think about your autonomous retrofitted tractor actually noticing and avoiding the laser scarecrow.  There will be many marketing opportunities ahead. Daily market intelligence will remain key.