Last week just happened to be the week where I pulled my corn planter out of the shed and blew the dust off it. No, I realize that over the last 38 years I’ve repeated that line many times. Your loyal scribe doesn’t have a fancy heated shop to work on machinery in the wintertime so last week was about as good as it gets. We had some warm weather in southwestern Ontario that made adjusting my corn planter a pleasant experience.
Let’s hope it gets even more pleasant from here on in. As I write this, we’ve had a day of rain so of course here we go again on the proverbial weather merry go round on our way to corn planting. Old crop corn in Ontario is now under $5 a bushel as it lost five cents on the nearby contract today. It was a response to the April USDA report released earlier today that sustained the bearish environment for all grains across the board.
The April USDA report is often times a non-event coming after the bigger prospective plantings report at the end of March. Today’s report did not veer from that narrative. For instance, corn ending stocks came in at 2.122 billion bushels, soybean ending stocks came in at 340 million bushels and the US wheat stocks came in at 698 million bushels. These were on the high end of trade expectations and the market acted accordingly. The USGA continued their stand on South American crop production with no change in the estimates for both corn and soybeans out of Brazil.
In lieu of fresh news grain prices drifted lower. I suppose you could make an argument if we don’t have any production changes going ahead it will continue that way or sideways into the latter parts of this year. However, we cannot get ahead of ourselves there is still so much risk ahead. As the famous Boston Celtic and champion Bill Russell used to say after winning so many titles,” That’s why they keep score.” That’s why each month we have to check in with USDA just to see what the score is.
Keep in mind it’s like I said last fall where “big supply” is winning. Not only did we get that crop in the bin after very tough growing conditions here in North America, but our Brazilian friends have chimed in with another great crop down south. We can tweak demand all we want to, but this market really is not going to go anywhere until we get some fresh news.
The question is what will that be? Well, remember that old axiom when it comes to grain prices, that we take the escalator up and the elevator down. Some of you might argue, where is that escalator or is the elevator still going down?
The answer of course is that nobody knows but there are a few market factors out there that might offer some hope. I also fully realized that hope is not a marketing plan. Keep in mind that sometimes when you’re involved on the farm, you cannot see the forest for the trees. For instance, there’s so much production risk ahead that the market will likely create some type of a premium at a certain point. This usually comes in June for corn and July for soybeans. It’s the quintessential seasonality of the market, which is a characteristic almost every year.
That seasonality and both corn and soybeans are often enhanced by some type of crop weather scare. Of course, nobody likes that on their own farm just thousands of miles away would do just fine. On top of this the world is very unsettled at the moment with geopolitical time bombs which could erupt at any time in the Middle East, Iran and Russia and Ukraine. This will be a continual wild card as we move ahead into 2024
Those points above will certainly affect grain futures prices but in Ontario and Quebec there is always our Canadian dollar. The Canadian dollar lost 59 basis points today down to .7303 which is the lowest trade we’ve seen since November 22nd. As you all know this is a stimulus for Ontario and Quebec cash prices for grain. I even heard some commentary this week from an economist saying that he expected the Canadian dollar to drop down in the $0.50 range in the near future. I disagree with that but if it did happen it would redefine our cash price scenario at every level.
The challenge ahead for farmers is to weather the storm of what is our 2024 grain price horizon. Yes, big supply continues to win the day, but we’ll eventually be on that escalator up to better prices. The challenge will be to keep up with that daily market intelligence. Keep up with the score of what’s going on. The journey to payday will be long. There surely will be many marketing opportunities ahead.