It is that time of year again when things tend to settle down. For me, that usually means that all my crops are in the ground and growing well but the 2024 growing season has been rather ugly. In this part of southwestern Ontario, we have had heavy rains damaging crops and it has led to a large replant in my area. In the past week people were finishing up planting the first time, others the second time and then we got another two inches of damaging rain just to make things more difficult. Did somebody say once that farming can be risky?

We’ve all been there before or at least I have many times over a career that spans 45 years in the fields. The hot weather over the last week has accelerated crop growth. Hopefully, these damaging rains won’t be so damaging. However, in southwestern Ontario believe it or not crops do not grow underwater.

I told one farmer today that at Christmas time we will look back and laugh at the calamity that we have in some of our fields. I was only trying to make him feel better, I don’t know if I was successful in that. However, the questions changed later in the day when I attended the 45th Anniversary of Kearney Planters in Turin Ontario.  Gathered there were many farmers from across Canada and around the world to recognize Barry Kearney and his family outstanding contributions to agriculture over the last 45 years.  And on cue after getting to my seat, I was asked by several local farmers above why grain prices were so low

With crops underwater for some of these guys it must have seemed a bit of piling on. For instance, you’re not feeling so good about your crops but then they’re not worth as much as they used to be either. I told them initially that there’s just too much grain around and that’s why prices are going lower. It was last week where I talked about grain stocks being above 10% generally means the buyers are not worried about supplies. At the present time, across the greater North American corn belt that’s exactly what’s happening. This crop is setting up to be another record year.

It means that “big supply” is winning the day again like it did in 2023.  Keep in mind that the USDA is estimating the new crop corn crop to come in 14.86 billion bushels at a yield of 181 bushels per acre this year. For soybeans, USDA is estimating the crop to come in at 4.45 billion bushels at an average yield of 52 bushels per acre here. I do not have to remind you this crop potential is huge.  Having said that, many of you are looking toward the June 30th USDA report as a potential flashpoint to change that bearish narrative.  As it is, we’ve lost about $0.30 in December 2024 corn since May 15th, and we’ve lost about $1.15 in November soybean futures since May 7th.  Thankfully the Canadian dollar at 73 cents US is helping to sustain Ontario and Quebec cash grain prices.

So, we have “big supply” impacting our grain futures markets, but we also have ugliness in some Ontario fields which will surely skew the Ontario grain supply this fall.  Earlier this year Statistics Canada said that Ontario would have 2.3 million acres of corn planted this spring and 3 million acres soybeans. Clearly, there is going to be less corn than that and more soybeans as there’s been acreage shifts in southwestern Ontario and in Niagara. It is also true that the corn in the field in Ontario is not as good as last year, meaning that there will be less Ontario supply.  This will surely have an effect on basis levels at some point in the next eight months.

Of course, much of that will depend on future weather in Ontario. You know the drill. If we get benign weather into the fall with no frost, we should have reasonable Ontario supply but if the weather continues to be ugly, the Ontario supply of corn will probably be cut back substantially from last year. The soybean acreage will be higher simply because of the switch out from corn.  Of course, remember soybeans are the great liars so you never know what you’re going to get.

Keep in mind that Ontario is geographically very wide and diverse agricultural province.  There is corn grown across an 800-kilometer northeast distance from Windsor to the Quebec border.  There can be a myriad of different production realities across that distance as well as different market opportunities. However, as it is right now, there won’t be as much corn in Ontario as there was last year. The acres aren’t there, and the production isn’t there and we haven’t even got to the hottest part of the summer yet.

So, you know why grain prices have been declining. However, keep in mind the road is littered with people that thought they knew where the grain market was going.  Nobody knows.  There is still a world of risk out there in the summer of 2024.  Our job is to calibrate it and measure it versus our own farm reality.  Daily market intelligence remains key.