I’d like to say it is the middle of winter, but it is really not. So far, this Canadian winter it hasn’t been too bad as the specter of global warming continues to manifest itself in Ontario.  Last year we had pretty decent crops across eastern Canada with local exceptions. You might remember that your loyal scribe found it difficult to grow crops underwater.

Last year we had approximately 3.1 million acres of soybeans and 2.2 million acres of corn in Ontario. I do not know what the yield averages were as of yet, but they will certainly be available shortly. As we look ahead, we have crop prices of approximately $5.70 a bushel for corn and $13.45 for soybeans down from earlier last year and down from the last few years. However, from a historical perspective let’s just say we’re still on the ballpark. Old guys like me can tell you real stories about low prices.

Of course, everybody is wondering what’s going to happen this year.   It is no secret especially in Canadian farm country that we cannot avoid the elephant in the room. That is the impending 25% tariffs that likely will come post January 20th. This has led to lots of shipments across the border early whether it is soybean seed, seed corn, fertilizer, or an assortment of livestock. At the same time our Mexican cousins are importing US corn like no tomorrow. It all seems so reasonable in front of the great unknown post January 20th. Nobody wants to get caught on the wrong side of the border if it can be avoided.

Sure, there is nervousness in Canadian farm country but there also is the same in American farm country. Basically, US agriculture is like a pawn in a greater game and pawns are expendable. At the same time there was emergency funds extended to American farmers last week which should numb the pain. However, there is great uncertainty with regard to how this new policy will fan out across the Great North American corn belt.

Having said that, let’s keep in mind that we don’t do politics here even though geopolitics have a lot to say with regard to grain prizes. Let’s also keep in mind that the price of corn and soybeans are mostly weather derivative markets. In other words, as the weather goes so do prices go and so does production. At the present time we’re in our weather derivative market for soybeans as we await the condition of what looks like to be a very good crop down in Brazil. Combines will be starting to roll this month in Brazil and it will really pick up in February. If there is a late season weather hiccup it will surely lead to higher prices for soybeans.

Of course, that’s ditto for corn if it runs into a weather calamity. Keep in mind that we’ve had about a $0.50 rise in the cash price of old crop corn here in Ontario since October.  This has happened partly because of a rise in futures prices but also because of the severe erosion of the Canadian dollar.   In fact, recently the corn soybean ratio was 2.29 which favors growing corn in 2025.  Intuitively, we know that if that’s the case we might end up with a bigger problem in the corn market in later 2025.  However, it all depends on that weather derivative.

Predictions for grain futures prices are always folly.  That has been especially true in the last few years.  You know my mantra, nobody knows. Case in point think of all the chaos that can happen to a market within the 2025 year. We know the flashpoints in places like Ukraine and Russia and we also know the reality of the post January 20th world. Add in the weather chaos that will be affecting things and it makes it very difficult to know where things are going to go. At the end of the day, nobody ever went broke selling for profit. That means when we do get to profitable price levels it will be time for standing marketing orders to be waiting.

With that as a backdrop I saw one American farmer the other day post on social media a picture of him hooking his big, huge tractor onto his cigar boat backing it into his shed.  He asked in the post whether the US subsidy money that was just announced would be enough to pay the fuel bill for the boat. It was meant to be funny, but as an agricultural economist from Canada I didn’t find it funny. The point being is if you can afford things like that you don’t need any subsidy for your farm.  From a Canadian perspective, on this side of the border none of that is going to be coming pre-election or post-election no matter who wins. We are on our own with our risk management strategies.

So, what to do? Like all farmers, we go to the field trying to maximize profit for next year.  That means trying to get as much yield as we can. I was hoping for the same thing last year until I got inundated with water. It’s essentially our agricultural economics as we face a perfectly elastic demand curves for what we produce. In other words, we don’t affect greater production enough on an individual level to affect prices. So, our market signal is to grow more. That’s exactly what will likely happen in 2025.

In the next week we will get the latest “Final numbers” from USDA in the January WASDE.  It will be mildly interesting, but it is never the end of the story.  Those numbers will change overtime.   What won’t change is daily market intelligence.  That is when you look at both futures and cash markets and consider basis, futures spreads and the cost of commercial carry.  They tell a story.  Set those marketing orders at your buyer and then, let the chips fall where they may.