Well, hasn’t this been an interesting week. We don’t do politics here, but we got news this week Prime Minister Trudeau will not be continuing as leader of the Liberal Party and Prime Minister after the party picks a new leader.  Parliament was prorogued until March 24th. Then at the end of the week we learned that the Gulf of Mexico will soon be named the Gulf of America!

I suppose in many ways that makes this upcoming week boring.  For instance, how are we going to top that. Well, on Friday we will have the “final” USDA report putting the numbers to the 2024 crop and that always is eventful. Who knows, we might be even get new names to the Great Lakes.

We shall see. I I’ve concluded over the last few years USDA reports can often service flashpoints for the market, but I don’t believe that as much as I used to. I tend to think that basis and future spreads and the cost of commercial carry have a lot more to do with what the market is actually telling us versus what USDA reports do. However, for those of us who farm, USDA reports still provide benchmarks for us to measure against previous reports and correlate this against prices.

At the present time in Ontario old crop corn is approximately $5.80 a bushel and new crop prices approximately $5.62 a bushel.  On the soybean side of the ledger, we’re looking at about $13.44 for old crop soybeans and $13.39 for new crop soybeans.  These prices are less than we’ve become accustomed to over the last two years, but they are still better than we saw last harvest time.  Dryness in Argentina and southern Brazil has led to the buoyancy in these prices over the last four weeks.

That pricing horizon will probably get further muddied tomorrow because despite the skepticism that I might have for USDA reports, there are always surprises.  For instance, it is likely that the USDA cuts back on US corn production. This was pegged at 15.143 million bushels in the December report, but I think you would expect this to be cut on Friday. There are also should be good demand numbers.   Generally speaking, there will be something traders did not expect.

The one saving grace for Ontario and Quebec farmers is the value of the Canadian dollar which closed at .6947 cents US today.  As always this is a reflection of how strong the US dollar is but of course on a political week that we had it’s also a reflection of confidence in the Canadian economy.   You cannot have a Canadian Prime Minister announced his resignation with certain government defeat post March 24th and expect the dollar to gain.  As it is, it continues to add stimulus to cash prices for wheat and soybeans in Ontario and Quebec.

At the same time, we have the crop growing in South America. It has been dry in Argentina and in southern Brazil and this is certainly put some type of risk premium in both the corn and soybean market. However, like I have said many times the drought ends when it rains. It is always hard to know in our North American perches, how the South American crop is doing. Needless to say, we are in a weather market similar to what its like in July or August here in North America.

Often times, corn and soybeans get all the attention and wheat does not.  Ditto for this January as well. Let’s just say that wheat is as moribund as usual.  Wheat prices in Ontario and Quebec are approximately $6.39 a bushel for old crop and $6.70 for new crop wheat coming off this July and August. That’s not exciting for anybody. I got in a conversation with a Russian friend of mine today who trades wheat. He was talking about the problems with the Russian wheat crop. I responded to him by saying the market yawns when they hear of any problems with Russian wheat.

He responded to me by asking why even though I think he already knew the answer. If there’s a problem with wheat production at any place in the world, it’s always quickly filled in. For instance, wheat is grown everywhere, planted and harvested every month of the year somewhere in the world so filling the supply gaps is never really a problem. Then of course we have our speculator friends and they’re short wheat at the moment. That’s only adding to the bearishness in the wheat market.

So, going into this weekend let’s hope for some good things in Fridays USDA WASDE report.  Beyond that, let’s hope for even better things because we need a lot of faith for these grain markets to gain.  I’m ready for some fresh news and I don’t mean the Gulf of America or the Annexation of Canada.  Let’s look for clues for $5 corn futures and soybean futures back in the teens. Despite our skepticism, markets are fluid.  Daily market intelligence will remain key to capturing good pricing opportunities.