As we get deeper into January, we are reminded of what a Canadian winter is. For the last couple of years Canadian winter in southwestern Ontario has been somewhat mild. However, this year it is much colder and snowier than we’ve become accustomed to. That at least will enhance the freeze and thaw effects on our soil structure. Farmers here always depend on that Canadian winter to cover over the sins from the past. Cold Canadian air can have its advantages.
In the over 38 years that I’ve been writing this column I would always tell my American readers their government better be good to us up here in Canada because revenge will be the coldest Canadian cold front ever. Of course, I say that even though I have no control of the weather. With the new American administration was held indoors because it was very cold. Hopefully the new American administration will surprise us and treat their Canadian allies warmly.
We’re certainly not expecting that. The last several weeks in Canada have been full of political intrigue with the Prime Minister resigning and our first ministers getting together trying to organize a Team Canada approach to incoming American tariffs on Canadian goods. Will it be all bluster. However, I think as Canadians we just should settle in and take what’s coming. Despite our historical trade agreements, free trade between Canada and the United States has always been what the Americans deem it to be. Here we are.
Initially, there is unlikely to be any effect on our cash grain prices in Ontario and Quebec. That may change if there’s any retaliatory tariffs on grain coming into Canada. As it is, putting politics aside for the moment we have seen a bit of a renaissance in cash grain pricing over the last few weeks. Many grain analysts have said this has been a gift from the market for producers to sell. Many market orders have hit. Cash soybeans are approximately $1.70 a bushel above where they were at harvest time while cash corn is about $0.70 above where it was when combines rolled. I guess you could say, it is a rally opportunity.
Last week we had our WASDE report. Earlier I had written the USDA cut US domestic corn production by 3.8 bushels per acre which resulted in a 276 million bushel cut to production with total production now set at 14.867 billion bushels. USDA cut soybean production by 1 bushels per acre down to 50.7 bushels per acre giving us a total production of 4.366 million bushels. Prices bounced up on the USDA bullishness.
At the end of the day, grain fundamentals matter over geopolitics and whatever else might be happening within the market. We all know that grain prices at the moment are heavily influenced by what’s going on in the fields in South America. Argentinian dryness has helped this process. However, rain has come back to Argentina in southern Brazil with good amounts slated to continue. East Central Argentina may have not gotten enough according to our DTN weather department receiving only one to two inches in the past 30 days and nothing in the past two weeks. It’s hard to know, just like it’s hard to know here from day-to-day what the weather will be doing.
Keep in mind some see this more as a corn issue versus a soybean issue. The Safrinha corn crop will be going into the ground over the next 30 to 45 days and delays in planting will affect corn later on. With Brazil being the world’s number one corn exporter now, delayed planting matters.
December 2025 corn futures are currently at $4.56. November 2025 soybean futures are currently at $10.32. Really, there’s nothing special about that as we look ahead. Those prices are about the same as they’ve been since June of 2024 and before that they were a lot higher. So, we might think we’re in a little bit more bullish of a time for grain prices but not really.
Post the Trump Inauguration we’re into uncharted water with regard to grains, tariffs and geopolitics in general. As we all know, there likely will be a different emphasis from the Americans in the Black Sea with Russia and the Ukraine. A hot war once made grain prices peak, but now it’s all dialed in. Add in issues with Mexico which is the number one importer of an American corn, and the grain arbitrage horizon just gets more uneven.
The challenge of course is for Ontario and Quebec grain farmers to balance all these marketing factors on the road ahead. It’s a road always littered with those who thought they knew where grain prices would go.