Ontario Corn Acreage Surprise

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I’m wondering if corn likes wet feet.  I had a field of corn at the six-leaf stage 10 days ago before 2 inches of rain came down. It was a calculated risk at the time to leave the corn for another day.  So when I got to the field yesterday most of it was eight leaf but as my sprayer rolled toward the back of the field the corn was more like eleven leaf.   Needless to say I was just glad to get my final application of glyphosate applied.

The wet feet analogy is particularly true on my farm.  I have a lot of heavy clay soils, which even though they are drained very well don’t like a lot of water at the best of times.  At the same time during periods of drought they are the soils to have as they retain water quite effectively.  So sometimes the cup is half full and sometimes it is half empty.  It was pretty clear though from last night’s adventure that the corn over the tile drains was a bit better than the corn in between.

So when Statistics Canada came out with their report of June crop area estimates last week I was a bit surprised.  It’s been a struggle in Ontario this year because of a later spring with lots of rain; corn went into the ground later than usual just like a lot of areas in the eastern Corn Belt.  The conventional wisdom has been 1.6 million acres of corn was planted which is a reduction from last year when 1.76 million acres were planted.  Actual production has already been decreased to about 140 bushels per acre from 156 bushels per acre produced last year.  Statistics Canada said there would be 65,000 more acres of corn this year coming in at 1.825 million acres in Ontario.  So on a year when input prices increased and everybody was swearing up and down they were not going to pay the money, it looks like corn acreage went against the grain this year.

I was initially very surprised by this.  I had locked into 1.6 million acres, especially at a time when Ontario farmers couldn’t get corn in the ground.  So let’s assume that I am wrong and statistics Canada is right for the moment.  My question is as we go into the USDA June 30 planted acreage report, will the private grain acreage pundits be wrong for US corn acreage just like it seems we were in Canada?

I don’t think anybody wants a surprise like that this coming Tuesday. USDA had a March figure of 85 million acres of corn, which is higher than the Informa June estimate of 83.11 million acres.  Based on the Statistics Canada estimate, my guess going into Tuesday would be USDA corn acreage to be surprisingly buoyant.  Maybe those 85 million acres will stand.

I know that Ontario corn production is very minor compared to the big corn picture.  However let’s look at what Statistics Canada is really saying.  Basically they increased Ontario corn acres by 65,000 and increased Ontario soybean acres by 300,000.  This all came from wheat acres, which were down 365,000 from 2008.  It was a very convenient equation and one I think most of us wanted to ignore even though we knew it was there.  Those acres had to go somewhere and it looks like they did.

The question is what does this really mean moving forward.  It’s pretty obvious in Ontario that even with reduced yields per acre there will be a lot of corn in Ontario this fall and exports are likely. Of course the greater question is this corn really like wet feet and how this affects things once combines start to roll this fall. In other words at this point in time regardless of everything we talk about with regard to demand, it’s all about the weather.

Lost in this debate is how it will all play out in the Canadian agricultural policy world.  For instance you have often heard me say that margin-based programs do not work and Agri-Stability and CAIS before that were the two poster boys for those policies.   Now lightning has struck!  The Ontario provincial agriculture minister said today the Agri-stability program doesn’t work and a new model is needed!  This comes after several years of the obvious, it never did work and every dime put in it by farmers has been just like flushing it down the toilet.  Kudos to the Ontario minister for admitting a terrible mistake, but at the same time shame on her for being part of this charade throughout the years.

So let’s hope that those numbers on June 30th had up to some bullish prices going forward.  Ontario producers need that because even our agriculture Minister is admitting now there is no safety net.  Ditto for across Canada. So when the numbers are announced on June 30 brace yourself.  Who knows?  Maybe the USDA has been talking to Statistics Canada about getting it right.  Regardless, the June 30th report will surely shape our market for the rest of 2009.