Stale Seedbeds and Ontario Ethanol: Corn Planters Roll in Ontario
Tonight I got off the tractor at about nine o’clock. It’s been a good week for planting corn in southwestern Ontario. I was planting a new corn hybrid called SmartStax or what I call “corn for dummies “. Who knows whether I am right or not? I put this hybrid on some of my toughest ground so maybe that is a good test.
The starting gun on corn planting season came early to Ontario this year. When I wrote the April Market Trends report for the grain farmers of Ontario I thought the starting gun for planting would be April 15th. With our cold climate planting before that can be risky and there would surely be some who would argue planting in April holds the same risks. However, this past week I have heard from all over the province, planters are rolling and I expect much of the corn crop in southwestern Ontario to be in by this weekend.
I did something this spring that I usually don’t do. I planted corn into a freshly prepared seedbed. That is something from the past for me. Over the last few years I have tried to perfect preparing a seedbed for next year’s corn in August and September of the previous year. I plow wheat ground and then use a special leveler, which crumbles my clay soils into a smooth matte. Add snow, rain, wind, sun, cold, heat, freezing, thawing, and time and come April of the next year the soil is in beautiful condition to plant. It just so happened last fall I ran out of time to get one particular field done so I knew I would have to work the ground just like I once did in the springtime.
This practice is fairly common in the sugar beet fields of southwestern Ontario. A prerequisite to making it work is to having flat fields. I once had a former editor of mine try it with rolling land and he had a severe erosion problem. In my own case it saves labor in the spring as well as conserves moisture and reduces any compaction. At the end of the day yield must be the winner and I have felt that way over several years of trying it. Now if I could only apply that stale seedbed technique to the corn market maybe I can reach back and get some prices from yesteryear.
The big culprit with regard to the Canadian cash price for corn has been our par dollar. The dollar finished in a dead heat with the American greenback today, which only depresses Canadian cash prices further. For several decades Canadian agriculture has grown used to a much lower Canadian dollar. In 2010 it is very difficult for many of us to adjust to this new found reality. I don’t subscribe to that fact that we are going to be consistently above par for the foreseeable future, but arguments against that are getting pretty hard to come by.
Thankfully for Ontario corn producers there is an Ontario ethanol sector. We can thank the provincial government for that. Over the last several years they pumped over $500 million into infrastructure as well as ethanol subsidy. In 2010 the Kawartha plant near Peterborough Ontario will be coming on stream. The proposed plant in Hensall Ontario will not. There have been winners and losers in getting the ethanol sector up to speed in Ontario and Hensall stands out for a lost opportunity.
Still, the industrial demand for corn in Ontario is impressive. The Suncor Plant near Sarnia is doubling in capacity. At the same time the Johnstone plant in eastern Ontario is changing the corn market in that part of the province. There will also be eastern Ontario corn flowing out in 2010/11 to northern New York State as Sunoco is opening a plant north of Syracuse. Without ethanol in Ontario the corn market would resemble the Ontario wheat market. In other words everything would be based on export prices from somewhere else. Kudos should go to the visionaries who helped push ethanol in Ontario several years ago.
This is all happening at a time when gasoline demand has been slow and the price of ethanol is very poor because there is too much of it on the market. At the same time the spread in corn futures months is weakening telling us something about that bearish demand for corn. In other words, maybe it’s not as bearish as we thought despite the onerous supplies on the market. It’s shaping up to make for interesting times in the corn market.
So we are off to a good early start in corn. Based on this early start with trend line yields and good weather we’ll have corn coming out of her ears this fall. Needless to say, it rarely happens that way. It is a long and winding road from the time I planted corn this past week to the day in November when it jingles through my combine. The challenge this year will be to get that marketing opportunity that seems so elusive. With our loonie soaring maybe $3.50 is the new $4. On that count, I hope I’m wrong.