Corn In The Bin, But Extended Stomachs Haunt My Vision

PhilStMartinsjib I farm in southwestern Ontario, which has about the longest growing season in Canada.  This afternoon I took a drive to Windsor Ontario.  As I drove the flat farm country between here and there I saw corn being harvested amid the mud and water.  It was such an unusual scene, December 22nd, mild weather and this farmer struggling to get his corn out of the field.  The freeze is coming soon.  This is Canada.  For those with crops still left out in the field this December, the big freeze can’t come soon enough.

Of course I made a trip to Windsor to do a little bit of Christmas shopping.  It was so strange walking around in a spring jacket, there is something about snow and Christmas shopping that goes together.  Not so this year, but something tells me it’s coming.  Needless to say, this is Christmas time and we have a lot to be thankful for.

One of those things we should be continually thankful for is that the demand driven market for corn seems to be still alive.  We had a drop of nearly $2 a bushel on the futures market since August and lots of naysayers.  Despite that the world continues to use more and more corn.  USDA in their December report pegged world corn usage at 868.61 MMT, up from their November estimate of 866.46 MMT.  This was well above the 2010/11 year where corn usage was 843.37 MMT.

If you had any doubt about it, ask your local seed corn salesperson.  It is that time of year when seed companies are looking for orders.  It doesn’t matter whether you are in southwestern Ontario or North Dakota a tremendous amount of seed corn varieties have been sold out. The bottom line is everybody and their dog wants to grow corn again in 2012.  For many of us in the North American Corn Belt it still beats soybeans hands-down.

The last few days has seen the world focus a little bit more on South American weather.  If you have been a market watcher over the last 2 weeks, you will know that the nervous ones among us have got the South American drought machine rolling.  Yes, La Nina is affecting South American weather but at this early stage it is still very difficult to tell how much damaging impact the hot dry weather is having on South American crops.  I get a kick out of hearing from my South American followers in Brazil and Argentina who are telling me the crop is just fine but they have heard elsewhere in their countries, it’s not so good.  At this point nobody knows, but it surely will become clear as the days and weeks go on.

What we have now during the holiday season is light trade as our commodity friends are looking for the fastest way to the holiday dinner table.  Surely many are looking toward the New Year and the January 9th USDA report, which will certainly set the table for 2012.  And, when I say set the table for 2012, I mean that.  This January report will move the goalposts like no other.

For the conspiracy theorists out there, that should give you enough fodder for the coffee shop.  However, let me just say there is a tremendous number of world demand and supply variables that need to come together this year for everything to work.  I believe much of that will start on January 9th when official numbers are etched in stone.

Until that time the, it’ll be up to all of us to have our hedges in place.  For many others it will also be a time together with friends and family to celebrate Christmas and New Year’s.  There will surely be lots of corn in the bin and food on the table to keep the conversation going.

That is a very good thing for us.  I include myself in that group.  However, just because my stomach is full and my corn crop was very good last year, at this time a year I know there are lots of empty stomachs and places where there is not so much corn.  It is such a great paradox in our agricultural world that we have such tremendous levers to produce food but not everybody gets enough to eat.  Visions from my walks in far-off lands with extended stomachs always skew my vision.

And yes, that will always be my problem.  Needless to say, it doesn’t hurt for all of us to think about it too.  From the flat farm country, north of Dresden Ontario, I want to wish you all a very Merry Christmas and good tidings for this holiday season.

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