The Challenge Within 2018

It is a new year and of course it is winter in Canada. 2018 has opened up with another polar vortex veering down into southwestern Ontario giving us icebox conditions. I’ve often thought that people in Ottawa, Montréal and Québec city really know how to dress for the cold, but down in my area we treat it more as an annoyance. Needless to say, it’s cold outside; January in Canada is living up to its reputation.

I spent the first few days of 2018 speaking at the Ridgetown Campus of the University of Guelph speaking at their annual Southwest Agricultural Conference. They celebrated their 25th anniversary this past week. It’s an excellent venue where farmers and agribusiness come together to learn about the issues that affect production agriculture. Your loyal scribe was speaking about something that I never speak about, my day job. I was asked to speak about my ideas on creating a stale seedbed for producing corn. It was the first time in my career that I have been asked to speak at a conference about a subject other than grain marketing or economics.

I’ll just say this. Production agriculture is in good hands in Ontario. The difference in tone between now and the old days is striking and it’s mainly related to the low interest rate era. The amount of technology and management that is apparent at conferences like these is compelling. Ontario producers in my opinion are poised for success because they are raising marginal production. It helps that the Canadian dollar stays around $.80 US. However, there is no guarantee of that going forward.

Of course everybody wants the price of corn to go higher because that would take the pressure off everybody in 2018. As we sit here now, the USDA is going to put its final stamp on things next week January 12th. The January USDA report can be downright explosive on futures price movement. I do not know what to expect this time around. However, don’t be surprised if USDA raises 2017 corn yields again.

There will be much drama in the market over the weekend and next week before the announcement from USDA. Of course, after that we will all be focused on how much corn and soybeans will be planted in 2018. The March 30th USDA prospective plantings report will get all types of buzz, followed by the June 30th USDA actual planted acreage report. Last year our American friends planted 90.4 million acres of corn and 90.2 million acres of soybeans. In 2018, many prognosticators are looking for soybean acres in the United States to finally overtake corn acres.

The good news within the commodity market in 2018 is the strong demand for both corn and soybeans. Corn is a good example with current usage at 14.435 billion bushels. That is an incredible number except for the fact the total supply of corn is 16.922 billion bushels. These exceptional crops we’ve had the last several years are lulling us to sleep, like this is normal. It seems to be getting normal, but bad years in agriculture do come along and eventually the apple cart will be tipped over. When that happens prices will have to go up to ration exuberant demand.

The commodity markets are one thing and our political world is another in 2018. You will remember that I said Donald Trump would define 2017. Well, I think he did a pretty good job of that, tweeting out every day to control the news cycle. We still don’t know if NAFTA will survive his purge, I’m sure they’ll be much more vitriol from the American side about that in the months to come.

In Canada we are still at least 18 months away from another federal election, but in Ontario and Québec, voters will be going to the polls in 2018. In Ontario the agricultural community has chafed under a Liberal government, which has restricted mnemonics, raised the minimum wage and continued a green energy plan, which has divided rural communities. There may be changes here, as well as in Québec where another federalist party threatens the Liberal government of Philippe Lorillard in a unique way.
Of course, much of this is all a theory now. However, changes in these realities might cause some real upheaval in 2018. Mother nature might still be mad about climate change and who knows how that might manifest itself on our farm fields. 2018 will be a challenge for sure, just like every other year on the farm.

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