Twitter Fundamentals Impacting Market Fundamentals As Planters Roll

Through the years there’ve been many starts and ends for me in my farming career. I often remark to myself that I used to be seen as this young guy on the block, but of course now it’s the opposite, I’m the old guy still here! However, I really don’t feel like making any apologies. It would seem that I earned every bit of experience that I have now. There’s nothing better than youth, strength and energy on the farm. However, experience and treachery takes you a long way too.

It is one thing to think of yourself getting older but it’s another thing to measure where you are today. For instance, I farm more land today by myself than I ever have before. Interestingly enough, that work might make me a little bit more tired from time to time, but I do so much more in an hour than I did 35 years ago when I started. Big equipment and new technology helps with that. All that science in a bag helps too. That is certainly something that I count on especially in the coming weeks when my corn planter will start rolling through the field.

Of course I can’t roll down the field without thinking about our grain markets as well. Having standing orders in place through this critical part of the marketing season has always been part of my management equation. My satellite radio crackles with market information. Of course, I must admit at this time of year it also crackles with my penchant for basketball talk. You all know I love the game.

I must say 2018 flummoxes me a bit. We have onerous grain stocks, which I thought would cause prices to be much lower than we had last fall. There have not been the usual predictions of doom in a market environment with such huge surpluses. I guess Argentina did that and all the geopolitical noise impacting our markets. Trying to figure out what’s next in 2018 has been difficult.

It’s difficult because how do twitter fundamentals impact market fundamentals at a time of the year when crop weather is critical to market action? I think you all know what I’m talking about there. We even had one of the most bizarre geopolitical episodes take place today at the demilitarized zone on the Korean peninsula. We actually had North Korean leader Kim Jong-UN walk over into South Korea to meet with his counterpart for peace talks. This is the same guy that President Trump referred to as Rocket Man. However, now we’re all going to play nice.

Nobody knows how all of this will turn out. Even President Trump said today he has no idea; in fact he might make it a short meeting. I would hope the drama in the soybean trade doesn’t get more colorful with these geopolitical gyrations. China is very close to these negotiations and I hope that their appetite for American soybeans somehow comes back.

Lost in much of this geopolitical talk has been the corn market. When we think China, we really don’t think too much about big effects on our corn prices. Any corn imports from China are always a bonus if they happen. Ontario has really benefited from the CETA agreement with Europe with our corn going in tariff free, not so far our American friends. President Trump caused that when he imposed steel and aluminum tariffs on Europe. The Europeans responded by putting tariffs back on US corn. Ontario farmers have benefited especially with so much corn to export from our record crop last year.

Of course, the corn market will surely be affected by crop weather and its effect on those 88 million acres our American friends are thinking of planting in 2018. I have a hard time with the fact that soybean acres are projected to be higher. Corn productivity is so high versus soybeans it wouldn’t surprise me if corn acres reach back up to 90 million. That won’t bode well for the corn futures market but it is so early to tell with planters just starting to roll.

In Ontario this year I saw one projection from, which was predicting 2.2 million acres of corn would be planted. I found that to be a bit of a stretch, but I was cautioned by my friend, Moe Agostino, that Agricorp, our provincial crop insurance agency had corn yield last year at approximately 185 bushels per acre, which was an incredible number. With that type of productivity in our northern space, planting corn makes sense.

That doesn’t take away that we need even more value-added processing in Ontario and Quebec. And heck, why don’t I add Michigan to that equation, as our corn market is cross-border continually.

So as I set my first A-B line next week I’ll hope for the best. My corn acres are down this year because of rotation. Needless to say, when those first seeds go into the ground I often think of the day that they will be harvested, which seems to be such an eternity into the future. On some cool November day I’ll harvest the grain produced by those seeds in who knows what kind of market environment. The market will surely go threw a myriad of gyrations on the way to that day. You got to wonder, in the wake of recent developments, what will our world look like then?

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