No Time to Be Greedy, Have Those Standing Marketing Orders Set

It is has been a busy week for me. The start of planting is always a bit easier than getting ready to play, but when the corn monitor beeps you know it’s go time. When the rain hit overnight I found myself 75% done planting corn. After the record cold in April, I had begun to wonder if whatever warm up. However the last few days have been the 80-degree range in SW Ontario.

Soybeans will always come later for me, as I never believe this early planting thing for beans. My heavy clay soils in southern Lambton County don’t warrant themselves early planting. 90° on June 1st always seems right to me.

It is one thing to plant the crop and it’s another thing to market it. I heard one analyst talking today on business television or how the Canadian dollar is headed back to the $.75 level against the US dollar. If that is going to happen it is likely that we will have higher cash prices in Ontario ahead. Of course, nobody knows but with that added facet of foreign exchange in our Ontario marketing equation, it always makes it so much more difficult.

I got a call from a grain merchandiser today offering me $7 for Ontario wheat produced in 2019 in 2020. Now, those are very high prices for Ontario wheat, but of course it is one or two years out. I am always a bit nervous contracting wheat that far out, because I’ve done that before and never even got the drill in the field in the fall. Call me crazy. I suppose if I really thought about it hard, that’s only happened once in my career. Needless to say, it was an expensive mistake that I have not forgotten.

We all know that we have onerous ending stocks in both corn and soybeans in the United States and around the world. However, it is a time of year when there is so much risk within the market and in our fields that can’t be quantified. Argentina seemed to change everything this past winter and it is hanging on. Soybean futures prices have been resilient ditto with wheat futures, which have reacted to some of the poor crop conditions in the United States.

Corn seemed the last commodity you would expect to be rising in price especially considering ending stocks and corn piles still very evident across farm country. Needless to say, July corn posted a new eight-month high last week, while December corn posted a new nine-month high. So the market is rewarding the unknown and producers have chances to capitalize on better prices.

In Ontario that means $5 corn, $13 soybeans and $7 2019 and 2020 wheat hanging in the balance. Of course, nobody knows the road ahead. This might be the year, where things dry out, or a year just like last year were everything turns up roses despite the hot and dry hype.

It is being complicated a bit this summer by the geopolitical events that are currently manifesting themselves throughout the world. Our American friends have made headlines getting out of the TPP and with their steel and aluminum tariffs. Some countries have responded in kind, principally the EU with renewed tariffs on American corn and of course the threat of tariffs on soybeans into China. This past week the Americans had a trade delegation in China and there was some talk that the late rally in soybeans futures today had something to do with the friendly announcement coming out of China.

So how likely are $6 corn and $14 soybeans? Yes, the answer, as always, is nobody knows, but its unlikely based on history. However, is it probable or even possible? There has to be a yes somewhere in the answer department for either one of those.

It gets back to the point that risk management never grows old. Interestingly enough, I read a story today about a 39,000-acre farm in Saskatchewan on the brink of bankruptcy partly due to their involvement with “streaming canola contracts”. That screams a problem before you start. The plaintives are involved in a class action suit against those who issued the contracts, but it’s just a long story.

Simply put, at these crop prices now, its best not to get too greedy. I always say market your crops where you are comfortable and profitable and never look back. Of course, that’s what I’ll be doing a lot of in the next few week as I roll my crop in, looking back, making sure that planter is doing it right. Those standing orders for grain will take care of themselves.

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