By Tom Collins
RIDGETOWN — Farmers should be able to get $5 a bushel for their corn during 2019, but it will take a while for the soybean market to get back to normal.
Those were some of the takeaways from Parrish and Heimbecker merchant Steve Kell’s presentation at the SouthWest Agricultural Conference at Ridgetown in early January.
Although the U.S. is expected to plant an extra three million acres of corn in 2019 (about 93 million acres), corn prices will rise as the Americans have exported more corn every week since September compared to the five-year average. Kell said the lower-ending stocks will help increase corn prices to about US $3.70-$3.75 a bushel, which will put Canadian corn at about CDN $5 a bushel.
“If you get an opportunity to sell corn at $4.80, the answer is no,” he said. “That’s too low. And if somebody gives you an opportunity to sell corn at $5.20, you jump all over that like a fat kid on a Smartie, because it’s above average. You can’t go broke making money.”
Kell also explained that Canadian corn prices are higher thanks to the Comprehensive Economic and Trade Agreement (CETA) signed between Canada and the European Union in late 2016. That deal means Canada is the only country that can ship corn to the EU without import levies. This has led to record exports of Canadian corn to Europe in 2017 and 2018, with the demand from Europe expected to continue throughout 2019, said Kell.
Kell pointed out corn prices have basically followed the same pattern for five straight years, with prices increasing in early summer before declining after Aug. 1 as the market pays more for risk.
“If you didn’t get five bucks a bushel for your corn, it’s because you didn’t want five bucks a bushel for your corn, because it was there all five times,” he said. “Every year, once the corn crop gets past pollination, that’s it. There really is no risk. Your corn marketing program needs to be mostly wrapped up before the first of August.”
As for soybeans, the U.S. trade war with China and back-to-back record soybean crops in 2017 and 2018 are taking their toll. The ending stocks for soybeans for 2018-19 are expected to be 956 million bushels. That’s 10 times higher than the 91 million bushels at the end of 2013-14. Even if the trade war is resolved soon, it will be a tough slog for soybean prices.
“We will not see the futures go back to a normal trading pattern once the U.S. and China resolve this trading issue, and it’s simply because we have too much inventory,” said Kell.