By Connor Lynch
CAMPEBELLFORD — A late June and early July commodity price rally did not go unmarked by many Ontario farmers.
This year’s planting woes are well-documented. Eastern Ontario has struggled to get and keep crop in the ground.
Concern about drought in the northwestern United States created the notion in the market and amongst speculators that the American corn, soybean, and wheat crops could be smaller than expected.
“Drought conditions in Minnesota and North Dakota,” caused an overreaction in the market, Toronto-based Parrish & Heimbecker grain merchant Steve Kell told Farmers Forum. “We had a much bigger upswing than we needed.”
Many farmers took advantage of it through shrewd attention to market forces and using target orders, said Kell. “Especially in wheat, farmers did a marvelous job,” said Kell, who has customers throughout Ontario.
“It’s a testament to people understanding what the market will really do,” he said. “For the people who knew what the current supply and demand situation looks like, they saw that this was especially good and they got it. For the people who don’t, they might not have realized we crossed the line of what was reasonable to expect,” said Kell.
Wheat soared as high as $280 a tonne at the peak, he said. Corn went as high as $220, and soybeans didn’t move too much, which isn’t abnormal, he said. More realistic prices for the market conditions would be $240 a tonne for wheat and $210 for corn, he said.
The July and August USDA reports, however, finally killed off that rally. Back-to-back, stable predictions of crop yields put to rest the notion that had somehow survived through the summer that yields were going to be pushed down.
Campbellford Grain merchandiser Peter Archer said that for farmers who missed the rally, it’s best to hold out for now. The next two rallies to come are typically just before the USDA September 5 crop report, when the market is still paying for risk, and in November.