By Connor Lynch
KEMPTVILLE — With world trade and events in an uproar, many farmers have despaired at the lack of predictability.
Market analyst and cash crop farmer Steve Kell was on hand at the Eastern Ontario Crop Conference at Kemptville last month to help shine a lantern into the fog of grain marketing.
Kell cleaved to the fundamentals. Market expectations come down to two main factors: Futures, and basis. With the 2020 corn crop forecast to be the largest ever, don’t expect any help from futures prices. Basis here in Ontario might bolster prices, however. Yields in the Great Lakes Basin area are likely to be low, and with U.S. end stocks shrinking, that might bolster the local basis price. As well, assuming yields shake out around Kell’s predicted 155 bu/ac average for the region, there’ll be a shortage of about 1 million tonnes of corn in Ontario. However much it costs to bring corn to Ontario (the equivalent of about 12,000 truckloads) should support the local basis price by that much.
When it comes to marketing corn, the biggest price spike is in May to June, from when planting is wrapping up to about knee-high corn. After that, the market knows what to expect (roughly), so it stops paying for risk. But, as Kell said, “How many people have time to watch the market in May?” Don’t hang around looking for highs. Have pricing orders in place.
“If you can’t bring yourself to sell corn by Canada Day, get your wife to,” he said. “She’s less emotional. She’ll do it.”
Soybeans are a different story. They had their price boost over the holidays, when Brazil, which plants about 30 per cent of the world’s soybeans, was planted. The trade war (and a possible end to it) seems like it’d be the thing to watch for but it’s not, Kell said. It shuffled shipping logistics, that’s all. The thing to watch for is China to rebuild its hog herd. Losing 90-million hogs severely cramped demand. Considering China, in a normal year, buys 50 per cent of the world’s supply of soybeans, that’s a serious hurt to soybean demand and, consequently, prices. The trouble is, nobody seems to know how long it’ll take to rebuild the herd. “Like a bunch of 12-year olds talking about sex, there’s lots of ideas but not a lot of knowledge,” Kell said.
In short, keep it simple. “You cannot go broke making money.” Don’t hoard soybeans expecting prices to catapult up. Lock in crop prices when you can make money.
Lock in profits when you can: Get your wife to do it if you can’t
By Connor Lynch