We’re getting to that point in the growing season where most producers are getting a general idea of what their crops are looking like. Of course, your expectations are completely dependent on where you are farm and there is a fairly wide divergence of conditions out there right now. Eastern Saskatchewan and Western Manitoba continue to be under water while the most recent Alberta crop report shows that 83 per cent of crops are rated in good-to-excellent condition (five-year average is 69 per cent) but are still lagging behind in terms of development. The Canadian Loonie is also rising which is making it harder for U.S. buyers to get aggressive in the Canadian markets. On the other side of the border, all U.S. crops have recently received U.S.D.A. good-to-excellent ratings above both last year’s levels and their five-year averages. However, bulls are more likely to make more noise (and news) than bears and not all areas are in great condition, creating some diverging ideas as to what this year’s crop really looks like.
Most of the market has dropped off recently, with corn below four dollars a bushel and soybeans now into the 12 dollar level. University of Illinois ag economists recently suggested that a 173.6 bushel per acre U.S. national average isn’t out of reach at this point (the USDA’s last estimate was for 165.3 – multiply either number by the U.S.D.A.’s 84.3 million acres that are expected to be harvested and you have a 14 billion bushel crop). It’s also been pointed out that below normal temperatures during pollination has historically produced big corn yields like in 2004 and 2009. Corn isn’t the only crop looking alive and well – Purdue ag economist Chris Hurt has suggested that the U.S. soybean crop “is about the fourth best crop in the last 30 years.” While the record for national average soybean yields was 51 bu/ac set in 2004, Mr. Hurt forecasts that if the weather conditions remain ideal (not too hot, not to cool), then 52 bu/ac is possible. However, the game-changer could be late July/early August when plants start podding.
Estimates are starting to come out as to what may be lost in the Canadian Prairies to the late seeding season and the subsequent wet weather in western Manitoba and eastern Saskatchewan. Multiple analysts are calling for around six million acres of seeded Western Canadian land will be lost this year, including over two million canola acres. I would suggest that this number may be a little preliminary as even just a few days of warm weather has brought some fields back from the dead, as evidenced by most recent provincial crop reports. Further, production in areas that are looking good will likely offset poor yields from the aforementioned wet areas, putting total output somewhere near the five-year average for the Canadian Prairies. What’s for certain though is that everyone in Western Canada won’t be taking off a record crop again. Accordingly, there will likely be some levels in the coming weeks to take advantage of in terms of locking something in before harvest selling pressure hits the market full tilt. As always, no better way to find the price that you’re looking for than by posting your grain on the FarmLead Marketplace and exposing it literally to hundreds of buyers in one shot.
Brennan Turner is originally from Foam Lake, SK, where his family started farming the land in the 1920s. After completing his degree in economics from Yale University and then playing some pro hockey, Mr. Turner spent some time working in finance before starting FarmLead.com, a risk-free, transparent online and now mobile grain marketplace (app available for iOS and Android). His weekly column is a summary of his free, daily market note, the FarmLead Breakfast Brief. He can be reached via email (email@example.com) or phone 1-855-332-7653.