This year’s fall weather was exceptional and most harvesting was done in record time. The biggest surprise I heard from producers is that yields were well above expectations. Many said they figured the yield monitors on their combines were out to lunch when they saw the numbers!
This brings a good problem: most producers, even those who aggressively priced their grains earlier in the year, have more grain to sell. When should they do that?
From mid-August to mid-September we saw grain markets pull back hard for a number of reasons. The most common at this time of the year is harvest pressure, which was exaggerated by the good harvest weather
Read Also
Good news, bad news for fungicides meant to fight stem rot in canola
A report shows overall insensitivity of sclerotinia to three fungicide groups hasn’t changed in a big way between 2010 and 2024 — but shows some sclerotinia populations have been discovered with elevated insensitivity to all three.
World buyers are always eager to see a new crop coming off as it helps them plan their buying strategy for the coming year. Knowing crop quality and quantity will help them decide when and where to buy to meet their specs.
If the volume or quality of what they need is scarce they will likely pre-buy as much as they can to ensure they have enough supply for the year. But if there is ample volume and quality they will buy on an as-needed basis so, as to not tie up cash pre-purchasing grains months in advance.
Going into this harvest, we knew we were not going to have a shortage of any of the major crops. There have been no major or wide-spread production threats anywhere around the world. In fact, the quality of harvested crops to date this year in Australia, South America, the Baltic region and the U.S., as well as here on the Prairies has been above average. From a buyer’s perspective, this is a good thing, as it creates a very competitive marketplace. Buyers will set the price more so than the sellers this coming year.
The one exception here on the Prairies was the tight ending inventory for canola and the talk that a below-average crop this year would help support and or drive canola prices higher this coming year.
Early canola yields have appeared the same as other Prairie crops — higher than expected. If this trend continues to the end of harvest there will be an adequate supply of canola to meet demand for the coming year.
This brings me to another reason why markets have pulled back over the past month: the rising Canadian dollar. This has been brought on mainly by the Bank of Canada raising interest rates twice in past months. The stagnant U.S. economy has also helped our dollar creep higher against the U.S. dollar.
Forward predictions are that the Canadian dollar will remain in the range of $0.80 to $0.84 compared to the U.S. dollar through 2018. If the U.S. economy doesn’t turn around, our dollar could end up even higher.
A higher Canadian dollar makes our grains less competitive on world markets. The only way we can compete is to lower our selling price, especially when supply is adequate to meet demand.
If we have adequate canola supply to meet demand, will buyers be as aggressive as they were last year? Are crushers going to be able to sell and crush as much canola as they did last year with the higher Canadian dollar?
The U.S. and South American bean crops are average or better, so for us to stay competitive, keep the crushers busy and keep overall canola export sales similar to last year, price is going to have to be the catalyst.
So this brings me back to that good problem I mentioned earlier — most producers this year are going to have more grain to market than they had expected. When should they price it?
I’m going to use my overly-used statement: “Know your numbers.”
Once you know your break-even numbers based on your actual yields, I suspect current market values for most grains will still provide a profit on your farm, from a dollars per acre perspective.
To stay in the farming game you need to be profitable every year, so focus on marketing with a “dollars per acre” mindset. Focusing on dollars per bushel can distract you; you may forgo selling at a profit, waiting for a target price you never achieve.
Knowing your numbers and some market information, are you better off selling more now at current values or gambling and holding to see if prices will improve? I’ll leave the answer for your farm up to you.
