Under the Agridome

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It is that time of year again when most of us get to press that autosteer button. I still haven't pressed it but I'm hoping to do that within days of writing this column. The weather has broken out very warm across southwestern Ontario and although rain is predicted for Friday there's been a flurry of field activity in the area. Rain makes grain they say, so as we head into the season, we'll see how it all pans out. Keep in mind, that drought ends when it rains.

Our markets are watching this very closely. It has been no secret during the last little while the traders have been keen to look on the geopolitical moments that we're finding in the news cycle. We saw both equity markets and commodity markets gyrate with the musings of the President Donald Trump. That is continuing with some tariffs being put off into the future. There is also almost a daily reminder that this may happen and that may happen regarding tariffs. Needless to say, both corn and soybean prices have benefited anytime a reprieve is mentioned.

I was very interested in DTN Senior Analyst Dana Mantini's comments last Thursday on the U.S. soybean prices in his daily video comments. He had mentioned that U.S. FOB soybeans have a $6 per metric ton or $0.16 per bushel discount to Brazil for July. He commented that he could hardly believe that, based on the huge crop that they had down in Brazil. Clearly though, there was an implication within the commentary that the U.S. is likely picking up additional non-China business. This goes back to what I had said in earlier columns where some Canadian soybeans will find increased competition from U.S. soybeans that are usually destined for China.

Mantini also pointed out that November soybeans are now above key moving averages with the 20-day close to crossing above the 50-day closing average. In other words, if everything stays the same, it looks like it'll break above those. Of course, he was relating to the fact that the good weather outside might lead to even bigger corn acre numbers while lowering that U.S. soybean acreage even further. A lot of my American readers are wondering whether we'll have "beans in the teens." It is more a hope than a wonder for me, as I just can't see it. Thankfully I'm not in charge of discovering soybean prices. Our weather moving forward will certainly do that for me.

It is an old story but a good one that as farmers we have to watch the weather and to consider it when we price our grain. At the present time, there's enough risk built into the market looking ahead because the crop isn't made. In fact, it isn't even planted yet. Risk premium should build in the market all the way up into June 18 and pollination for corn and into July and August for soybeans. Lots of times after that, it's like watching the same movie over and over again. So, having those standing market orders ready can be a good thing.

We also have a federal election coming up here in Canada on Monday as we will get a new government of some type. The No. 1 ballot issues this time around was dealing with a U.S. president who referred to us many times as a potential 51st state. Interestingly enough, he has been fairly quiet during this Canadian election campaign. He's been busy, especially when some of his erratic policies have led to the U.S. dollar be under siege and plummet to its lowest level in three years. Unfortunately, for Canadians, anytime the U.S. dollar goes down, the Canadian dollar goes up and our basis levels shrink. Canadian dollar closed Thursday at 0.7227 US, which is about $0.03 above where it dropped when big tariffs were applied on Canada.

Keep in mind that the federal election will put us in a place where we all wanted to be back about three to four months ago when Trump came to office and our Prime Minister Justin Trudeau resigned. Earlier, it was very unstable with constant attack day upon day. Those days might increase in the near future, but at least we'll have a government newly elected. That counts for something, and it should give Canadians more confidence during the day-to-day barrage from the United States.

In the next several weeks, all of this will be swirling around us as we make our day-to-day micro decisions on our farm. Whether that be checking the oil on the tractors or putting graphite on the seed or diagnosing mechanical problems, the markets will continue its work. In this environment, it would be so much easier to have your standing market orders ready. They might even hit while you are asleep at night. Of course, that's a good thing. It also makes a world so much less complicated. This week I hope to press the autosteer button. It truly is the 8th wonder of the world.

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The views expressed are those of the individual author and not necessarily those of DTN, its management or employees.

Philip Shaw can be reached at philip@philipshaw.ca

Follow him on social platform X @Agridome

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