Under the Agridome

It hasn't been the best week here in southwestern Ontario. I say that because the weather is still not cooperating, and we've lost about $0.30 on corn over a week and about $0.38 on soybeans, courtesy of our futures market. It just seems that market bears are holding on at a time when we'd like to see something different. I had a bit of a difference last week as I got to drive a combine for almost a whole two days. Then the rain descended, and I went back into my waiting routine. I am definitely hoping for some sunshine this coming week.

If I get that sunshine, I'll be able to switch over to corn and join that party. However, locally I've been told I'm not missing much as corn here remains in the 30% moisture level. It seems that our smoky summer did have an effect on the radiation hitting those corn plants. It reinforces the fact that climate change is real and indirectly it is affecting the bottom line on the farm. Needless to say, I hope to join that party soon.

Unfortunately, we had some other bad news on the grain front last week concerning a strike by 360 workers in the St. Lawrence Seaway system. For my American readers, let's just say the St. Lawrence River is the smaller Canadian equivalent of the Mississippi River regarding grain movement. If you look at our geography, it is the waterway system which connects the Atlantic Ocean to the interior of North America. The 360 seaway workers walked off their job last weekend to back their wage demands. When I first heard this, I knew there would be nothing good about this for eastern Canadian farmers.

It is a fluid situation with a meeting scheduled for this weekend and hopefully there will be some type of resolution. It goes without saying that a strike by seaway workers could have big detrimental effects for Canadian grain farmers. According to the Grain Farmers of Ontario approximately 600,000 to 700,000 metric tons of grain travel through the seaway every month. With harvest in full swing across Ontario and Quebec, there's some potential for some real bottlenecks. If you think really hard, this could mean an incredibly sloppy basis, as well as crops backing right up into the field. Obviously, no one wants to go there. The Grain Farmers of Ontario organization has expressed these concerns to the Canadian minister of agriculture.

On top of this we also had a joint statement issued by the premiers of Quebec and Ontario, Francois Legault and Doug Ford. They were calling for a swift resolution to the strike action, citing these $17 billion in goods which were transported through this seaway system last year alone. A long-drawn strike will definitely affect our greater economy.

This news is particularly challenging because of the big crops that are currently coming off in Ontario and Quebec. We obviously need places to put that grain even temporarily and under the current scenario that will be a problem. You must remember that the basis level for grains is the value which determines when grain is moved and, if grain doesn't move, it means basis value get worse. That's taking place right now and, in a year, when Ontario may face higher disease pressure in its corn crop, this strike makes basis anomalies more likely. However, a swift resolution of this labor situation would do the direct opposite. That's where we sit right now.

If there is swift movement toward a labor resolution with the seaway strike, grain will move more normally. Unfortunately, what this might mean this year is a race to the cheapest price among our competitors on the high seas. The futures market has trimmed off a good chunk during the last week and with good crops in Ontario and Quebec cash grain basis is unlikely to be strong. That being said, in lieu of domestic utilization of our own grain, good transportation systems for transport of that grain are incredibly important. That is what the St. Lawrence Seaway is to us here in Canada and in the same light the Mississippi River is to our American friends.

There are lots of moving parts with the labor situation being one of them. Apparently, the St. Lawrence Seaway Management Corporation is seeking a ruling under the Canadian labor code that would require striking workers to ensure ships loaded with grain are still able to transit the seaway system. Apparently, this was in place to move grain during the British Columbia port strike this past summer. Who knows.

There is clearly a lot of risk associated with every facet of this grain movement conundrum. In fact, without a grain futures market, it would be incredibly difficult even to move grain and that's why futures prices went much lower last week. It took that just to get grain moving. We'll see what happens in the next several days along the St. Lawrence River. The hope is for better days ahead and for everybody to get paid and for the grain to keep moving. We have our problems in Canadian agriculture but when grain movement stops it's never good.

So, let's hope the sun shines on so many fronts this coming week.

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Philip Shaw can be reached at philip@philipshaw.ca

Follow him on X, formerly known as Twitter, @Agridome

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