Under the Agridome

It is the week before big tariffs from the United States take effect on Canadian goods going into the U.S. Or at least that's what we think, as it's very difficult to get good information coming from the American administration. Some say it will be March 4, and then others say it will be April 2, and who knows -- there's probably answers in between. As it is, you know my stance; no backing down not one millimetre.

We will see what happens but, in the meantime, we have got some farming to do. This past week in southwestern Ontario we had the big melt and all that big snow started to disappear and higher temperatures did give a hint of spring. At the same time, we had grain futures prices start to go south. Nobody likes them going in that direction so maybe it's time to look into the future. The USDA did that exactly Thursday when it released some preliminary numbers on acreage and yields for 2025.

The new USDA numbers came from its Agricultural Outlook Forum which is running Feb. 27-28. It gives a first look at crops in 2025 and 2026. Over the years, it has become recognized as an almost informal look at the numbers ahead, especially when we have the March 31 prospective plantings report which can be a market mover. As our grain prices depend on grain fundamentals such as acreage, yields and supply and demand, it's a starting point for where we are about to journey. It will all be affecting grain price discovery during the next several months.

USDA announced that farmers will plant 94 million acres of corn this coming spring -- that is up 3.4 million acres from last year. At the same time the USDA forecasted soybeans to come in at 84 million acres -- that is down 3.1 million acres from a year ago. The yield forecasted from USDA came in 181 bushels per acre (bpa) for corn and 52.5 bpa for soybeans. If you mull all those numbers over in your head for a while, it all makes sense. Sure, the yields seem excessively high especially for soybeans, but we all expected more corn and less soybeans come this spring.

Keep in mind that grain fundamentals are very important and at the end of the day they always mean something for your grain price discovery. However, also keep in mind that we shouldn't necessarily rely on the USDA for market direction. What we should be doing always is looking at future spreads, basis values and the cost of commercial carry to determine where the markets are headed. We also should have a good appreciation for where the non-commercials are in the market, whether they are short or whether they are long. This will help us give us some future direction where grain futures prices are going. The U.S. Agricultural Outlook Forum is a very small part of that, but it does give us a starting point.

That starting point this year is 15.58 billion bushels (bb) of corn and 4.37 bb of soybeans. All this USDA hocus pocus will result in corn ending stocks of 1.965 bb at the end of the 2025-26 crop year. The soybean ending stocks number was predicted to come in at 380 million bushels (mb) which is the same for this past year. Now all we need to do is wait and see what happens. There is a world of risk between today and Nov. 30 when most of the corn will be harvested.

What does this mean? Well, one thing it means is that there will be many grain marketing opportunities ahead. I say that with sincerity because it's no secret that those kinds of grain fundamentals on the supply side means that there is grain everywhere. Remember, I haven't even mentioned our South American friends and their great potential. However, even if projections from the USDA came to fruition this coming fall, grain price seasonality will give us the opportunity to price grain profitably as we move ahead. Circle June 18 on your calendar to price corn and push that five weeks further to price soybeans.

Seasonally, that time period historically has been a good time to price grain. Keep in mind 2025 has the potential, especially with all the geopolitical risk involved to be a year of real fracture and disruption in grain prices. There are also weather forecasts already of dry weather coming in the spring and summer of 2025. All that means is, we get more of the same: A cornucopia of risk we as farmers always deal with.

The challenge will be to measure all these marketing factors on the grain futures side of things. In addition to that, Ontario and Quebec producers will have to balance our undulating Canadian dollar which will be under attack from the economic warfare directed on us by U.S. President Donald Trump. At the end of the day, there will be marketing opportunities within these volatile markets. Remember, don't close your eyes when it gets rough. At the end of the day, we'll capture those grain market opportunities with our eyes wide open and we will win.

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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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