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10

ONE OF THE

most valuable lessons Ontario

grain farmers might take away frommarketing

grain in 2017 is not to underestimate the

influence of local markets. This was where

some marketers found some of their greatest

profits last year.

Where this was most clearly demonstrated

was in small grain markets. Typically, there

isn’t much change in oats, barley, or mixed

grain marketing strategies year over year.

Ontario does a pretty good job of supplying

the market what it needs, and the market

tends to provide some consistent prices in

return. But, that all changed with a corn

surplus in 2017.

SURPLUS

When we went into harvest, we were storing

almost too much corn. That’s the thing about

major agronomic impacts which happen well

in advance of harvest; grain buyers had plenty

of time to anticipate a supply shortage and

get their own stocks in order well in advance.

I was amazed to have more old crop corn

offered to me in October 2017, than any of

the 10 years that I have been in marketing.

The market had just really overcompensated.

Even after almost two successive crop failures

in many areas, the market place was worse

than ever for these farmers.

It just goes to show, there is no guarantee

that prices will rise in a crop failure.

However, the corn farmer’s loss turned out

to be the small grain farmer’s gain while all

of this was developing. Small grain farmers

went into the planting season knowing there

was a surplus in the market. Many responded

accordingly by cutting back acres, or simply

choosing not to grow any oats or barley

altogether. Combined with a wet spring, that

added up to some superior prices compared

to corn. Once again, we saw a major price

fluctuation swing from a discount to a fairly

big premium all within the same year.

And what that means for 2018 is a potential

opportunity to sell those crops in advance.

THE YEAR AHEAD

I’m more optimistic than ever that we might

get some ability to contract acres in small

grains, especially if farmers get those contracts

in place in time for planting season. There’s

a real risk we might see the market swing

back in another extreme fluctuation if

everyone jumps in too far and grows more

acres than the market can handle. Let’s not

forget, the demand in this market is particularly

inelastic, and we can’t just put a surplus onto

vessels in the harbour. But, we could also see

Profit hunting closer to home

THE POWER OF LOCAL MARKETS

Marketing

Jeff Robinson with Amy Petherick

it take more than one year to fulfill the

shortage that developed by the fall. Easy as

it is to get in the habit of not planting small

grains when nobody’s offering an incentive,

now that the incentive is there, you should

evaluate your selling options wisely.

The same goes for the incentive that was

lacking in the corn market when many

growers were making early seed purchase

decisions in the fall. Remember how we had

a surplus of corn back in the 1990s? Back