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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