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6

ONE OF THE

most encouraging things to

watch in the Ontario grain markets through

the 2017 harvest period was how strong cash

basis levels have remained despite a rather

large crop both within Ontario, and also for

the broader North American market.

If you compare the basis levels for soybeans

being bid in the lake terminals in Toledo,

Ohio to the values bid by the Hamilton

export terminals through the months of

October and November, the Ontario

terminals maintained a 20 cent U.S. per bushel

premium over their American counterparts

right through the fall season.

Throughout October, this fall’s busy season

of exporting soybeans at the Hamilton

terminals have typically been bidding basis

values (converted into U.S. funds) of $-0.10

to $-0.15 under Chicago, while Toledo has

typically posted U.S. basis bids of $-0.30 to

$-0.35. While 20 cents per bushel doesn’t

sound like a big premium, when you consider

that Ontario produces nearly 145million bushels

of soybeans, it’s clear that the competitiveness

of the Lake Ontario export market pushes an

enormous number of dollars back into the

hands of this province’s soybean producers.

HIGHER VALUES

There are a couple of reasons why the

Hamilton soybean market bids higher values

than terminals further inland in the Great

Lakes shipping lanes.

The first of these is simply a matter of

geography. Lake Ontario is simply closer to

the Atlantic Ocean, and vessels can’t sail

across Lake Erie or through the Welland

Canal for free. There are both more empty

ships that become available nearer the

mouth of the St. Lawrence Seaway than

there are further inland, and the journey to

the ultimate destination is shorter for ships

which start further downstream. The freight

savings enable exporters to bid more for

soybeans which can be loaded in an

advantageous origin.

The second reason for the Ontario basis bids

to be so much stronger is simply the result

of healthy competition. Ontario soybean

growers are extremely fortunate to have

four export terminal operators, two crush

plants, and several food grade soybean

processors all competing to originate

soybeans from this province. Ontario farmers

have a lot of choice about how and where to

market their crop, and the fierce competition

tugs all of the slack out of the prices

being paid.

Access to global markets has also been

beneficial for corn prices in Ontario this

harvest. With western Ontario corn bids at

$+0.10 CZ17, central Ontario at $+0.15 CZ17,

and eastern Ontario at $+0.30 CZ17 (all in

U.S. funds), our province’s corn market is

markedly stronger than the $-0.10 CZ17 posted

in Toledo. In fact, the current basis levels

being bid for corn in the eastern Ontario

market are within a nickel of the values

posted for New Orleans where U.S. heartland

corn is barged in to load ocean vessels for

export around the world.

The greatest potential risk to the Ontario

grain markets being able to maintain their

premium basis levels relative to the

surrounding American grain buyers is that if

the price gap between Ontario and nearby

U.S. states becomes too wide, it leaves the

door open to American corn and soybeans

flowing into our domestic processors. It’s

certainly not hard for soybeans and corn

Location, location, location

THE COMPETITIVE LAKE ONTARIO EXPORT MARKET

Stephen Kell

continued on page 8

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