By John Phair
Today’s Farmer
Saturday June 21, 2008
It’s an ill wind that blows no man, no good, as the old saying goes.
And it appears Ontario’s farmers are well positioned to benefit from the devastating floods that have wiped out millions of acres of crops in Indiana, Illinois, Iowa and Wisconsin, while heavy rains continue to impede planting in other states.
In recent days farmers and market analysts alike have been drawing parallels to the disastrous flooding of 1993 which devastated Midwestern crops and sent corn prices spiralling to record levels.
However, Iowa Governor Chet Culver, says this year’s flood is much worse.
In a press release June 13, the governor said he had declared 83 of Iowa’s 99 counties disaster areas and says as much as a third of the state’s corn and soybean crop is under water.
The Iowa Farm Bureau estimates that as much as 1.3 million acres of corn and two million acres of soybeans in that state have been lost.
On June 16 corn for December delivery shot up to a record price of nearly $8 per bushel on the Chicago Board of Trade (CBOT) while rains continued to pound vast areas of the U.S. corn belt.
“These markets are incredible, it’s a great time to be a crop farmer (in Ontario), there is no doubt about that,” said OMAFRA cereal crop specialist Peter Johnson. “With soybeans in the teens, corn over $6, and wheat rallying back up, life is good.”
However, in his CropLine report Johnson says this year’s unsettled weather has created some problems in Ontario as well.
He noted that in the northern part of Huron County and southern Bruce County many growers still have soybeans to plant.
“In fact, some growers don’t have an acre of beans in the ground yet, it just continues to rain and rain,” he said.
Johnson said he has no idea where grain and soybean markets will top out but suggests growers should sell some on the way up.
“Don’t try to hit the top of the market because that’s usually a recipe for disaster,” he said.
Dave Gordon of London Agricultural Commodities Inc. said it’s 1993 all over again but thinks this time it’s much more severe.
“In 93 it was just the Mississippi River that flooded, but this time it’s more widespread with a pattern of rain that just won’t stop,” he said.
“The flooding we see on TV is mainly around the rivers, but what about 60, 70 or even 100 miles away from the river? I think that’s really where I think a lot of damage has been done and I think that is what we’ve got to talk about is away from the flood, where they’ve had 12 to 15 inches of rain and can’t get anything planted.”
Gordon said it’s probably too late to re-plant corn and also questions the feasibility of replanting these areas into soybeans.
“I really question that,” he said.
He said there is no question anyone who has a crop, either here or in the U.S. will benefit from the higher prices. He also suggests Ontario has its share of weather problems.
“I’ve talked to two guys already this week in Ontario who haven’t got a kernel of corn in the ground, it’s just been too wet up here as well,” he said.
He said the market may settle down and trade in a new range for the next month or so but thinks there could be some extreme volatility ahead.
“Once we establish what the acres are in the states, estimate the yield and production, then the market could get really volatile, possibly right through the summer,” he said.
However, he said in the meantime growers need to take care of business.
“We are seeing cash prices we have never seen before in this lifetime, you can sit and wait and hope and we might go another dollar higher, but there comes a time when you need to sell, and I think most farmers have done this,” he said.
Gordon said the bigger question might be, will there be a market next year to support recently higher input costs.
“Fertilizer prices could really be the killer next year,” he added.
Publisher: Dean Muharrem Proprietor and published by Bowes Publishers Limited at 930 Richmond St., Chatham, Ontario, Canada N7M 5J5
