Mark Brock has been growing corn near London, Ont., for decades but he has never seen a market quite like this with prices plummeting so fast he may not even try to sell some of his crop this year.
Like many farmers, Mr. Brock has been trying to protect his profits by forward selling as much of his corn as possible.
“It’s never fun to sell in a down market but sometimes that’s just the reality of the situation,” he said Monday from his 1,500-acre farm. “But we’re getting to a point now where we might not sell much more and store it and see how the U.S. crop makes out in the end.” He added that he will likely skip an application of fungicide in the next few weeks because the lower market prices will mean he won’t see a return on the added cost.
“It might not pay off. It might end up costing money in the end,” Mr. Brock said. “We have to be a little more frugal, more so than in the last few years.”
Corn prices have fallen to four-year lows lately, driven down by expectations of a record crop in the United States, the world’s largest corn producer. Even the unrest in Ukraine, the world’s fifth largest supplier, hasn’t dampened the price plunge. Prices for corn have fallen by 27 per cent in the past 12 months on the Chicago Board of Trade to about $3.70 (U.S.) a bushel.
“The trade is bracing for a big crop this year,” said Arlan Suderman, a grain market analyst with Water Street Advisory in Peoria, Ill., who figures the U.S. grain-corn crop could exceed government estimates of 171 bushels an acre amid favourable weather.
U.S. growers have enjoyed warm weather and ample rain, but some farmers have faced a tough season. The long winter and late, wet spring meant some fields were too damp to plant, and germination was slow. Some farmers switched to soybeans, which require less fertilizers and pesticides and grow quicker than corn. As a result, the crop in Ontario, which accounts for 62 per cent of Canada’s total, is expected to be smaller than last year’s. And farmers are faced with selling their corn for less than the cost of production.
Ontario is one of the few provinces that gets enough heat and rain to grow corn. Quebec produces 30 per cent of the Canadian crop, followed by Manitoba at 6 per cent, according to Statistics Canada. About half of Ontario’s corn is bought by makers of ethanol, which is blended with gasoline to reduce harmful emissions. The rest is used by makers of animal feed.
Mr. Brock is hopeful the smaller Ontario crop will buoy local prices, as processors try to avoid the expense of importing and bid up corn at nearby elevators.
The cool Ontario summer has delayed much of the province’s corn, said Henry Van Ankum, a grain farmer near Guelph, Ont., and chairman of the Grain Farmers of Ontario.
“We’re going to need a warm end to July and August to properly mature a crop,” said Mr. Van Ankum, who figures it costs $4.50 to $5 to grow a bushel of corn, including tractor fuel, seeds, and inputs such as fertilizers and herbicides. “It’s a real concern.”
Violence in Ukraine helped support prices for corn and wheat for much of this year, but it’s the bumper crop in the U.S., the world’s biggest producer, that is ruling markets now.
Mr. Suderman said corn producers in the Black Sea region, Brazil and Argentina are watching the the U.S. market, and planning to limit supplies if high prices persist. If that happens, he said, declining global supplies will once again prop up prices.