This past week, your loyal scribe inched his way into my first soybean field, hoping for good things as this harvest season has ramped up in southwestern Ontario. So far, so good. I'm hoping the rest of the way soybeans continue to tell the truth because, as you all know, I call them the great liars. However, at least here in southwestern Ontario it looks like August rains help boost crop yields.

We will see what happens next. You never know what's going to happen to the crop until you get it in the bin, but of course, we constantly have to check out market prices to see how things have changed. This past week, USDA released its quarterly grain stocks and small grain summary reports, which can always hold some surprises at this time of year.

That's what we got on the corn side of the ledger as USDA found 2.095 billion bushels of corn reserve still on hand as of September 1st. That was 173 million bushels larger than the estimate in the September WASDE report. The corn price dropped following the USDA stocks report, hitting a six-week low and breaking through multiple levels of chart support. The USDA estimate was at the high end of pre-report predictions. Large speculator long positions also topped out on Sept. 15. December corn futures briefly dipped under $5, and the cash price in Ontario is currently $6.39 a bushel.

September 1st soybean stocks came in at 315 million bushels, which are neither bearish nor bullish with regard to the soybean complex. Having retreated below $13 for the moment, with cash prices in Ontario off the combine at $17.00 plus a bushel. That's at least $3 a bushel more than a year ago. However, as we all know, there is a long journey ahead with regard to what happens to the soybean price.

We must remember that this is the largest soybean crop in American history, and prices are much higher than a year ago, mostly due to the uneven geopolitics of the Iran-U.S. war and its effect on the energy markets. Sure, there's also huge demand domestically in the United States, but we learned earlier this week that the Chinese maintained their 10% tariffs on US soybeans going into China. That's something that I thought our American friends might gain when President Xi and President Trump got together last week in Washington. As one of my American friends reminded me, "China gets it while the US is unable to understand anything beyond calling everything a "deal". But hey, at least he got two pandas out of the meeting."

Meanwhile, the Canadian dollar has been doing its job serving as a stimulus to Canadian cash grain prices. As I write this Thursday, the Canadian dollar is at 70.32 cents U.S., getting awfully close to that psychologically damaging 69-cent level. We all surely know there's a lot going on via the trade front with Canada and the United States. This has reduced the demand for Canadian dollars as investors are pouring more money into the US dollar even during this uneven time. Any movement downward in grain futures prices is buffered because of this, and any movement upward in grain futures prices means an acceleration in Ontario and Quebec cash grain values. Needless to say, there has been an erosion in corn and soybean futures.

The question is, where do grain prices go now? Interestingly enough, I saw a very popular American agricultural host asking this question to a couple analysts on social media recently, and the topic was $7.00 corn. You know what I mean, $7.00 corn means $9 corn here in Ontario. Apparently one of the analysts had already come out and said that he expected that. I cringed when I heard that question because the obvious answer is that neither one of them knows; in fact, as I've said a million times, nobody knows. All you can do is immerse yourself in the facts, and producers engage in good risk management. As I write this, December corn is trading at $4.97 a bushel. On September 2nd it got to a high of $5.49 a bushel.

On August 17th I wrote a column here entitled "The Bears Are Coming, But They Haven't Arrived Yet." At that time, we were still on the elevator up with regard to grain prices, and I guess we have to ask ourselves now if the bears finally caught up. Or is this simply a harvest lull before a post-harvest rally takes over? It is also hard to say, as we've got the biggest soybean crop ever and the second-largest corn crop ever filling the harvest pipeline.

The market did send us an invitation, and of course lots of us took it. It may happen again and it may not, but there is still a tremendous amount of uncertainty being produced in this wartime economy. The challenge for Ontario and Quebec farmers will be to recognize the opportunities when they appear without believing for a minute that we know what comes next. The market will continue to throw us surprises, just as it always does. There will always be another market and another opportunity. For now, let's concentrate on getting those soybeans out of the field and into the bin. After all, the crop may be telling the truth this year, but the market is never wrong.

Philip Shaw can be reached at philip@philipshaw.ca

Follow him on social platform X @Agridome

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