We are about to ramp up planting big time in Ontario. The end of April and the first few days of May always serve as a launching pad for corn getting into the ground in Ontario and Quebec. Your loyal scribe had been dodging raindrops earlier and now I'm hoping they stay away with more rain predicted. Side dressing my wheat with nitrogen has been a continuing challenge this year.

Hopefully that comes together for me real soon, because even though wheat is the cockroach of grains, wheat prices are much higher than a year ago. Cash SRW wheat prices for July delivery presently are $7.36, a fat dollar higher than last year's harvest. Cash soybeans are $15.50 with new crop showing about $14.75. New crop corn prices are approximately $6.14 a bushel with basis variations wide across Ontario and Quebec.

Many of these prices are better than last year, resulting from really who knows what. We've had some tumultuous geopolitical events combined with algorithms' voracious appetite for chasing headlines which has made this happen. However, underneath it all there are the grain fundamentals triggering all the chaos at the top of the market.

Having said that, it's never a bad thing to review the fundamentals. You might remember last year that the United States grew 17.02 billion bushels (bb) of corn, with a yield forecast 186.5 bushels per acre (bpa). In the most recent April 9 World Agricultural Supply and Demand Estimates (WASDE) report, Corn ethanol usage came in at 5.6 bb, feed and residual usage came in at 6.2 bb and food seed and residual use and industrial use was projected at 6.97 bb. This year, surveyed U.S. farmers came up with the figure of 95.3 million acres of corn which is down 3% from a year ago. Soybeans, on the other hand, are projected to be 84.7 million acres which is up 4% from last year. Winter wheat acreage is the lowest since 1919.

In other words, the grain fundamentals are saying that there is grain almost everywhere. Corn demand numbers have been impressive and continue to be. American soybean demand has not been as good, but there is hope with a presidential meeting in China in May.

Of course, with wheat we know it comes out of the woodwork whether it's in the Black Sea, Argentina, Australia or Canada. It would seem at the end of the day that grain fundamentals should win and grain prices should retreat into the doldrums. Of course, as we all know, that didn't necessarily happen and as we look at grain prices now, sometimes you wonder where all the pixie dust is coming from.

It certainly is a long story and part of the answer lies in what I was talking about last week with predictive markets. In many ways there is no connection to previous days, no classic technical or fundamental analysis to apply.

All we have to do is watch headlines, real or imaginary, and predict how algorithms will react. The current U.S. administration has spent the past decade mastering this practice, creating a system of manipulation most likely not equaled in market history. With social media in the mix, there is a continual "want to hear" frenzy. In some ways our grain futures markets have elevated themselves because of this environment. Surely it must lead to balancing on the cash side of the equation.

Back in Ontario and Quebec, our cash prices still matter, even though they act off benchmark futures prices heavily influenced by the latter. A year ago, we had terrible drought in eastern Ontario and parts of Quebec. At the present time, demand for soybeans out of Quebec has been extremely strong, taking almost every bean out of the province. There's also been corn railed in from the U.S. to satisfy some of the quality requirements for poultry and other livestock. Of course, much of this has to do with "price" but of course that harkens back to how we got here.

Last year the weather was so tough that it changed the supply forecast and eventually everybody needed to scramble to get the grain they needed.

That takes us to where we are now. Statistics Canada is saying Ontario farmers will grow 2.316 million acres of corn this year and 2.894 million acres of soybeans. In Quebec, we're looking at 825 thousand acres of corn and a million acres of soybeans. That Ontario corn number is a stretch to me, but that is the discussion for another day. The bottom line is looking at grain fundamentals only, with good weather grain prices should soften.

However, it is the long way to payday. Every farmer knows the risks that are ahead of us as their corn planter starts to click acre after acre. A new fundamental will emerge. A new story will be told. The algorithms need more distraction. Within this mix, it's not lost on farmers that risk management doesn't grow old. However, keep in mind the outside noise is getting so loud. Finding our way within the din will be an ongoing challenge as spring grows older.

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Philip Shaw can be reached at philip@philipshaw.ca

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