Commentary

June 14 2017

Wet weather has caused some serious issues.  It seems that there isn’t anywhere in the province that hasn’t been affected by wet weather.  Planting delays are the norm and getting into the field has been difficult.  Early in June many fields remained unseeded and the planting season is running out of time.  In some of the areas that have been planted, field conditions were tough and the crop has gone in to less than ideal conditions. 

So how wet has this season been?  The water level in Lake Ontario represents the situation well.  It is reported that Lake Ontario recently reached its highest point since 1918, the year lake depth records began.  At this level Lake Ontario is about 82 cm above its long term average.  In order to lower Lake Ontario levels, the Board which oversees its flow has proposed an intermittent closing of the Lake Ontario-St. Lawrence seaway.  The proposal is to close this portion of the seaway for a 24 hour period, followed by continued navigation for 48 hours, in a stop and go cycle.  For the 24 hour closure timeframe the flow would be increased by approximately 1,000 Cubic meters per second, on top of the current flow of about 10,200 Cubic meters per second.  The proposal indicates that this cycle would remain in place until August 1st, when at that time the lake is estimated to be 40 cm lower than its current level.  This process was last utilized by the seaway in 1993.

The difference between this growing season and last year is dramatic.  Last year many areas in Ontario approached record dryness and this year some areas have received record rainfall.  The only similarity year to year is that the areas most affected with rain this year are the same areas that were most severely affected with drought last year.  Heavy soil areas in the Niagara peninsula and central/eastern Ontario have been some of the most severely affected areas.  

This year’s weather has certainly changed planting intentions.  Producers indicate that little spring grain and spring wheat have been planted.  Corn acreage is lower than everyone would like to see it, with the average guess being about 10% less than intended across the province, with various local regions having significantly less planted.  Without surprise these unplanted acres are switching to soys, making it possible that Ontario will plant record soy acres this season.  The main challenge in planting record soy acres is producers bumping up against their crop insurance deadline, causing them to report prevented planting and potentially leaving these acres unseeded. 

The Ontario winter wheat crop appears to be progressing well and should produce solid yields again this year.  The challenge to this yield is potentially disease issues with all the wet weather.  Of utmost concern is the potential for fusarium head blight and vomitoxin developing in the crop.  Agronomists have been vocal in expressing their concern that conditions during pollination have been ideal for the fungal disease to infect the developing grain.  While a lot of wheat has been sprayed as a preventative measure there are lots of fields which were sprayed after the ideal spraying window, with application delayed by inclement weather. 

In various regions of the US the wheat crop has had a tough year.  We’ve considered the challenges faced by the US Hard Red Winter crop in the plains.  There remains concern for increasing crop abandonment due to the many production challenges faced this season.  Some estimates are for up to 10% of the HRW crop to never be harvested or to be harvested as silage.  With the large rains that have passed through that growing area the expectation is for the crop to produce low protein this year.  With a low protein HRW crop millers would need to increase the amount of Hard Red Spring wheat in their grist to maintain adequate baking characteristics in the flour.  This of course would increase the demand for high protein Spring wheat.  So how is the Hard Red Spring wheat crop progressing?  It is burning up with a severe drought.  Reports out of US spring wheat country show wheat heading at just a few inches tall due to the lack of moisture and heat stress.  Production problems for wheat seem to be increasing and therefore we should see wheat prices locally supported as commodity funds cover their massive short positions.

The Ontario corn crop, like that in the US, is not off to a very good start.  Unless we see fantastic yields in our local area this fall, Ontario will certainly be an importer of corn and producers should see the benefit of import basis.  If US corn yields this fall are lower than current expectations we will see declining US ending stocks.  With even a 10% drop in yield and steady demand the US stocks to usage ratio would fall to record lows.  We have lots of summer weather ahead of us.  The outlook for the corn market can change as fast as the weather.