Ontario corn production is down this year due to the drought, but that doesn’t mean there will be a shortage of corn, says Peter Archer.
Despite the dry summer, there are some respectable yields being reported in both the western side of the province and in the Ottawa Valley in the east, notes Archer (@maizingpete), who farms in the middle east part of the province and operates a grain company —Maizeing Acres Inc. at Campbellford and Trenton.
Where end-users are traditionally looking for new crop corn at this time of year, they’re still sitting on old crop: “Everybody’s got enough corn. There’s no incentive to push new crop corn into the pipeline.”
Factoring in the carryover and some better-than-expected yields, Archer is not anticipating a tight supply situation.
“Yeah, we had a crop problem, we had a drought and yields are going to be smaller, but if we have enough corn, the bids we have today, I think there’s a pretty good chance we’re paying too much,” he notes.
If there is further upside, it’s probably limited on the basis side, and would have to come from the futures market, suggests Archer.
“For farmers, our bid that’s approaching that $5 Canadian mark is probably a pretty high bid. Their job is probably — to borrow a line from Steve Miller — to take the money and run,” he says. “The safest play on this is to sell the cash and own a March call — that would be my thoughts on it.”
High disease levels are causing concern about the supply of feed-quality corn in some areas, but there’s also plenty of wheat to go around as a feed replacement, he notes.
Archer joined us on RealAg Radio on Thursday to discuss harvest progress, cross-border corn movement, and more as Ontario’s corn harvest ramps up: