Producers Face More Difficult Marketing Challenge in 2023-24

With commodity prices down in 2023-24 compared to the past couple of years, producers have a much more difficult marketing task on their hands. 

“When Russia went into Ukraine, when Brazil was having a drought, you could fall off a turnip truck and still do a good job of marketing grain because the price just kept coming up,” Steve Kell, a Simcoe County crop farmer and grain merchandiser for Kell Grain told attendees at the Ontario Agricultural Conference earlier this month. 

Today, the landscape is much different, with US corn and soybean futures currently trading around three- and two-year lows, respectively. 

Kell, who walked the crowd through the supply-demand dynamics at work in the major crop futures markets as part of his presentation, said one of the biggest mistakes farmers can make in the current environment is refusing to accept that the strong prices that marked the past couple of years have come and gone. Trying to hold out for last year’s price is simply a recipe for missing the selling opportunities the market is giving you this year – even if they don’t seem as good. 

“The biggest mistakes in grain marketing are made by people with (unrealistic) expectations,” he said. 

In his own case, Kell said that when he ordered the seed for his 2023 corn crop just over a year ago, local prices were around $7/bu. Today, spot prices at southern Ontario elevators are about $2 lower. 

“If you never come off that ($7) number, it just gets worse, and worse, and worse,” Kell said. 

Meanwhile, Kell said there appears to be little on the horizon that will pull current prices higher. The weather in South America - where earlier hot, dry conditions in Brazil have given way to rainfall - remains something to monitor, he said, but added it may take a new-crop production scare to really perk up the markets again. 

Perhaps the biggest reason prices in 2023-24 have been so weak, he said, is that there have been no major problems. There were no major weather issues and while the war in Ukraine remains ongoing, the markets have basically gotten used to that fact. Issues in the Middle East, with some vessels rerouting to avoid Houthi attacks in the Red Sea, are more transportation-related rather than production related. At the same time, North American production of corn, soybeans and Soft Red wheat this past year was likely the biggest on record, he said. 

“The whole thing is just kind of flat and boring and that’s created the circumstance we’re in,” Kell said. 

“The problem with 2023, and as we move into 2024, is we don’t have any major problems.”