Corn guide

September 2015

Ready for More corn

Farming for profitability pG. 6

For young farmers like Billy Beaudry, it‘s all about technology

Moving north pG. 10 A year to manage risk pG. 18

PG. 3

Today’s IPM challenge.......... pg. 12

When good isn’t good enough.... pg. 15

Search for a ‘tipping point’.....pg. 16

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Cornguide

Maximize efficiency above all else

East of Montreal, Billy Beaudry knows he’s under pressure to choose the right corn technologies

By Ralph Pearce, CG Production Editor

Photography: Stephanie Mantha PhotoGraphe

F

“ When we do try something, we try it as a side-by-side comparison, so we know what’s going on.”

— Billy Beaudry

arming in Quebec typically calls to mind those long, narrow ribbons of land that run inland from the St. Lawrence River. But that’s not the reality that Billy Beaudry and his family face on their farm about a third of the way toward the U.S. border, on a plateau between the St. Lawrence and the Appalachian Mountains.

The Quebec stereotype (like farm stereo-types all across Canada) might also call for a farmer who is a grey-haired veteran steeped in tradition.

As you’ll see, that isn’t his reality either.

Beaudry and his family are based near Saint-Valérien-de-Milton, about 20 minutes southeast of SaintHyacinthe, just east of Montreal. Billy is a third-generation farmer and graduated from McDonald College at McGill University in 2006. His uncle took over the family dairy operation, so when Billy’s father Alain started farming in 1982, he began with a small sow barn and then started purchasing more land to go with it.

Today, the family operates on roughly 1,500 acres, with mostly corn and soybeans grown on the plateau’s variable ground, where soil types frequently change within individual fields.

The Beaudrys also do some sharecropping, usually based on wheat although there have been years where they have turned to barley and oats, with the occasional contracts for seed oats. In addition to the cropping operation, the family has kept their hands in the pork industry, operating Beau Porc, a 100-sow farrow-to-finish operation with as many as 2,100 finishing hogs under contract.

Keeping everything manageable is a Continued on page 4

Corn Guide, September 2015

3

Continued from page 3

complex process, yet the focus on the farm seems to be on finding operating efficiencies, including working with a relatively small group of full-time employees. In all, there are four members of the family who work on the farm: Billy, his parents, Alain and Sylvie, and his sister, Cindy. During spring planting and fall harvest, they also bring in as many as four seasonal employees to help with the duties.

In addition to juggling crops and livestock, Beaudry says the soil variability is one large challenge, and the weather often makes it even tougher.

“Even though all of our land is tiled drained, we do a lot of surface drainage every year,” Beaudry says. “We are working with an RTK system to make some topographical maps to level our soil. But it still seems as though the rain events are a lot bigger than they used to be.”

Frost is slow to leave such soils, so even though low commodity prices can increase the incentive for getting a good start, the reality of spring weather can make things very difficult.

Land prices not the same impact Just as prices for land are on the rise across the country, it’s the same in Quebec. Beaudry knows of two neighbours who were vying for the same piece of land. The bidding process escalated before the deal finally closed for nearly $22,000 per acre.

“We can only plant 2700 or push it to 2800 heat-unit corn,” says Beaudry. “It’s not like in the Saint-Hyacinthe area where the soils are great and it drains the water so well, and they usually have a half a tonne per acre more yield than we do, doing the same kind of work.”

He expects regional land prices will ease, either coming down slightly or at least staying relatively stable. In the meantime, Beaudry says he continues to look to improve efficiencies on his farm, using new technologies and systems, as well as learning from other growers in his area.

“The most important thing is that when we do try something, we try it as a side-by-side comparison, so we know what’s going on,” he says. “If it’s valuable, then we know how much more money we’re making, and if it’s not, it helps to understand why it didn’t work. It’s more a matter of trying to get the idea of what 4

other people are doing that’s good, and trying to replicate it on our farm.”

2015 is also the fourth year the Beaudr ys have been using the GreenSeeker technology, trying it first in 2012 in side-by-side comparisons in two fields with their dry fertilizer applicator.

In those trials, Beaudry says they could see the technology was working, but to get the full potential, they had to apply later in the season. That’s when they decided to go with the Y-Drop system and found it to be the perfect companion to the GreenSeeker units.

“With that technology, we’ve changed the way we’re fertilizing our crops now, and we’ve learned a lot, too, because even with the rain we have, we’ve been side dressing for a long time,” says Beaudry, noting that his father started the practice about 15 years ago. “But during trials, we realized that sometimes we’re probably not putting down enough N early in the season, and then we would come back too late, and that would cost us a bit of yield. Now we have a starter at about 50 kg of N per hectare (roughly 47 lbs. of N per acre) and then we come back at the two-leaf stage and add another 50 kg of N per hectare. So mainly half of our nitrogen is put down early, and after that, I go with the Y-Drop and the GreenSeeker system at the 12-leaf stage, at least.”

The move to more intensively evaluating new technologies on the family farm has also encouraged better tracking of crop histories. Based on in-season monitoring, Beaudry and his family have a better idea of what to expect in the fall.

Use of basic GPS technology and the GreenSeeker system allows him to keep better records and then try to narrow the focus on particular parts of the field according to specific soil types.

Importantly, by developing more precise plans, Beaudry is able to get closer to maximizing crop production and reducing the costs that go with it.

“It’s also great for record-keeping and making things simpler, always calculating our cost of production for every field, every year, so we know where to go after,” he explains. “We always try for better yields — that’s the main thing for us. But we’re also taking a good look at our cost of production, to make sure we’re not buying those yields. That’s our goal every year — to beat our record year — but at the same time, we’re slowly trying to move towards more reduced tillage.”

Quebec farmers have it “covered” The Beaudrys also make use of cover crops, wherever and whenever possible, including into corn. There are some in his region who do more with cover crops but Beaudry is well experienced with ryegrass given the soils and types of drainage he has on his land. Again, depending on the year and the crop rotation, he likes to spread seed early, seeding into corn after the second glyphosate application, around the fiveto six-leaf stage.

And he always grows a cover crop after his wheat, noting that there’s more time to do what he wants in advance of seeding. If it’s a sharecrop, he can level

Corn Guide, September 2015

the land, put down some manure followed by lime, and then subsoil everything, after which he can plant ryegrass or blend it with oilseed radish.

In 2014, he also tried peas in the mix, acknowledging that the seed is a little more expensive, but that he’s been told it can reduce nitrogen costs.

“It’s kind of a trial that we’ll see this year, if the part of the field that had some peas on it last year has even better yields in corn, and if I can put less nitrogen and reduce my costs,” says Beaudry. “We’ll see how it goes.”

Slow and steady For now, Beaudry, his parents and his sister take a more methodical

approach of managing their farm.

They’ll assess any new trend or practice, performing the side-by-side compar isons that prov ide reasonably conclusive results, and find the right fit for their operation — first and foremost.

Although he sees himself as open minded and willing to try new things, it’s always with the same “slow and steady” approach. It’s easy, he has found, to get caught up in the trap of buying newer and bigger technology without first determining a system’s cost-benefit.

It’s also important to share information, he believes. Beaudry was among the first in Quebec to use the Y-Drop

system, often hosting other farmers to see first hand what the system can do.

“We t h i n k w e s t i l l h ave s o m e things to maximize on the land we have,” says Beaudry, adding that their goal is to be sustainable while casting an eye on the future (he has two children and another on the way, and his sister has a son and is considering having another) and a desire to keep farming in the family. “We want to be ready if there are a lot of people interested in farming. Obviously in the long term, we think about increasing the size, but we’re not in a big rush because now it doesn’t make sense.

You have to capture your net income to have more land.” CG

“We always try for better yields — but we’re also taking a good look at our cost of production, to make sure we’re not buying those yields.” — Billy Beaudry

Corn Guide, September 2015

5

Cornguide

Farming for profitability Precision ag systems can take your ability to analyze profits way past yesterday’s cost-revenue calculations

By Ralph Pearce, CG Production Editor

6

I

t’s been the mantra of agricultural economists, bankers and even agronomists for the past 20 years. “Know your cost of production.” At every podium at every conference, you can almost guarantee the question is going to get asked. How can a farmer farm successfully without knowing their cost of production?

We’re always told every successful corporate executive outside of agriculture knows the cost of their widgets or grommets, usually down to the last fraction of a penny.

Then the question comes again: Can agriculture afford to be different?

But agriculture HAS changed, especially in the past 10 to 15 years, maybe not because the idea of farming for profitability is so new (it isn’t) but because farmers now have the ability to measure specific properties on the farm, from fertility levels to soil organic matter percentages to cation exchange capacity.

Of course, farming has also changed because the numbers are getting so much more volatile, which puts additional pressure on farm decision-making, not just from year to year but sometimes from one week to the next.

The equipment and systems used to support these decisions are far more complex than they were even five years ago, just as the complexity of our seed technologies has leapt ahead, with double- and triple-stacked traits as well as drought toler­ance and above- and below-ground pest protection. It’s a new universe compared to when Bt genetics first hit the market in the early 1990s.

All of these things have changed the landscape in which farmers conduct business. Yet the focus in the fields still tends to be centred on productivity. How is your company rep or your ag dealer helping you drive yield? In spite of the layers and the complexity, yield remains the single most-important factor in measuring

success, and some are arguing that’s only because there’s a comfort level that comes with yield, along the same lines of “if it’s bigger, it must be better.”

Now it’s all being challenged by individuals including Mike Wilson, a certified crop adviser with Thompson’s Limited.

For the past two years, Wilson has been building tools that can monitor, measure and collate farm details into a workable program to increase profitability.

“A lot of this is still in the experimental stages,” says Wilson, who’s based at the company’s Blenheim, Ont. office. “With some of our key customers, we’re starting to see some really positive results, and it’s starting to confirm that we are on the right track and it is something that we’re going to be able to take to the mainstream as we move forward to develop into a more encompassing program for all of our customers.”

Contrary to the perception that “preci-

“It’s not precision ag anymore, it’s agronomy.”

— Mike Wilson, Thompson’s Limited sion ag” is something new, it really has been around for 20 years, if GPS-based yield monitors represent its beginning.

The yield monitor quickly evolved towards variable-rate technology (VRT) but then developed at a much slower pace, if for no other reason than the theory of VRT was created without farmers necessarily having the ability to make full use of the data.

Now that hardware exists and is being upgraded constantly, there are more growers willing to adapt to it, in spite of the steep angle of its learning curve.

It’s in recognition of these changes, along with multi-hybrid planter units and automated down-pressure systems, that Corn Guide, September 2015

The precision with which practices can be measured means that everything done on the farm — planting, spraying, harvesting — can be layered together with other facets to create a complete picture of that farm.

Wilson has renamed his department “Advanced Agronomy.”

“It’s not precision ag anymore, it’s agronomy,” Wilson says, noting how it’s been influenced by a number of different catalysts, from land prices to commodity price volatility, and from input costs to market demand.

“That’s how we’re going to farm in the future and that’s how we’re going to be more profitable,” Wilson continues.

“The progressive farmer, the farmer who’s in it to make money and treat it as a business, this gets their attention every time. They want to be more profitable and usually with profitability comes more bushels anyway — we wind up being more productive as well.”

It’s interesting that in the past, the two have been positioned as exclusive aspects of farming, much like oil and protein in soybeans, where you can’t have high levels of both, only one or the other.

Wilson believes the idea that profitability leads to improved productivity may be a starting point for the discussion.

There are some fields in Ontario, he says, that are incapable of producing more than say, 125 to 150 bushels, and that no matter how much fertilizer is applied, or how high the plant densities are pushed, Corn Guide, September 2015

they can’t produce more. Wilson has witnessed one field where the combination of low yield potential and high fertilizer and chemical inuts was costing the farmer $400 per acre every year.

The challenge is convincing growers that in spite of combining more corn and thinking they’re making more money, they may actually be losing money by doing so.

What helps is Wilson’s system, where there are multiple layers of data and calculations that can show land or rent prices, fuel costs, inputs and fertilizers, so the losses become easier to outline on the page or the computer monitor.

Maybe the farmer can just cut back on seeding rates or drop fertilizer allotments, thereby improving per-bushel cost enough to net more per acre.

It’s similar to a pitch senior agronomist Dale Cowan made several years ago: stop growing corn on the headlands where the yields are at their lowest. Those numbers are just dragging down the field’s average, he once said.

Instead, throw down the cheapest cereal or grass seed you can find, let it grow for two or three years, and let the roots break down the compacted layers and add some organic matter to the headlands.

Wilson agrees. “If we’re farming based on your farm’s average, we’re going to continue to produce average yields,” he says. “If we start creating management zones and farming the farm based on zones, then we increase profitability, because that spot of the field that only yields 125 bushels, we’ve been wasting money on for years. Let’s save our money, or better yet, let’s spend it where it’s needed. That area of the field that yields 250-plus because it’s the best spot on the farm and we’ve been fertilizing for 180 bushels, can it yield more?”

Wilson insists it can, and that with the latest upgrades in measuring nutrients and performance, farming by zones also becomes more economical.

“Now we’re getting more bushels off the farm for the same amount of money, or we’re getting the same bushels for less money,” Wilson says. “It can shake out many different ways.”

It also starts with the essential step of a yield map. Without some form of precision agriculture, decisions based on management zones are not possible. And there are some misnomers tied to this trend.

Wilson has actually proved some of the Continued on page 8

7

Continued from page 7

systems that fall under the umbrella of “precision ag” may not help drive profits.

The ultimate goal for Wilson is to have the recommendations from the advanced agronomy calculations match the variation in the field. If grid sampling can’t match what the customer knows is happening in the field, then the information is incomplete.

What has to be kept in mind is that the customer’s stake in this is the biggest factor to be considered.

What’s changed in the last few years isn’t just the layering of information that’s become available. It’s that we also have the means of analyzing and incorporating that information.

We can look at yield zones on a map, bare-ground imagery that shows colour variation and variability, or even an elevation layer from RTK or a UAV flight, and if those components can be combined, and the customer agrees that this is the shape and condition of the field, that’s the most important facet.

“Then we can start measuring more of what’s happening with greater specificity, and have a stronger correlation to the results, because we’re actually applying in those yield zones more accurately,” says Wilson. “It gives farmers a better in-depth look at each zone, and allows them to make better decisions on things they may have questioned before.”

On a much smaller scale Chris Boersma, who farms around Ridgetown, Ont., has been working with Wilson for the past year or two but has been engaged in improving his profitability since the late 1980s, when

Current Farming Practices

Current Farming Practices Yield vs. Inputs (Farming with Average’s) 450 400 350 300 250 200 150

Under Application Loss of Yield Potential Over application Wasting $$$ Environmental

100 50 0

Low Productivity Areas Current Yield

Medium Productivity Areas Current Imput level

Yield Goal

High Productivity Areas Input Goal

The current practice in agriculture is still focused on maximizing yield.

Technology will change our Future

Technology will Change our future Yield vs. Inputs 450 400

Targeting Maximum Yield Potential

350 300 250 200 150 100

Very little Waste

50 0

Low Productivity Areas Current Yield

Medium Productivity Areas Current Imput level

Yield Goal

High Productivity Areas Input Goal

Using data that is being collected already, the drive is to farm the best acres for profitability; costs will be reduced on poorer soils, and productivity will increase.

Mike Wilson, CCA-ON • Thompson’s Limited

8

“You understand that the crop is influenced by 100 different factors and you’re trying to manage 80 of them.”

— Chris Boersma, Ridgetown, Ont.– area farmer he was involved with a group called “the Most Economical Yield.”

For Boersma, it’s not a new concept; what’s changed is the capacity to measure against the expectations of farmers who consider using this relatively new system.

“It’s more intensive now; there are a lot more details to it and there’s more paperwork involved, and a lot more to consider,” says Boersma. “You understand that the crop is influenced by 100 different factors and you’re trying to manage 80 of them, so there’s more intensity, without a doubt. But you have to be of the mind and have the resources to do it, and if a farmer doesn’t have that, they’re not likely to see the benefit of it.”

Plus there’s the level of the return on investment; it isn’t a dollar at a time. Instead, with this management zone or Advanced Agronomy concept, the farmer is aiming to shave a few pennies here, or maybe a nickel or a dime there.

But together, they might add up to dollars per acre.

It’s a longer-term process and it requires greater management input, but once you get started with it, the benefits only continue to grow, especially as the equipment and software continue to drive deeper for more detail.

But Boersma agrees that convincing a grower that there’s value in a process that might cost a dollar or two — or more — per acre to get started is a difficult pitch. The value of that information, generated on a 12- or 30-square-foot basis, continues to build. Added to that is the potential for measurements to become better defined, similar to being able to measure parts per million.

Now there’s the capability to measure in parts per billion and parts per trillion, and that’s opened the door for better standards and more specific applications.

As the scale continues to shrink, the value only gets bigger.

“Now because of technology, I can get the percentage return on any one product based on a number of different scenarios, without a lot of extra labour or work throughout the season,” explains Boersma. “That’s because every implement’s record­ing what’s applied, and the combine’s picking it up, and it’s all reporting that if we spent $1 per acre on product A, we got $1.10 back or $1.80.”

It’s not necessarily an indication of increased yield, it’s a reflection of the product applied, and a return on that investment, so the correlation is much more direct.

Prerequisites In some ways, Advanced Agronomy is similar to other trends where there are innovators and then early adapters. There are two primary differences, says Boersma. The first is the capital investment and the size of the farm play a role in that investment.

Smaller farmers are less likely to be able to justify that kind of financial commitment.

The second difference from other trends is the learning curve, which tends to be more vertical.

“With the technology, the equipment is data logging everything,” says Boersma, noting that he can see a spot in the field where a spray application was missed or went awry. “It’s probably a combination of things, but everything comes together.” CG Corn Guide, September 2015

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SerVinG manitoba FarmerS Since 1925 | Vol. 73, no. 4

Producers urged to test feed for ergot contamination Last year’s wet spring has left a potential deadly legacy

By Alexis Kienlen staff

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rgot-contaminated feed is on the rise and producers need to be testing to avoid poisoning their livestock.

“Last year at this time, we were running 20 to 40 samples a month for ergot — we’ve had days this year where we run 40 samples, and lots of them are high concentration,” said Barry Blakley, a professor at the Western College of Veterinary Medicine in Saskatoon and a supervisor in the college’s Prairie Diagnostic Services laboratory.

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Province promises new supports for smaller farmers and processors The report says support to grow food-processing sector must extend to all sizes of players

By Lorraine Stevenson co-operator staff

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see ERGOT on page 7»

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Farmers like Karen Friesen, who are engaged in small-scale food processing and direct marketing, are encouraged that the province has committed to helping their sector prosper. Friesen and her husband Jonathan operate Valleyfield Acres near Morden, selling farm-raised vegetables and preserves. photo: Lorraine stevenson

new report aimed at supporting local producers and small-scale processors is being praised as an important step towards fostering a better working environment for new entrants to farming and food processing.

Advancing the small scale, local food sector in Manitoba, a path forward, a 65-page report that includes 21 recommendations, was released last week by Agriculture, Food and Rural Development Minister Ron Kostyshyn, as part of a new five-point strategy to help grow the province’s food-processing sector.

The report follows several months of public consultations, interviews and surveys with a variety of direct marketers and small farmers.

“Manitoba has accepted all of the recommendations and will be working with our partners to move this important part of our agricultural economy forward,” he said in a release.

Ko s t y s h y n i n i t i a t e d t h e project last spring amid growing tensions between startup processors and government inspectors over food safety regulatory compliance and enforcement issues.

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Cornguide

What do climate change and western corn share?

“Plenty,” says Jeff Rubin

By Ron Friesen

10

Moving north J eff Rubin is former chief economist for CIBC World Markets, now a best­ selling author, and he believes a warmer climate will result in a longer growing season and more heat units on the Canadian Prairies. This, he suggests, could turn the region into the new North American Corn Belt as production inevi­ tably creeps northward.

“The migration of the Corn Belt to the Canadian Prairies could be a double win for Canadian farmers. By switching to corn (and other cash crops like soybeans), farmers would significantly increase the cash flow from their acreage, setting the stage for marked appreciation in farm­ land values,” writes Rubin in his recent book The Carbon Bubble.

“Rising temperatures and drought should reduce corn yields and hence pro­ duction in the U.S. Midwest, with some prime growing areas becoming unsuit­ able for corn cultivation. Given how important the U.S. is to world produc­ tion, any reduction of U.S. supply is almost certain to put upward pressure on world corn prices, making the crop all the more valuable for those who can grow it.”

Mind you, Rubin has been spectacu­ larly wrong before. His previous book, Why Your World Is About To Get A Whole Lot Smaller, predicted world oil prices would top $200 a barrel by 2012, profoundly affecting economic drivers in industrialized countries. We all know how that turned out.

But something is happening which makes you wonder if the agri-industry isn’t anticipating Rubin’s prognostica­ tions. Already, major seed-producing companies are announcing bold plans to develop corn hybrids suitable for Western Canada with the goal of expanding corn acreages significantly.

First out of the gate was Monsanto Canada in June 2013 when it raised eye­ brows by launching a 10-year, $100-mil­ lion program to develop earlier relative maturity corn hybrids adapted to Western Canada. “Taking into consideration crop rotations, this could result in an estimated annual western corn market of eight to 10

million acres by 2025,” a Monsanto news release stated.

Not to be outdone, DuPont Pioneer announced on July 30, 2014 it would con­ struct a multimillion-dollar research facil­ ity in Lethbridge “focused on developing ultra-early-maturity corn products for growers in Alberta and Western Canada,” according to a company statement.

All this activity gives the distinct impression of companies trying to turn a currently marginal crop on the Prairies into a major one.

While they don’t say directly that a warming climate is one of the motivators for their research efforts, they imply it.

“It’s certainly something that we’re thinking about,” says Dan Wright of Monsanto Canada. “We certainly believe it’s not going to get cooler in Western Canada. It will continue to get warmer.”

To call corn a minor crop in Western Canada right now would be an under­ statement. Monsanto estimates the cur­ rent annual acreage ranges between 300,000 and 500,000 acres, much of it confined to southern Manitoba. That’s barely a sliver of the 16.64 million acres of canola that Prairie farmers were expected to seed this spring.

For Monsanto’s 10-million-acre dream to come true, corn would have to expand far beyond a small corner in Manitoba.

This raises an important question: where would all that corn be grown?

“I would say the logical area for it is in the southern half of our growing areas where the combination of shorter season varieties and time to maturity could result in reasonably sized production,” says Bruce Burnett, a CWB weather and crop specialist.

The main reason why southern Manitoba is home to most of the corn currently grown in the West is climate.

The region generally receives more pre­ cipitation and has a longer growing sea­ son. Take corn out to semi-arid regions in Saskatchewan and Alberta and you could see it looking like onions shrivel­ ling in the dry ground, especially this year when the western Prairies experi­ Corn Guide, September 2015

“There are risks, but there are risks with growing any type of crop,” says Manitoba Pam de Rocquigny.

“It’s up to each individual producer.” enced some of their driest growing conditions in years.

“Corn will not perform well under drought conditions. There’s no doubt about it,” says Burnett. “We can’t become the new Corn Belt without reliable rainfall.”

Climatologists generally agree the longterm trend on the Prairies is toward warmer weather and a longer growing season by perhaps 10 to 15 days. But the outlook for moisture is less certain. “We shouldn’t expect a large increase in the amount of precipitation we have, even with a longer growing season,” Burnett says.

That said, Burnett acknowledges Monsanto and DuPont are both very market-savvy companies and may be on to something if they are willing to plow millions of dollars into developing corn hybrids suitable for all of Western Canada, not just part of it.

Monsanto’s Dan Wright says he is “extremely excited” about the progress his company has seen in its corn program after only two years. Wright says Monsanto had nearly 90 test plots this year, with locations ranging from Manitoba’s Red River Valley (the heart of the province’s Corn Belt) to Saskatoon, down to Lethbridge, up to Edmonton and Corn Guide, September 2015

as far north as Grande Prairie, Peace River and “the edge of failure,” just to see if it’s possible.

While admitting this year’s drought was hard on Monsanto’s test plots, Wright says the company is making progress on lowering heat unit thresholds from 2150 to under 2100. A new variety released this year, DKC23-17RIB, is at 2075 heat units.

Wright says the goal is to get down to 2000 heat units, which would be a breakthrough for an early hybrid.

Another goal is to produce hybrids consistently yielding 100 bushels an acre or more, generally considered the threshold for a commercial corn variety. Here, too, Monsanto is making progress, says Wright.

“We’ve found lots of areas across Western Canada where we’ve put our test products in and said, you know what? We’re close.”

Morgan Cott, a field agronomist with the Manitoba Corn Growers Association, is skeptical about corn expanding into non-traditional areas of Saskatchewan and Alberta, despite shorter-season varieties. She believes most expansion will come from existing growers increasing their own acres.

“I would expect producers just to be growing more of their own acres, not necessarily growing much farther north

or in areas that might not be great for corn,” says Cott.

“It wouldn’t be a quick growth geographically,” Cott believes. “It would be a slow sort of thing.”

However, Burnett believes corn could have a future outside Manitoba, depending on how effective companies are at getting varieties to yield well in a shorter growing season.

“You could conceivably grow it in a large portion of the Prairies if you got the length of the growing season short enough,” says Burnett. “(But) I don’t know whether you can do that with acceptable yield results for corn.”

Another factor to consider is frost.

Even if prospects are favourable for expanding corn acres, Western Canada is not Iowa or Indiana.

The growing season is shorter. No matter how you cut it, corn takes longer to mature than cereals do and the threat of damage from an early frost is always real.

“You can see an increase in your growing season but if your climate still remains quite variable and you still occasionally get these frosts on August 20, that’s another thing to consider,” Burnett says.

Still another potential problem is the fact that corn is a high-residue row crop.

As a result, it is not always suited to parts of the Prairies where minimum- and notill cropping systems predominate.

Breaking up corn residue after harvest can require special tillage equipment.

Would corn force producers to open up no-till systems? It’s a question worth asking.

“There are a lot of areas that are no-till production as you move farther west,” says Pam de Rocquigny, a Manitoba Agri­ culture, Food and Rural Develop­ment cereal crop specialist. “How does corn fit into that in terms of a high-residue crop where we need to incorporate that residue?”

But you never say never when it comes to new crops on the Prairies. There was a time when growing winter wheat in Western Canada was considered doubtful.

No one expected Saskatchewan to become one of the world’s largest lentil producers.

And look what happened with soybeans, which used to be the preserve of the U.S. Midwest but now are the third-largest crop in Manitoba.

“There are risks, but there are risks with growing any type of crop,” says de Rocquigny. “It’s up to each individual producer to pencil out what makes sense for their farming operation.” CG 11

Cornguide

Today’s IPM challenge Are you keeping on top of all these new pest-control opportunities?

By Ralph Pearce, CG Production Editor

12

T

he term has been around for decades, and it trips off our tongues as easily as “no-till management” and “cover crops.” Yet one of the challenges, even for those in search of a silver bullet in crop management, is the constant evolution of the term “IPM.” Its meaning is rapidly evolving, and so are the ways of practising it in order to achieve better pest control at lower cost.

Part of the challenge, in fact, is how easily the terminology is tossed around.

Are we all really talking about the same thing?

Definitions of the “pest” part of integrated pest management have had to stretch a lot in the past 10 to 15 years, and so have the tools we can use to keep on top of them. Seed traits and technologies have come to the fore, but there are new chemical innovations too, and even strategies such as precision agricultural systems and cover crops that focus on soil health.

Even among the experts, the definition can differ from one agency or individual to the next. The United States

Environmental Protection Agency (U.S. EPA) states IPM is “an effective and environmentally sensitive approach to pest management that relies on a combination of common-sense practices.” It goes on to state that IPM is “best described as a continuum” where most growers identify their pests before spraying while a smaller group use “other methods.”

The University of California-Davis says IPM is based on scientific research, and that it focuses on “long-term prevention of pests or their damage by managing the ecosystem.” It goes on to note that IPM brings together approaches that are often grouped as biological, cultural, mechanical and physical, and chemical controls.

One of the more extensive resources on IPM is found on the Ontar io Ministry of Agriculture, Food and Rural Affairs (OMAFRA) website. The information and guidelines there reflect the province’s multi-faceted agri-food industry, with everything from fruits and vegetables to field crops, and from beneficial insects to weeds and diseases.

Corn Guide, September 2015

Photo credit: Tracey Baute, OMAFRA

The introduction of biological controls looks and sounds impressive, but like any of the other pillars of IPM management (cultural, mechanical/ physical or chemical), it takes time and sound management skills.

The evolution of IPM Differing definitions are only part of the confusion surrounding IPM. There’s also the hard-to-escape fact that, as the tools of IPM evolve, so do our opportunities for using them, whether they are new traits, crop protection materials, or new trends in cultural practices.

The upshot is, wherever you look, there is no easy route for defining IPM, or for implementing its many facets.

That’s a concern for Tracey Baute. As the field crops entomologist with OMAFRA, she’s seen how the definitions have changed, along with perceptions of what constitutes IPM. In the wake of the current controversy surrounding the use of neonicotinoid-based seed treatments, she notes that growers are accused of not following IPM, under the misconception that chemical seed treatments cannot be part of an IPM strategy.

“Yet IPM is incorporated in almost everything farmers do, to some extent, so to say that they’re not doing it is not correct,” says Baute. “Chemical control, no matter what kind it is, is part of IPM. IPM isn’t going to suddenly save the world: we’ve been doing it all along, and in some cases, chemical control is still necessary.”

According to Baute, there are several messages that need to be reasserted in the farming community, including the four pillars of IPM — biological, cultural, mechanical (physical) and chemical. Each has its unique strengths and weaknesses, and all have their uses from one growing season to the next.

But it’s the idea that IPM is a holistic or total-package approach that can be most important.

“One step in the process, and it is one that I think everyone takes for granted and doesn’t realize is part of IPM, is taking the preventive measures — the crop rotation, or planting early or late, depending on what pest might be a problem, or proper fertility,” says Baute. “All of those aspects help improve the system in a bigger-picture approach, and I think they’re dismissed and growers don’t realize that they’re part of integrated pest management, where you’re doing these things likely for other reasons too, but in some aspects, it’s preventing the issue from the very beginning.”

Of course the other factor to keep in mind is that none of the four pillars of management in IPM are inexpensive, simple answers to the challenges that growers face. Beneficial insects are part of Corn Guide, September 2015

the biological controls, but balancing their introduction with existing cropping practices is both long term and complex.

Adjusting planting dates can be a cultural control, yet weather patterns are often more of an influence on performance and yield. Different forms of tillage can provide physical control of weeds, yet there are always concerns about compaction and increased cost. And chemical controls are still a vital part of that holistic approach, sometimes for a pest that has passed its threshold, but sometimes too as a prophylactic measure.

“We’re constantly integrating pest management in what we do, so maybe it’s blurred a bit as to what is IPM now,” says Baute, noting that Bt corn has been one of the biggest advances in IPM, allowing less use of broad-spectrum foliar insecticides. “Some will argue it’s still an insecticide, it’s still a chemical control, but it’s almost more like a genetic control because it’s in the plant. But it’s our way of being able to successfully control a pest

grubs, as an example. “Homeowners can afford to try nematodes but that’s done at a totally different scale — those things have to be pampered and irrigated. But you take that same concept to a field scale and that’s $400 an acre, and farmers just can’t do that. Not every aspect of these possible control measures is going to be economical or feasible for a grower.”

The use of cover crops is another component. It’s been refloated as a saving grace for growers, and a way of improving soil health, boosting yields and encouraging a symbiotic relationship between certain cropping practices and beneficial insect species. But as Baute points out, there are also risks, including finding the right cover crop species to suit current cropping practices. What’s the best timing for planting? Is it easy to kill or easy to plant into?

“You could actually increase your insect pressure, depending on how you manage the cover crop, so it really comes down to modifying based on your needs and what

“When it comes to something like seed treatments, it seems as though it’s seed treatments or IPM, yet chemical control is part of IPM.” — Tracey Baute, OMAFRA entomologist like corn borer that was a continuous problem that always needed to be controlled. And you’re reducing these insecticides, which lessens the impact on all other pollinators and predators that are present. I don’t think growers necessarily think of that as IPM anymore — it’s now just another crop to grow, but in all aspects, it is IPM.” That’s also why it’s harder to establish a rigid definition of IPM. The changes in technology that have altered the agricultural landscape are myriad, but it’s true too that no two farms are the same. In the past 10 years especially, industry stakeholders have recognized that farmers, whether they live across the highway from each other or across the province, are farming on different soil types, or with different pest or weed species, tillage practices or crop rotations. There is no one plan that works for everyone.

“That’s why any decision on pest management usually comes down to economics, first and foremost,” says Baute, pointing to discussions about controlling

your ultimate pest issues are,” says Baute.

“The concept that by excluding chemical control, IPM will save us is not the case.

IPM has to have chemical controls there as options, because with some pests, that is the control measure that we have to turn to if we want to produce a viable crop.”

Bigger and better?

One important consideration impacting the scope and definition of IPM is the phys i c a l s i ze of s o m a ny f a r m s .

Technology like GPS systems or data transfer has provided more layers of information and greater scale. But renting or acquiring more land challenges the incorporation of any or all of the many facets of IPM, something Paul Sullivan has noticed in the past few years.

“Time is a premium for a lot of growers and it’s hard for them to step back and spend enough time assessing and evaluating, and they can get all kinds of information,” says Sullivan, an agronomist and independent Continued on page 14

13

Continued from page 13

certified crop adviser from Kinburn, Ont., just west of Ottawa. “That becomes an important part of making the best decision you can make. Some of the things that come into play for farmers aren’t properly evaluated a lot of times, just because in the race to get everything done and then start the season over again, there can be a lot of loose ends that don’t get looked after.”

Much of what can be learned in a season can also be forgotten in the time between harvest and the next planting season, and often a grower will default to the familiar. Farmers are tied to tradition, says Sullivan, and generally they don’t change things very quickly in spite of how fast things around them may be changing.

Partly that’s because farmers know there’s a price that will be paid if their strategies don’t work. Partly, too, it’s because they know better than anyone else how important it is to have realistic job lists that they can actually get done.

“We probably look at pest management on a fairly regular basis, but don’t recognize that we do,” Sullivan adds. “It’s a total-crop sort of scenario because as we look at some of the technology that continues to evolve and be used by farms, in some cases, some things work for growers and some don’t work at all.”

One example is fungicide in corn.

Sullivan notes there’s a group of growers that consistently makes money putting fungicide on corn, and there’s a group that’s tried it and it didn’t work, and it won’t go back to it. But he believes success using fungicides on corn relates to what’s in the field: nutrient levels and the combination of conditions that boost yield might be related more to the genetics and not just the fungicide.

“It’s the same with fungicides, it’s the same with varieties, it’s the same with a lot of things,” says Sullivan.

Logic and common sense Sometimes it’s best if a farmer tries to keep things uncomplicated and not overthink IPM with its many tools, layers and systems. Sullivan sides with Baute on the notion that some growers don’t realize that crop rotations are a part of IPM. Common sense and logical, basic crop production practices become the basis for the foundation of pest management. And that allows the crop to resist some of the things that could become a bigger issue.

“Keeping a field clean of weeds helps 14

Cultural practices such as no till or reduced till and maintaining rotations can be a form of IPM.

Further reading For more information on definitions and the parameters affected by integrated pest management (IPM) guidelines, check the following websites: www.omafra.gov.on.ca/english/crops/insects/ipm.html#stats_facts www1.agric.gov.ab.ca/$department/newslett.nsf/all/agnw23482 www.epa.gov/opp00001/factsheets/ipm.htm www.ipm.ucdavis.edu/GENERAL/whatisipm.html to eliminate cutworm moths from coming in,” Sullivan explains. “And good weed management with a burn-down in the spring, ahead of soybeans, reduces the risk of glyphosate-resistant Canada fleabane from becoming an issue.”

To Sullivan, that burn-down isn’t just a payback to the grower, it also sets the stage for IPM practices later in the year, and it builds on control measures that will be a benefit during the following season. At that point, the grower has a cleaner field that’s easier to control weeds in the subsequent wheat or corn crop.

Yet as much as the technology has added and enhanced IPM practices, Sullivan believes there’s more that advisers, agronomists and dealers can do to help smooth the way as IPM continues to evolve.

“As advisers to growers, we respect their experience, we respect their perspective, but in some cases, I don’t think we’re counselling farmers enough — we don’t try hard enough to help them understand what’s happening,” says Sullivan. “If they decide that that’s not something they’re going to do or that they are going to do, when in our assessment it doesn’t make sense to do it, it’s understanding the parameters that are

there. And I think that as a support level for growers, CCAs and other advisory staff within the industry, we have to help growers understand their risk or the actions they’re taking and how those become important considerations.”

Some growers, Sullivan adds, can take the concept of IPM and move it ahead faster within their operations. Often­ times, these are the innovators and early adapters, and they’re usually the site of more attention and resources — as a means of spreading the word and sharing ideas. In addition, there are growers who are as comfortable purchasing new equipment as they are in fielding advice via social media from Dave Hooker or Peter Sikkema at University of Guelph’s Ridgetow n Campus, or from Bob Neilson at Purdue University. They can incorporate data points from their yield maps and pinpoint fertility issues, and mesh them with weed, insect or disease challenges.

“It’s not that those guys didn’t exist in the past — they did,” says Sullivan. “But we have a sector of growers that is more tech savvy, who have the ability to sort through and apply some of that technology better than a generation ago.” CG Corn Guide, September 2015

Cornguide

When good isn’t good enough How do you go from good to great at marketing? With volatile years ahead, these five steps will help

By Lisa Guenther, CG Field Editor

N

eil Blue cut his grain-marketing teeth as a farmer in the bad ol’ ’80s. He had no choice. It was either that or rack up loss after loss.

“Now the second and sometimes the third generation of farmers are learning about these things,” says Blue, today a m a r ke t i n g a n a l y s t w i t h A l b e r t a Agriculture and Forestry. “Some of them are coming out to courses, too. Some of the parents are sending them to courses.”

It’s a good start, Blue says. But it takes more than education. You also have to figure out for yourself whether you’re doing a great job at sales, or merely good.

It isn’t as simple as you might wish, but here are five steps that will help.

#1 can you rein in your ego?

To start, avoid getting caught up in the daily market swings, Blue advises. Yes, you need to follow the markets, but you don’t need to track them as closely as traders.

It’s advice to heed as you improve.

Moving to the next level introduces a new set of hazards.

First is trying to hit home runs, making every sale at the very top. Instead, Blue recommends hitting more singles, even if it doesn't always give you bragging rights.

If you crave the big thrill, you can still have it both ways by only trying to catch the highs with a small portion of the crop. Just make sure you’ve already covered your costs before you swing.

Blue also suggests metering out sales throughout the year to manage risk. But remember, he adds, “It’s generally better to price into a rising market than to try to hit the price highs.” #2 Do you Have a plan?

“Flexibility is required because things can arise — and they generally do arise — that catch you off guard,” says Blue.

Be prepared by having not only a Plan A, but also a Plan B to switch to if conditions change.

A solid marketing plan requires numbers. Blue recommends knowing breakevens per unit of production to set price Corn Guide, September 2015

targets. You can also use break-evens per acre, but Blue says using units of production allow the calculation to change with yield.

Also identify your cash flow needs and how to use strategies including cash advance programs to ensure you are forced to sell at poor prices to make a payment.

Importantly, written marketing plans will ultimately help you evaluate your marketing year. You can see whether you hit your price targets, says Blue, and you can evaluate whether other marketing tools might have made a difference.

While many farmers consider a oneyear marketing season, it could easily be an 18- to 24-month period once you factor in planning, Blue says. #3 Do you Know the Big numbers?

On the fundamental side, knowing which supply-and-demand factors are at play is helpful, says Blue. Farmers can subscribe to a marketing service or find the information themselves.

But it takes time. You might need to set aside five hours a week to study markets, he says. And that’s a year-round job, not just while selling the crop.

And farmers can’t ignore the technical side entirely, either.

“It’s easier to understand how it works than to use it,” Blue agrees. Even so, the more basic ideas are the most important ones for farmers to wrap their heads around. Trend lines, support and resistance are probably the most watched and most important signals, he adds. #4 Do you get good advice?

Some farmers enjoy marketing.

Others would rather just focus on the production side. For those who don’t enjoy studying markets, hiring marketing services can help, says Blue. Even farmers who like following the markets might subscribe to a marketing service or seek professional advice.

But how do you know if you’re getting good advice?

Farmers still need to follow the markets enough to know whether a consultant’s advice is good, says Blue. You need to know what your alternatives are, and to ask informed questions.

But no one actually knows what’s going to happen in the markets, says Blue. This makes measuring the value of marketing services, or one’s own performance, difficult on a one-year basis. A three- to five-year period is a better indicator of how things are going. #5 Do you pay attention to the fine points?

Some farm marketers could stand to improve their awareness of pricing and delivery alternatives. Many still only price check with traditional market outlets such as large grain companies and crushers, Blue says. He recommends using a cash grain broker, even if it’s only to shop around and gather advice on what’s happening in the market.

Savvy marketers also track basis separately from cash and futures prices, says Blue. “Basis gives some important signals on change in demand or relative to how the futures prices move, and what the buyers are thinking or reacting to in terms of price.”

Another signal to watch is carry in the futures market. Carry refers to the price difference between contracts for different delivery months. If the price is going up from one month to the next, that’s positive carry.

“When there’s strong carry in the market, it’s a signal that the market is fairly well supplied in the nearby,” says Blue.

But when there’s not much carry in the market, it’s a sign of strong nearby demand. Using such signals can help you react to opportunities as they come along, Blue explains.

Farmers will probably never be pricemakers. And grain and livestock will keep swinging from high to low and back again.

But the good news is today’s farmers are more skilled at riding out that volatility than ever before. And maybe that first idea isn’t so bad. Is it time to sign up for a marketing course this winter? CG 15

Cornguide

Search for a

‘tipping point’ Is corn ready for prime time on these Saskatchewan fields? Maybe yes, if we can get the marketing right

By Gord Gilmour, CG Associate Editor

16

W

hich has to come first, the acreage, or the market to justify it? That’s exactly the chicken-or-egg, catch-22 sort of situation that farmers on the Prairies have found themselves in repeatedly in past years as their cropping options have changed.

First it was the canola revolution of the 1970s and ’80s which made Canada into the world power in healthy rapeseed oil, complete with its own unique take on the oil profile of the crop. Then there was the pulse crop explosion just a few years later that suddenly saw lentils and chickpeas become a realistic alternative.

Now, with industry lining up to promote grain corn for the region and talking of targets as big as 10 million acres, growers are faced with perhaps the ultimate irony. One of the most widely grown crops throughout the world is, in the western Canadian context, just another specialty crop without markets or infrastructure.

Market analyst Frank Letkeman, of Winnipeg’s Ag-Chieve grain market advisory service, says he appreciates the irony, but nobody should be terribly surprised by the impasse.

“This sort of thing happens every time we see a new crop emerge in the region,” Letkeman says. “We are an exporting region and we don’t ever have markets large enough to consume our production domestically — but developing those international markets can take time, and to do it, you need to have the product.”

It’s not that the crop is a totally unfamiliar one in the region. It’s long been produced in Manitoba’s Red River Valley and under irrigation in a few pockets of southern Alberta. But now it’s starting to creep out of the cradle and pop up in places like southern Saskatchewan, where it’s been virtually unknown.

In no small part that’s being driven by shorter-season hybrids bred specifically for the area that require fewer corn heat units.

The latest ones come in at around 2100 CHU, which opens the door to vast swaths of the Prairies, not to mention the major recent investments by ag companies like Monsanto and DuPont/Pioneer that suggest even shorter-season varieties are just a matter of time. But Letkeman cautions that it won’t be as simple as just getting the requirements for CHU down in this heat- and moisture-loving crop.

Corn Guide, September 2015

“There’s also the question of reliable rainfall,” Letkeman says. “This is a crop that definitely needs moisture to reach its full potential.”

That suggests that the drier portions of the Prairies might not be suited for non-irrigated production, and the shorter-season northern areas are always likely to be better wheat, barley and canola country rather than corn-soy ground. Then there’s the on-farm infrastructure problem. Unlike soybeans, it’s still an open question whether corn can be adapted to solid seeding with the ubiquitous air seeder, or whether it will remain a row crop. So far nobody’s recommending sowing with an air seeder, though some are beginning to experiment with it.

Other on-farm infrastructure challenges remain as well, mainly in the area of farm equipment. Planters are north of $200,000, corn headers will be in the $100,000 neighbourhood and then there’s the question of handling the corn after it’s harvested. Right now the current varieties come off wet — in the high 20 per cent range, and even up into the low 30s, and it won’t store safely until it hits about 15 per cent.

“There are a lot of farmers who, if they want to seriously grow corn, will need to buy a grain dryer,” Letkeman says.

Here again another small irony emerges. Grain dryers are a reasonably common sight on farms in the region, but growers in the southern Prairies, where corn seems to be best suited, are the least likley to have them. They’re much more likely to see their crops dry

Corn Guide, September 2015

reliably in the field, and therefore have forgone this expense, whereas growers in parts north have been forced by the reality of a perennially short season to make this investment.

“That’s a challenge for farmers — right now growing corn does seem to require more specialized equipment and management,” Letkeman says. “I think that may limit acres for a while.”

Another thing that could give potential corn growers sticker shock is the cost of inputs. Corn is a higher user of nitrogen and phosphate than crops traditionally grown in Western Canada, and given that the practice of planting it is also a bit riskier, some growers may hesitate to give it a try. Offsetting that, however, is greater productivity and therefore potentially higher returns.

It is, Letkeman says, the eternal challenge of farmers learning and adopting a new crop. Techniques from other areas aren’t necessarily going to transfer straight across to the new growing area, and therefore there’s going to be a learn­ing curve.

“We see this period of trial and error with every new crop,” Letkeman says.

As the kinks get ironed out, acres will come, and the production from those acres will begin climbing and growers will really dial in on corn.

That’s when marketing will become a challenge, since currently domestic animal feeders are showing enough interest in corn to keep demand healthy for the relatively small amount produced. As recently as this spring, the farm press was suggesting that demand was out-

stripping supply, keeping prices healthy — but Letkeman doesn’t think that will last when production starts to seriously climb. However, he’s also confident that the region’s grain companies are set to rise to the challenge, though it may take a bit of time and see a few growing pains.

“I do think that the grain companies — organizations like Viterra and Rich­ ard­­­sons — are beginning to develop these global export markets that we’ll need in the long term,” Letkeman says.

“In the end most of this crop will wind up going offshore, or even just down to the U.S. — but it will be exported.”

Letkeman says this developmental work will have to happen, because reputation is everything in the global grain market and it will take time to convince buyers that the crop is more than a flash in the pan or one-off.

“It’s going to take time to develop the market for this crop, for Canada to be seen as a ‘go-to’ place for corn,” Letkeman says. “We just haven’t grown enough of it in the past to have developed that reputation yet.”

If industry production targets are going to be met, however, that market development is going to have to come very quickly. Currently about half a million acres of corn are being planted, meaning hitting 10 million acres by 2025 is going to see nearly a million acres a year added, though of course the pro­gress won’t likely be linear. Instead a tipping point will be reached and acreage will suddenly jump. CG

17

Cornguide

A year to manage risk C

It’s going to take skill to navigate your way to healthy prices in a year when volatile currency markets will make our price swings even wilder

By Philip Shaw

18

orn farmers continue to be bedevilled by low corn futures prices. In Ontario just over a year ago, for instance, the December 2015 corn futures price on August 4, 2014 closed at $4.15 per bushel. This year on August 5, the December 2015 corn futures price closed at $3.78.

In the history of agriculture, this type of price movement is very common. It isn’t unusual to see the price of a particular commodity lower than it was the year before. In the case of corn, new technology and modern management methods have certainly given producers the ability to produce in spades, and we have also seen a fluid market environment, where the whole world has begun to enjoy growing corn, especially at the price levels we’ve seen in the recent past.

Of course, that $3.78 corn futures price on August 4, 2015 is a long way down from corn’s record level of $8.49 achieved in August 2012, but it’s hard to forget how much fun corn production can be at those futures price levels.

What has also become apparent since then, however, is that everyone wants a share of that pie. Even though global demand has been increasing at record levels, supplies have been keeping up and ending stocks have grown over time.

Nobody knows the future, and the 2015 crop is not in the bin yet, but its potential is still huge, and Canadian farmers will have to use their best market acumen to garner profits from corn moving ahead.

According to the July USDA report, there were 88.9 million acres of corn planted in the United States in 2015. The USDA has pegged corn production at 166.8 bushels per acre for an impressive 13.530 billion bushels.

This is not a record crop, but it is still one of the largest of all time. At the same time, the USDA reports that total use for the 2015-16 marketing year will be 13.735

billion bushels, which is at record levels, so ending stocks should move down as long as demand is maintained.

In the 2015 growing season, corn production in the United States has been severely impacted by wet conditions in June, which at the time of this writing had not been estimated. For instance, large expanses of Indiana, Illinois, Missouri and Iowa received excessive amounts of rain in June. This is likely to affect corn yields as well as harvested acres in later USDA reports. This may factor in a smaller U.S. corn crop being realized in the later months of 2015.

The size and the scope of the 2015 U.S. corn crop is still to be determined.

Futures prices will react to whatever the market feels the value of corn will be at any future date. However, the real story for Canadian grain farmers in 2015 is the precipitous drop in the value of the Canadian dollar.

In fact, you could argue that this has been the whole story for Canadian agriculture since the dollar was at par in December 2012. The simple fact is that grain and other agricultural commodities are priced in U.S. dollars. It is the default currency of the world. Our Canadian cash prices are largely based on the foreign exchange calculation and as our Canadian dollar gets cheaper compared to the U.S. dollar, Canadian cash prices to producers are higher. In many ways, this devaluation in the Canadian dollar has shielded Canadian farmers from the futures price malaise in corn.

Of course looking ahead to the devaluation of the Canadian dollar gives us opportunity, but it remains an extra layer within Canadian grain-marketing management to get right. As producers, how do we hedge our risk with regard to the futures value of grain, versus the value of the Canadian dollar? Many times those two factors do not move in the same direction and it makes for a more complicated Corn Guide, September 2015

marketing decision. Just looking at grain futures without a keen eye on the move­ ment in the Canadian dollar can lead to frustration. It is all part of risk manage­ ment, and with corn looking ahead it will remain a very important part.

What are some of the factors that may affect the Canadian dollar movement going into winter? Simply put, the Canadian dollar is traded on currency markets every day and its value is a mea­ surement of its demand.

Interest rates are a key factor. When the Bank of Canada raises interest rates, typically the Can­adian dollar goes up and when it lowers interest rates, typi­ cally the value of the Canadian dollar is down. At the same time, the Canadian dollar typically has an inverse relation­ ship to the value of the U.S. dollar.

keting year will largely impact the corn basis. Daily intelligence is key.

There is opportunity here for eastern Canadian corn producers. With the Can­ adian dollar down it has mitigated the price drop in futures. However, don’t be fooled by the optics. If futures prices ever rise substantially, with the Canadian dol­ lar at the 75- to 80-cent range, cash prices will go much higher. It is all about the relationship between futures values and the value of the Canadian dollar. When the value of the Canadian dollar is sub­ stantially lower than par, movement in cash prices can be even more volatile.

The road ahead will certainly be an important one for market action.

Monthly scheduled USDA crop reports will continue to serve as flashpoints for corn futures price movement. The

The low loonie has shielded our farmers from weak corn prices. But be alert, Shaw urges. Grain and currency markets don’t always move in the same direction In the last several months the U.S. dol­ lar has been gaining in value, partly because of the healthier U.S. economy and the outlook for the U.S. Federal Reserve to increase interest rates. This constant move­ ment of U.S. and Canadian variables has a distinct impact on the Canadian dollar and thus our Canadian grain prices.

Although the Canadian dollar is an extremely important factor affecting cash basis values for corn, there are historic factors that always come into play with regard to the behaviour of the Ontario corn basis.

Historically, Ontario exports corn into the United States at harvest time to create space and then imports it back in the fol­ lowing late spring or summer. This cre­ ates a very low basis at harvest and possibly a higher “import” basis later.

However, in later years Ontario has pro­ duced more corn, which sometimes means we export all year. 2014 was not one of those years. Much Ontario corn was exported out early with U.S. corn being imported later. In 2015 we have approximately 2.055 million acres of Ontario corn, which may produce 325 million bushels of corn.

How this is used throughout the mar­ Corn Guide, September 2015

October USDA report and the final USDA report in January 2016 are very important reports which can spur violent price movement. This is in addition to any other news from USDA. There are also all the other macroeco­ nomic factors that can and will affect the grain futures markets. The continuing pressure on the euro from Greece and strength of the U.S. dollar will continue to weigh on grain futures prices.

As well, corn from areas like the Black Sea region and South America will con­ tinue to find its way into world markets, and late-summer and fall weather in the United States will impact U.S. crop size.

In sum, rallies within this marketing environment surely need to be rewarded.

With new-crop cash corn currently running at $4.25-bushel in southwestern Ontario, as of August 5, 2015, it is a leap of faith looking forward.

There may even be a “black swan” event affecting the market, which may change everything. The challenge for corn farmers looking ahead is to assess all of these factors and how they will affect futures values and basis.

Risk management never grows old.

The challenge is to keep on top of it. CG 19

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