Don’t Let Grain Surpluses Blind You

Crops are starting to take off here in Ontario. We have been inundated with very warm weather the last couple of weeks and crops look good. We have had a very limited amount of moisture here in southwestern Ontario but slightly dry is always better than slightly wet. When it comes to planting time, there’s nothing more challenging than dodging raindrops. However, at least for this year we’ve had a good planting season across Ontario.

At the same time, we saw grain futures prices fall. Of course, while this was going on we still had the hot war going on between the United States and Iran which is the partial reason that we saw elevated futures prices this past spring. It almost seems now that the grain trading algorithms has it all dialed in that the war is coming to an end.

We shall see, it seems like U.S. President Donald Trump almost changes his view on that from day to day. In the meantime, we had the USDA June World Agricultural Supply and Demand Estimates (WASDE) report on June 11. It is a reminder that fundamentals still matter even in a world of predictive markets and social media that continually drive grain trading algorithms. (https://www.dtnpf.com/agriculture/web/ag/news/article/2026/06/11/usda-releases-june-crop-production-3)

On the corn side of the ledger, USDA predicts 2026-27 corn production to come in at 15.995 billion bushels (bb) with the yield forecast of 183 bushels per acre (bpa). Keep in mind that this is not as high as last year’s record but if it comes to fruition, it will be second highest, which means there should be corn everywhere. The planted acreage is still projected to be 95.3 million acres with harvested acreage projected to come in at 87.4 million. The stage is set certainly for a corn encore from last year.

The old crop July corn contract has had a really rough time falling for seven out of the last eight session finishing at $4.11 a bushel today which puts it back to mid-October lows. It was accentuated by all those funds which were long incrementally switching and getting out of their position. This crop isn’t made but there certainly isn’t any worry about running out of old crop corn.

Despite the problems with corn prices, we do have demand that is off the charts. For instance, in the USDA report released Thursday, total corn usage is forecast at 16.205 bb. That figure is simply amazing and seems to keep rising every year.

On the soybean side of the USDA equation, nothing much has changed since a month ago. Unfortunately, even though nothing much has happened from the USDA, we have lost over a dollar a bushel since mid-May on the soybean futures market. USDA is still estimating this year soybeans to come in at 4.435 bb with a yield estimate of 53 bpa on 84.7 million acres. This would be the second highest soybean crop on record. To look further ahead, the USDA is estimating that Brazil will produce another soybean crop this October of 186 million metric tons (mmt) with Argentina chiming in at 50 mmt.

For those of us who grow soft red winter wheat in southwestern Ontario you might be interested in the USDA estimate of US winter wheat production coming in at 1.029 billion bushels. This will be the smallest US winter wheat crop since 1965 and who knows it might get even lower. Farmers are planting less and less wheat every year partly because they can’t see their way out of it. There is wheat everywhere in the world looking for a cheap home to go to.

It would seem that the powers that be in the grain business are foisting upon us another surplus year which gives every reason to drive down prices. However, keep in mind we had it much worse last year and even though prices retreated, they never retreated as far as we thought they would go, and they actually caught fire later in the year. Keep in mind lots of us had many standing orders hit during the early days of the Iran war and there may be opportunities ahead that we just can’t see now. Often, grain surpluses can blind us to marketing opportunities better yet to come along.

One such opportunity which is helping Ontario and Quebec farmers is the low value of the Canadian dollar which closed Thursday at 71.6 US. The Canadian economy has slipped into a slight recession and of course we are also bothered by Trump saying he may not renew the Canada-United States-Mexico Agreement (CUSMA), all of which is bearish for the Canadian dollar. (https://www.dtnpf.com/agriculture/web/ag/columns/washington-insider/article/2026/06/10/trump-raises-doubts-usmca-ag-groups)

The challenge for Ontario and Quebec farmers will be to measure the marketing risk still left in mid-June and July. Historically, you can get price fireworks during this time. Everybody sees a huge crop coming but Mother Nature may yet not play nice. A few weeks of excessive heat, a return to drought conditions, or any number of weather surprises could quickly change the narrative. Add in a Canadian dollar that continues to provide a cushion for local cash bids and there is still plenty of uncertainty ahead. As always, grain markets have a way of humbling those who become too comfortable with the obvious. There will be many marketing opportunities ahead.

Philip Shaw can be reached at philip@philipshaw.ca 

Follow him on social platform X @Agridome