We obviously want to sell our grain for the best possible price and buy inputs such as fertilizer at the lowest possible price.
However, price isn’t everything, especially this year with its enormous crop on the Prairies.
Grain companies, and therefore producers, aren’t going to move all the grain they want, even without a work disruption at Canadian National Railway and even if it’s an easy winter without bitter cold snaps and deep snow.
Pricing grain, or at least locking in a basis, can ensure a place in the transportation system.
Unless you reserve a spot on the train, you could be disappointed later.
Bins are full, and producers feel pretty good when they multiply current prices by the volume in storage.
However, grain in the bin isn’t cash in the bank.
Grain can spoil, grain bins can fall over, grain bags can be damaged by wildlife and grain can be stolen. And before we know it, storage space will be needed for another crop.
Most farmers are in a strong cash position so they may not need to sell much to meet immediate financial commitments.
Someone recently tweeted that with harvest over, it was time to lock the bins until the bears go into hibernation. That could be a counterproductive attitude.
Prices go up and prices go down. You can almost always find analysts who are bearish and others who are bullish. However, not many analysts are predicting the return of $14 a bushel canola any time soon.
No matter the direction of prices for the balance of the crop year, there will be serious constraints to how quickly product can move through the system.
Price improvement won’t change the reality of transportation logistics. In fact, our movement bottlenecks could mask possible price improvements in the world market.
For that reason, this is a different marketing year than most. Some commodities can still be sold quickly and turned into cash, but there isn’t much of a spot market for many of the major grains and oilseeds. Nearby transportation capacity is booked.
Waiting to see what happens does not a marketing plan make. Inaction could easily lead to disappointment.
This is also the case when it comes to buying fertilizer.
Why, you might ask, would anyone be in a hurry to buy fertilizer this fall?
Prices have generally softened, and no big upsurge is forecast. Last year, there was little or no price advantage to buying in the fall. And when you buy granular fertilizer early, there are usually more problems with lumps when you go to use it.
On top of that, many farms have nowhere to store granular fertilizer. Fertilizer bins have been filled with grain that hasn’t yet been marketed.
For those who use anhydrous ammonia, why apply in the fall when you’re set up to apply it all in a single pass at seeding time?
We’re using an ever-increasing volume of fertilizer. Spot shortages in the spring have become common in recent years. This fall, with so many producers holding off on fertilizer purchases, input suppliers report that movement is dramatically slower than normal. That sets up the potential for a logistical nightmare in the spring.
It isn’t a happy situation if your seeding unit has to sit while you wait for fertilizer to arrive or if you have to scramble to find a supply from other retailers.
Just as with grain, price isn’t the only consideration.
Kevin Hursh is an agricultural journalist, consultant and farmer. He can be reached by e-mail at [email protected]