7 ONTARIO GRAIN FARMER DECEMBER 2024/JANUARY 2025 continued on page 8 close enough to the actual delivery period that there’s greater accuracy in the basis bids because the crop supply and grain demand modelling is becoming fairly well developed six to 12 months out. It’s certainly possible to sell futures for a grain delivery in 2027, but since so little is known about what the crop supplies or world markets might look like three years from now, there would be a lot of protection taken in the basis portion of the bid. However, if you contract corn in December of 2024 for delivery in June of 2025 (six months out), the basis portion of the price is pretty accurate because the supply and demand picture for next summer is already pretty well understood at this point in time. Picking the right day to make forward sales is not without a certain amount of risk, but there are fairly reliable seasonal patterns which can at least get us to focus on locking in prices at the right time of year. During spring seeding and the emergence of the newly seeded crop (April, May, and June), it seems that futures markets experience a great deal of anxiety over new crop supply, and prices are both high and volatile. In eight out of every 10 years, if a producer forward contracted new crop corn or soybeans during May or June, they would lock in a higher price than the spot bid at harvest. Even this past spring we saw new crop soybeans as high as $15.35/bushel in May, and new crop corn reached $5.85/bushel before the first of June. There are two reliable seasonal cycles in the wheat market, too. One in the fall when the market is trying to buy acres and one in the spring when the crop is breaking dormancy and frost, floods, and snow are worrisome to the crop.
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