It is that time of year again when we can have real fireworks in our grain markets. On Thursday, we had a hint of that with soybeans jumping $0.22 a bushel based on some Chinese buying rumors. As we all know, prices have retreated during the last few weeks, and this has created an opportunity where China could buy on the low. The lower-priced South American soybeans are not at a discount anymore versus U.S. soybeans and it might result in even more Chinese buying.

On top of that, it's just the time of year when the weather heats up and we get credible evidence that the crop might not be there. Now, I know it's way too early to tell that as we still don't have that heat wave, but higher temperatures are predicted for next week and the market might just be reacting to that. Interestingly, I saw a chart last week of very high French corn prices compared to our corn futures prices, which reached a contract low. The weather is super hot in Europe, and you've got to wonder if some of this will translate into our grain markets next week.

At this time of year, it's just the way things are. Sometimes the July 4th weekend represents a seminal moment in grain market volatility. It just so happens the Canadian dollar dipped below $0.71 last week and anytime that happens, Canadian cash prices perk up. At a certain point, the big-supply gravy train which the commodity markets have seen during the last several years will have a hiccup; when it does, prices will have to rise to ration demand. We are nowhere near that now, but the possibility exists somewhere over the horizon.

Having said all that, let me take you back to last winter when the war started in Iran. At that time, we were all getting ready for higher fertilizer and fuel costs based on the war calamity around us. We still have those costs as the bills are coming due. However, increasingly I'm finding it hard to look the other way when I see announcements from south of the border of increased subsidies going to U.S. farmers. It might be sour grapes because we know in Canada, we don't get any of that money. However, it's making a real difference on the bottom line down South and much of that subsidy money is being re-capitalized into farm assets.

This week, the Trump administration requested another $11 billion in aid for American farmers. (https://www.dtnpf.com/…) That comes on top of roughly $12 billion already distributed earlier this year. If approved, direct government payments to American farmers could reach more than $55 billion in 2026, accounting for roughly one-third of total U.S. farm income.

The irony is that American policymakers describe these payments as temporary. Yet temporary programs seem to arrive with remarkable regularity. Trade aid, bridge payments, disaster payments, economic assistance payments, and emergency funding packages have become recurring features of the U.S. agricultural landscape.

Meanwhile, Canadian grain farmers continue to rely primarily on market returns and business risk management programs. AgriStability, AgriInvest, crop insurance and various provincial programs all play important roles. However, most Canadian programs are designed to protect against disaster or severe income declines. They are not generally intended to supplement annual farm income during periods of low prices. As many of you know, I've been a long critic of this Canadian agriculture policy. It simply doesn't work as it should to mitigate risk and it continues to live to this day.

Keep in mind I'm a pragmatist. You've heard me say before that the Americans do a great job of taking care of their farmers. That's something Canadian famers should admire. At the same time, we must realize it makes it harder to compete when the playing field is so dishevelled. Simply put, it means much of our non-supply managed agriculture is not as shiny as the Americans. We have to make that used tractor go a little farther.

That is, unless everything changes, and Canadian government changes its Canadian agricultural policy. In lieu of that, I think we might have to depend on some type of weather market in the next month to drive these prices back higher. You would think at a certain point the extreme hot weather in Europe would show up in these agricultural markets. At the same time, if it shows up here, it's almost guaranteed prices will bounce.

The road ahead for Ontario and Quebec farmers will be one of uncertainty, not only because of what governments choose to do, but because Mother Nature still has a way of reminding us who's really in charge. The Americans may have bigger subsidy cheques, but they can't buy rain or lower temperatures. As we head toward the heart of summer, weather will once again become the great equalizer. Somewhere out there is the next pricing opportunity. The challenge, as always, will be having the courage to take it when it arrives.

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Philip Shaw can be reached at philip@philipshaw.ca

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