Corn futures steadied after hitting fresh contract lows on Tuesday, with the outlook for massive harvests in the United States keeping pressure on the market. The production forecast sparked a third straight day of losses in soybeans.

On a continuous basis, the most-active CBOT September soft red winter wheat contract hit its lowest since July 8. Front-month K.C. hard red winter wheat futures hit their lowest since Dec. 9 and MGEX spring wheat dropped to its lowest since July 2.

“Technically you are at or below contract lows,” said Jim Gerlach, president of U.S. broker A/C Trading. “That has a tendency to feed on itself.”

Ukrainian ProAgro consultancy on Thursday increased its 2020 wheat harvest outlook for Ukraine to 26.59 million tonnes from 26.07 million tonnes. It also bumped up its wheat export forecast for the country by 600,000 tonnes.

Canadian farmers are on track to harvest a record-large all-wheat crop due mainly to favourable crop conditions, farmer advisory service FarmLink Marketing Solutions estimated.

Early harvest reports out of North Dakota showed big yields in that state’s spring wheat crop, Gerlach added.

CBOT September wheat futures were off 9-1/2 cents at $5.01-1/4 a bushel (all figures US$).

CBOT December corn ended up 1/2 cent at $3.23-3/4 a bushel and CBOT November soybeans were 3/4 cent lower at $8.78 a bushel.

“U.S. crops are looking very good; we are likely to see record corn and soybean production,” said Phin Ziebell, agribusiness economist at National Australia Bank in Melbourne.

The U.S. Agriculture Department on Thursday morning confirmed private sales of 126,000 tonnes of U.S. soybeans to China for delivery in the 2020-21 marketing year.

— Mark Weinraub is a Reuters commodities correspondent in Chicago; additional reporting by Naveen Thukral in Singapore and Nigel Hunt in London.

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The Winnipeg-based company’s staff toured western Canadian fields during the last two weeks of July.

“We expected a big crop and we saw a big crop,” said Neil Townsend, FarmLink’s chief market analyst. The wheat crop in particular is an “absolute monster,” he said.

The wheat harvest including durum looks to reach nearly 39 million tonnes, surpassing the current record of 37.6 million, set in 2013.

Pandemic lockdowns caused a surge in demand for bread and pasta, made from wheat.

FarmLink estimated canola production at 20.2 million tonnes, up from 18.6 million last year.

Even so, many canola, pea and lentil crops are behind normal development and need favourable late-summer weather, according to FarmLink. Canola and cereal crops require additional moisture to reach their potential.

Due to COVID-19 restrictions, the annual tour chose fields less randomly than usual, focusing on client crops. Scouts drove alone and covered more ground, FarmLink said.

Statistics Canada is scheduled to release the government’s first estimates of crop production on Aug. 31.

— Reporting for Reuters by Rod Nickel in Winnipeg.

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Farm At Hand, which makes the cloud-based Crop Planner software suite for farmers and the Farm At Hand Agronomy suite for agronomists, announced Tuesday it has been wholly acquired by Telus for an undisclosed sum.

Few specifics of the deal were available last week, though Farm At Hand on Tuesday described it as “a natural fit” toward its goal to “simplify complicated tools to be user-friendly and match how you plan, work and keep track of what’s happening on your farm.”

Working with Telus, it said, will further that goal “by making Farm At Hand the hub that links together leading-edge software and IoT devices.”

IoT, or Internet of Things, refers to connected physical devices, such as farm equipment and crop monitoring systems, sharing data over networks without human involvement.

Farm At Hand recently announced it would work with tech firm Agrimatics to connect that company’s Libra Cart grain cart display and data management system with Farm At Hand account, and in May it announced integration with Deere’s MyJohnDeere system.

Through the Telus deal, Farm At Hand said Tuesday, it will be “better able to alert you to key changes, and offer advanced tools and information — a way of keeping track of everything in one central platform.”

Both companies emphasized last week that nothing will change immediately in Farm At Hand’s operations.

A Telus spokesperson said the Vancouver-based telecom firm “will continue Farm At Hand’s proven commitment to helping farmers best manage their farms, adding new features and services in the future.”

Farm At Hand, on its website, said its customers will “still have access to the tools you rely on,” adding “one of the things that we love about Telus is their approach to data transparency and privacy. They too believe farmers should own their information and be empowered to choose who they share it with.”

Asked whether Farm At Hand’s operations will directly connect to Telus’ in the future, the Telus representative said “we’re always looking at emerging areas where we can leverage data and technology to spur innovation, help organizations be more productive and improve the lives of Canadians.”

Telus — which provides consumer and business phone, cellular, broadband and cable service across Canada — said it “has long partnered with farmers to help connect, track and modernize farms and welcoming Farm at Hand to the Telus family will further that effort.”

Farm At Hand was founded in 2012 in Saskatchewan and relocated its operations to Vancouver the following year. In 2015 it became an arm of Winnipeg-based grain marketing consultancy FarmLink Marketing Solutions; co-founders Kim Keller and Himanshu Singh left the company the following year. — Glacier FarmMedia Network

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The Grain World tour on Tuesday and Wednesday, organized by FarmLink, visited fields in Alberta, Saskatchewan and Manitoba to observe conditions and calculate yield estimates.

Dry conditions parched soils across much of the Canadian Prairies for three years, raising fears about this year’s crops surviving, until rains fell in June and July.

“To kill the crop, you need persistent drought. The early season drought may have cut the top end off yield, but crops can recover,” according toFarmLink’s presentation in Regina, Saskatchewan.

FarmLink estimated an average Canadian canola yield of 39.9 bushels per acre in 2019-20, up slightly from 39.8 bushels a year earlier. The crop may produce 19 million tonnes, down from 20.3 million a year ago, after farmers planted less.

Crops looked above average in Saskatchewan, Canada’s main crop-producing province, and more variable in Manitoba and Alberta, FarmLink said. Canola crops, many of which were planted late, are at risk of damage from an early season frost, the company said.

ICE Canada November canola futures dropped 0.6 percent.

The crop tour estimated an average Canadian wheat yield, excluding durum, of 52.1 bushels per acre, the same as last year.

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The inaugural Grain World crop tour, organized by FarmLink Marketing Solutions, toured the Prairie provinces on Tuesday and Wednesday.

Moisture conditions vary widely across the Prairies, resulting in highly variable crops, the tour found.

“We saw some short (crops), tall ones, thin ones, fat ones,” said FarmLink senior market analyst Neil Townsend. “But we didn’t see much that would measure out as a disaster.”

FarmLink is an advisory service for farmers.

The crop tour estimated an average Canadian wheat yield, excluding durum, of 54.4 bushels per acre in the 2018-19 crop marketing year, up from the previous year’s 53.8 bushels, and surpassing the five-year average. Durum yields also looked bigger, rising to an estimated 39.01 bushels per acre from 35.3 bushels, but falling short of the five-year average.

Spring wheat yield prospects in northern North Dakota are better than a year ago but lag the five-year average, scouts on the second day of an annual U.S. crop tour said on Wednesday.

The Grain World tour estimated an average Canadian canola yield of 41.9 bushels per acre in 2018-19, up from 41.1 bushels a year earlier and larger than the five-year average.

The tour yield estimate is a “game-changer” for canola, changing sentiment from bullish about supply and demand to a key question of how much canola China will buy, Townsend said.

Wheat and canola looked lush in Manitoba, but in Alberta, canola was so immature that scouts could not count pods, Townsend said. In general, crops need rain, and soil moisture is insufficient, he said.

Two crop futures traders who were not on the tour said the results looked bearish.

ICE Canada November canola futures were up 0.6 per cent, but pared their gains slightly after the tour estimates were released.

Much of southern Alberta and central Saskatchewan has received well below normal rainfall in the past month, while most of Manitoba’s growing area has received roughly average amounts, according to Agriculture and Agri-Food Canada.

Statistics Canada is scheduled to report its first estimates this year of crop yields and production next month, using a farmer survey.

— Rod Nickel is a Reuters correspondent covering the agriculture and mining sectors from Winnipeg.

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As farms grow, so too do their storage needs, says Lyle Muyres, vice-president, marketing for CORR Grain Systems

Statistics Canada’s 2016 Census of Agriculture confirms operations are getting larger, with producers increasing their farm size through land rentals, crop sharing and leasing land from governments.

Rented acreage was highest in Saskatchewan, rising 15.8 per cent to 17 million acres between 2011 and 2016. The number of farms in that province fell 6.6 per cent, but average farm size grew from 1,668 acres in 2011 to 1,784 acres in 2016.

While the dual 2,000-bushel flat-bottomed bin was once a mainstay, farmers have since replaced them with larger units to manage their grain better.

“I would say our average sale would be about 40,000-bushel bins right now,” says Muyres. “We do still sell some of the smaller hoppers, but I think the growth is on larger storage.”

Alberta Agriculture and Forestry’s crop market analyst Neil Blue adds the uptick in land rentals is also helping drive demand for temporary grain-bagging systems.

“It’s so handy for farmers who have rented land which they may not have long-term tenure on, to just use the temporary storage for land that is a distance from their home site,” Blue says.

Grain production isn’t only rising thanks to larger operations, but also through better genetics and farming practices.

“Trend line yields are up, we’ve had some pretty good crops, and that’s driving it as well,” says Derek Squair, president of Agri-Trend Marketing.

“We are seeing a steady increase in crop yields, so the same number of acres is producing more grain,” agrees senior market analyst Jonathon Driedger of FarmLink Marketing Solutions. “Farmers simply have more grain they have to deal with. That’s a big part of it.”

Muyres estimates some operations have had as much as a 25 per cent yield increase over the last few years. “That is a lot of extra product that needs to be dealt with when it comes off the field.”

More storage, more flexibility

Also driving storage demand is the flexibility it offers to deliver at different times of the year.

Muyres says farmers will receive a premium if they’re in a position to deliver a lot of product when the market needs it.

“I think these bins really allow that, because often producers put them close to primary highways and roadways where they can get it out any time of the year, and they’re able to meet those premium markets,” Muyres says.

More farmers are also using bins to help them delay their sales until after harvest, when prices are almost always under less pressure. Producers are scoring premiums too by holding their higher grades until the market signals a strong need for them.

Basis levels reached epic proportions during 2013-14’s western Canadian rail traffic bottleneck, an event Driedger pinpoints as triggering storage investment growth.

Farmers who could ride out those really wide basis levels were far better off than those forcing grain into a market that didn’t want it and lacked the ability to move it, he says.

That year represented an amplified version of what farmers often go through: “There are periods when if you can avoid having to push grain off the farm by storing more of it, it gives you more flexibility, and maybe the grower can try to capture some higher prices later on in the year,” says Driedger.

Blue says some of the delivery problems that plagued the 2013-14 log-jam season continue to haunt farmers today.

“Even this year a lot of farmers have complained to me they have contracts that aren’t called for delivery for two or three months after the contract delivery date that was intended,” Blue says. “So it continues to this day that there’s difficulty in farmers delivering in a timely manner.”

Elevator capacity rebounding

The log-jam event even got grain companies into the act of increasing their country elevator storage, reversing a long trend of decline.

In 1986 Prairie primary elevator capacity was 7.7 million tonnes, but it then bottomed to 6.1 million tonnes in 338 elevators. But as of May 1, 2017, it had grown back up to to 343 elevators with over a million tonnes more storage capacity.

“Most of it comes as almost all the major grain companies have been adding storage at their existing elevators over the past three years,” says Mark Hemmes, president of Quorum Corporation, the company which the federal government has hired to monitor the grain handling and transportation system.

“Most of the additional storage is using 300- to 700-tonne steel bins that are linked into the elevator’s main system and leg.”

Hemmes links that growth to the 2013-14 problems that left grain companies with bins so full, they were forced to stop buying.

“The incremental storage gives them greater flexibility when the supply chain gets plugged up,” Hemmes says. “It means that even if they have a loaded train on the siding and the elevator is getting full, they can still buy grain and meet their contracts with producers.”

Bigger funnel, smaller neck

The recent bump in elevator capacity does little to offset farmers’ need for more storage because of higher yields. In 1986 the system could hold about 22 per cent of a year’s delivery. Today it can only handle about 16 per cent, and in fewer elevators — 332 last year compared to 1,846 in 1986.

In other words, a good deal of the efficiency costs in the commercial elevator system were transferred to farmers, including the price of building silos, labour hours associated with storing grain and keeping it in condition, interest costs of holding it, and the higher cost of transporting it greater distances.

“And [elevators] only are able to take so much at the time of harvest, so guys need to have a plan, they’ve got to go somewhere,” says Muyres. “And with more distance, if they can’t get their product there and return to their operation quick enough, you’ll see a lot of guys store it and then move it later.

“It’s just part of their plan to be able to maximize the amount of acres they cover with their existing equipment, and I think grain storage allows them to do that.”

How much is too much?

All things being equal, a farm can’t have too much storage, Driedger says.

“I see no downside to storage… it can really pay for itself in years when for farmers it’s in their best interest to ride out a dip in the market, or ride out periods when basis levels are weak, or movement is challenging. And you need a certain amount of storage to do that.”

Muyres once believed a time would come when steel demand would slow down and that bins wouldn’t get any bigger.

But he says he’s been proven wrong. There’s no indication that interest in bins is waning, and, if anything, more farmers are looking for even larger capacity — in some cases over double the popular 40,000-bushel units.

“We’re setting up quite a few this year of close to 100,000-bushel bins; not for the first time, but for the first time we’ve had a lot of interest in it, so my sense is that’ll continue to grow,” Muyres says.

Where does it stop?

Muures thinks he knows. “Maybe in some cases — and we do some of this as well — there’ll be virtually terminal-sized operations on the farm.”

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