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Earlier this week, I got done planting soybeans for the first time. Yes, on some of my heavier soils, unfortunately I sometimes have to plant them more than once, but hopefully that's not one of these years. It has been an incredibly dry stretch during the last 2 1/2 weeks here in southwestern Ontario and much of the crop has been planted. Rain is predicted this weekend and it will be welcome if it comes in amounts which will foster good emergence.

Unfortunately, where we find ourselves in the calendar year has not been particularly friendly for our crop prices. There were many months since Christmas where I talked about how prices were higher, much higher than last year. However, during the last few weeks we have suffered quite a meltdown in the agricultural commodity market.

To give you an example, Kansas City wheat has had 11 straight down days and 14 of the last 16 days has seen KC wheat down in price. In fact, the July contract has plunged $1.32 since the new high made after the May USDA report. In many ways, the KC wheat contract is the poster child of lost enthusiasm in agricultural commodity prices since early spring.

However, KC wheat is not alone. Unfortunately, December corn is $0.60 lower since May 13 after the May USDA report.

Now, think about that for a little bit. Corn prices are usually not that volatile and you could make the same argument for wheat. It is true that we saw prices rise during the geopolitical instability that we saw during the winter with regards to the Iran war. Funds built up big, long positions and during the last few weeks have started to liquidate those in ever increasing numbers. It has led to much lower prices, something never particularly welcome on the farm.

What is particularly unwelcome about this price erosion is that spring bills are coming due, and we all know they are much higher than a year ago. Our raison d'etre as farmers is to boost productivity and increase yields. Unfortunately, at times we catch ourselves in that agricultural efficiency vicious cycle. With the recent futures prices declining, it looks like another repeat of that.

It is what it is, and it is something that we have seen many times over the time that I've written this column. However, let me offer something else as key to future farm profitability. We are all aware that our variable costs are much higher this year and the risks we are being asked to take on are higher. That's a tough place to be, but from my perspective we should be far more focused on our fixed costs that add to our ongoing deft obligations. That used tractor might make more financial sense than a new one, deferring high-cost capital expenditures might need to be considered especially in the current agricultural economic environment. It is one thing where you cannot meet your variable expenses, but if part of that has to do with high carrying cost of fixed capital expenses, that makes things tough, too.

I'm not preaching here, even though it might sound preachy at times. We all know that our land costs are very high and for many of us the very high appreciation in land values has made us richer. For others who have recently purchased land, it has redefined the role of long-term farm debt. In fact, nobody can predict the agricultural economic future, but we do know that our agricultural economic efficiency criterion never changes. Making sure our marginal revenue from an additional increment of production is higher than the marginal cost of getting there is always when we should start.

Some of you might say that new technology in 2026 is there to lighten our load, boost productivity and help us avoid agricultural economic inefficiency. I would agree with that to the most extent but of course it has to be tangible technology that we're investing in. It is true that I have said auto steer is the eighth wonder of the world, but not every new technology in agriculture that comes along is. Sometimes, it's just basically costly and is really not going anywhere. I've seen that a lot of that over my years.

It is always important to realize that in agriculture we are consistently in a fluid situation. For instance, earlier in this piece I documented how wheat futures prices and corn futures prices have gone down drastically since May 13. Keep in mind the market will open next week as well and it can go up as fast as it goes down. Yes, I do remember the elevator and escalator analogy on prices. In 2026, all of it still applies.

So do grain fundamentals in the end. Remember that big crop last year versus the big crop predicted this year. It seems the funds do now, after a winter and early spring of amnesia. In times like these, when margins are being squeezed and uncertainty is high, it becomes even more important to focus on the costs we can actually control. Variable costs are necessary to grow the crop but managing fixed costs and long-term debt obligations may ultimately determine who is best positioned to weather another period of lower commodity prices. As always, there will be plenty of twists and turns ahead. For now, the soybeans are planted, the rain is on the way and another growing season is unfolding in front of us. The markets may have lost some of their enthusiasm, but the crop still has a long story left to tell.

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Philip Shaw can be reached at philip@philipshaw.ca

Follow him on social platform X @Agridome

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