The Rural Voice, 1985-12, Page 23the (for example, March 1986 corn
prices). The gap between December .
1985 futures and March 1986 futures
narrowed to 1/2 cent as of November
as opposed to approximately 11 cents
a month before. This phenomenon
clearly indicates the buying spree in
corn has been predominant on the
near term option.
Harvest progress as of November
17 was 78 per cent complete versus
the average of 90 per cent. Entry into
the corn loan program is currently at
472.9 -million bushels with expected
levels to reach the 2.0 to 2.5 billion
bushel level. This movement into the
loan program should keep cash
marketers bidding aggressively for
corn.
Dry weather conditions in Brazil
are prompting a move out of feed
grains and into soybeans, ironically
narrowing the corn -bean price gap.
The November 12 USDA produc-
tion report estimates a record
8.72 -billion bushel (1985-86) crop
based on 74.75 -million harvested
acres yielding 116.6 bushels per acre.
This would be a new record yield.
Carryover estimates were raised to
1.379 -billion bushels on the 1984-85
crop.
**Hedgers** should be watching
basis bids as well as farm selling
trends in the States. Any sign of a pull
back in basis bids may signal the
beginning of farm selling. With little
or no premium built into deferred
futures months, and with farm -gate
cash prices trading above loan rates,
there appears to be little incentive for
producers to be storing corn at this
stage of the game. July 240 Call op-
tions, currently trading round 10 1/2
cents, would be a limited risk replace-
ment hedge for producers who decide
to sell some cash corn.
SOYBEANS: Where is the bottom?
Right now, no-one seems to know,
but the old lows of 497 1/2 failed to
hold this market on a recent sell-off.
Concerns about loan rate ad-
justments on beans pressured prices
to levels that we have not seen for a
long time.
November beans finished on
November 19 at 4.91, a decline of 12
1/4 cents from levels a month before.
Beans generally lost 35 to 40 cents in
the four most recent trading sessions.
The primary source of concern in the
bean markets has been the perception
that the 1986 Farm Bill legislation will
drastically lower not only 1986 and
beyond bean loan prices, but retroac-
tively lower 1985 bean loan prices.
Until more information is put forth
and Congress finally does decide on a
specific plan of action, it will be dif-
ficult to project 1986 prices.
Harvest progress was 81 per cent
complete as of November 17 versus
an average progress of 89 per cent.
The USDA Crop Production
report released on November 12
estimated 1985 production at
2.129 -billion bushels based on a
harvested acreage figure of
62.223 -million acres with an average
yield of 34.2 bushels per acre (a
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record yield estimate). Carryovers
were projected at 615 -million bushels
— another record!
**Hedgers** have some tough
decisions to make: i.e., store or sell?
One method of sitting on the fence
would be to liquidate your cash bean
position and buy July 525 Call op-
tions at approximately 24 cents.
Downside risk is limited to the pur-
chase cost, while 525 should be an at-
tractive buying price if indeed we do
have a rally in futures.
JUST A WORD ABOUT ...
SOME MARKETING IDEAS: A
summary of some of the ideas
presented above:
1. Corn: sell some cash and
buy call options — limited risk
and the seller has access to most
of his money.
2. Beans: same as corn, sell
some cash and re -purchase Call
options.
3. Live Cattle: look to lock up
selling prices in the next two to
three months.
4. Live Hogs: some good sell-
ing opportunities should
materialize in the November -
February time frame.
The information contained herein
is believed accurate; however, Bache
Securities Inc. assumes no respon-
sibility for its use. For specific recom-
mendations and suggestions regar-
ding stop orders please contact your
nearest Bache office.
David Clarke is an Account Ex-
ecutive with the investment firm of
Bache Securities Inc., 376 Richmond
Street, Suite 200, London, Ontario,
N64 3C7. 1-800-265-1570.
May your Christmas Day be
merry, may your household
ring, with all the fun and
laughter this holiday will
bring. To you and yours we
extend our sincerest wishes
for the merriest Christmas
ever and a Happy New
Year. Thank you for your
patronage.
Wishing you
a joyous
Holiday Season
AGRE
FARMS LTD.
Aart DeVos & Sons
Ag. Chemical Supply
R.R. 1, Bluevale
519-335-3093
hl ( 1 \1131 R 21