The Rural Voice, 2001-04, Page 62BERNIE McGLYNN
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58 THE RURAL VOICE
Grain Markets
Little news means
poor prices
By Dave Gordon
The past two months have ben
very uneventful as far as grain
markets are concerned and as usual
the result is lower prices. There has
been no news to push prices higher
by an appreciable amount even
though mad cow disease and foot and
mouth disease have captured the
headlines. I think that markets will be
in limbo until the end of March when
two very important USDA reports
will be out. The quarterly stocks
report and the planting intentions
report will provide direction for grain
markets in April and May.
The corn and soybean reports
could be diametrically opposite with
corn stocks higher and soy stocks
higher and soy stocks lower and corn
acres down while soy acres will be
up. In fact, I think the market already
has corn acreage down by 1.5 million
acres at 78 million and soybeans up
to about 75.5 million acres. Deviation
from these acreages will likely make
prices move.
CORN:
The last USDA report showed an
increase in corn carryout and I don't
think the whole story has yet been
told. U.S. corn exports was lowered
to two billion bushels and this still
appears to be too high given the slow
pace of exports sales and shipments.
Domestic use is excellent and
growing but not quick enough to
affect this year's supply/demand. It
will, however, bode well in the years
to come especially, with the increase
in ethanol production. Livestock
numbers are up and should increase
even more to supply the European
market. But, this too, will take time to
develop.
In Ontario, demand is steady and
the supply is still coming from
Michigan and when the seaway
opens, vessels will start moving into
Ontario and Quebec rather quickly.
This points to an oversupply later in
the summer and lower basis levels.
As I've said before, when we import
corn into Eastern Canada, we always
overdo it just as when we export, we
tend to ship out too much. This is
why basis levels in Ontario tend to
swing between export and import
levels.
Right now, old crop corn basis is
at import levels and should be sold
and I suspect corn acreage in Ontario
will increase this year so, new crop
corn basis should be locked in on the
portion producers plan to sell at
harvest time.
SOYBEANS:
The USDA lowered the projected
carryover for old crop soybeans and I
suspect that the quarterly stocks
report will show that usage has been
vzry good. In fact, exports are well
ahead of even the most recent USDA
target of 975 million bushels. Now,
exports may be drastically reduced as
the South American crop gets into
shipping position, but I still think the
U.S. will meet their target.
Domestic crush is also very good
given the high livestock numbers in
the U.S. The European demand for
soymeal may drop off as livestock
herds are slaughtered due to foot and
mouth disease. As I stated earlier,
European meat demand may push
North America to increase meat
production but it will take time to
expand herds. In the long run, oilseed
demand should continue to grow.
The two files in the ointment
however, will be U.S. production in
2001 and continued expansion of
South American production. Keep in
mind that South America has millions
of acres of undeveloped land just
waiting to be cleared and put into
production — and this isn't rainforest
we're talking about. One Iowa
producer stated that he thought he