The Rural Voice, 2001-07, Page 45won't be a slowdown in our domestic
soy crush. Keep in mind that canola
acres are down in western Canada so
Tess canola will likely be crushed in
Ontario.
It appears that the soybean and corn
markets are going in different
directions. In the U.S., corn acreage is
down but old crop stocks are growing,
meaning a smaller 2001 corn crop will
be needed in the big picture. China
could be a wild card in all of this
depending on how they deal with the
aftermath of the drought they are
enduring. On the other hand, U.S.
soybean acreage is higher because of
their loan rate and prices should still be
dropping, but it looks like old crop
stocks may not be as high as the USDA
has been reporting up 'til now.
Domestic crush and exports have been
excellent and basis levels have
certainly gained strength in the U.S. so,
if 2001 production is lowered and
carry-over is lowered, suddenly the
market is dealing with less soybeans
than the prices show.
In Ontario, we have more corn acres
that got in relatively early and we
could be looking at a 240 million
bushel crop versus about 175 million
bushel in 2000. This is the main reason
new crop basis levels have been
softening and I think there is more
downside. We will likely be exporting
corn at harvest time this year and into
2002. We won't go back to import
basis levels until the summer of 2002.
So, producers need to take a hard look
at basis levels being offered for early
2002 and get some corn sold.
Soybean acreage on the other hand,
is lower than last year and the crush
growing, basis levels should stay
relatively firm. This fact is already
apparent in the basis levels being
offered for early 2002. If futures prices
make any kind of a run this summer,
producers may want to seriously
consider forward contracting for the
winter months.
I don't see any big price gains in the
futures markets this year given the
facts that we have right now. Producers
may have to live with some small gains
and really pencil out the cost of storage
before deciding if storing will pay and
for which commodity it will give the
best returns. But don't be caught
holding old crop grain, especially if
harvest begins in September.0
Information supplied by Dave Gordon,
LAC, Inc., Hyde Park, 519-473-9333.
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JULY 2001 41