The Rural Voice, 2000-01, Page 49Little in sight to
strengthen markets
By Dave Gordon
Grain markets have been very weak
since my last writing and there
certainly doesn't to be any news to
push prices higher. The USDA will
probably increase corn production in
their January report offsetting the
latest increase in feed usage.
Soybeans, on the other hand
will be affected more by South
American weather than by
factors in North America.
We cannot ignore the fact
that world stocks are
particularly high especially for
coarse grains. It is interesting
to look at the evolution of
grain production in a country
like China over the past 15
years. Wheat production is
projected at 115 million metric
tonnes this year, up from 86
million in 1985 and corn production
has gone from 70 million metric
tonnes to 130 million over the same
period. So, you can see that with the
increase in production, the likelihood
of large carryovers remain high.
CORN:
The USDA raised feed usage in
the latest report by 50 million bushels
which I find rather suspect given the
mild weather North America is
experiencing and the thought that hog
numbers are not as high as USDA is
reporting. Exports are moving along
ahead of last year's pace and I think
the increased exports will offset
reduced feed usage.
I think the January USDA report
will heavily influence price direction
through winter months because the
idea right now is that yields will be
increased once again. If production is
increased without a matching
Grain Markets
increase in demand. prices will likely
stay very weak. In fact, I feel that
March futures will drop to the $1.80s
prior to the January report.
In Ontario, basis levels are
reflecting import values in the
southwest but slightly weaker east
and north. This will continue in the
coming months because of the
imbalance between production and
usage. Southwestern Ontario had a
generally poor corn crop at the very
time that both Casco and Commercial
Alcohol are increasing their grind.
Basis levels range from $0.55 to
$0.60 over March futures for old crop
while new crop is quite strong at
$0.65 over December 2000 futures.
And while we are discussing new
crop corn, there is no definitive
higher to get enough protein
extracted.
The crush in Ontario is running at
record levels so far this year and with
a smaller soy crop, basis levels will
stay quite strong at import levels.
throughout the coming year. As well.
there are good premiums for white
hilum soys and certain varieties and
producers should try to take
advantage if they have soys that meet
the specifications of the buyer.
No doubt. 1999 has been a tough
marketing year for many producers,
but for those who took advantage of
higher prices early in the year, it ‘k as
financially rewarding. In each of the
last two years. prices have been
highest early in the year and faded as
the year went on. Will 2000 follow
the same pattern? It's hard to
believe that prices can go much
lower from these levels. but we
could stay soft for the next few
months.
When I look at the market
prices and all of the information
that is available about supplies
and usage. I have a hard time
getting too bullish about either
corn or soybean prices. But,
having said that, 1 also realize
that about the time that every
analyst and producer is bearish,
something often happens to
suddenly take prices higher. Will
2000 be the year in which this
happens? 1 don't know, but it's
something to keep in the back of your
mind when marketing grain in the
coming year. Don't put all of your
eggs in one basket and hold out for
higher prices but you might look at
call options or spreading out your
selling over several months.
1 know producers are ingenious
enough to survive low prices and are
always optimistic about the future.
Btu, make a new year's resolution to
do more forward planning and temper
the optimism a little. Ifemember
"markets are made to be sold."
Finally, I want to wish all readers
a very Merry Christmas and a happy
and prosperous 2()0).0
answer as to who will or won't use
GMO corn. A couple of feed mills
are planning to move into using only
non-GMO while the industrial users
are saying that, so far, they will be
following the same plan in 1999,
namely only E.U. approved hybrids.
SOYBEANS:
The USDA changed nothing in
their last supply/demand report so
soybean prices have taken South
America weather as a cue to go
lower. If the weather continues to be
ideal, South American could put out
another record crop which would be
very negative. However, there is
another three to four months before
harvest and dry weather can still
come in to play. One point of interest
coming out of the U.S. is the fact that
soybeans grown west of the
Mississippi are low in protein and
some think that the crush will be
Information supplied by Dave Gordon.
LAC, Inc., Hyde Park, 519-173-9333,
JANUARY 2000 45