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48 THE RURAL VOICE
Grain Markets
Marking in 2002 will be a challenge
Dare
Gordon is a
commodities
specialist
with LAC,
Inc., Hyde
Park, 519-
473-9333.
By Dave Gordon
February 15, 2002
The last month has been very quiet
as far as grain prices are concerned.
There was a USDA report issued on
February 8 that proved to be a non-
event even though the U.S. soybean
carryover projections were lowered
once again.
One development that we need to
keep an eye on though, is the soybean
yields in South America. Early
harvested soybeans are running
behind last year's results and now the
focus will be on yields of full season
soys, but keep in mind that acreage is
up as well. Argentina's soybean crop
projection was recently revised
upward and it appears that Argentina
will resume grain exports now that a
compromise has been reached with
exporters regarding tax rebates. We
should see huge exports in an effort
to bring in U.S. Dollars.
CORN
The USDA made no changes to
the projected carryover and exports
are not likely to increase with a
strong U.S. Dollar and weak Japanese
Yeti. If ending stocks are to be
reduced, the demand will have to
come from the domestic feed and
industrial markets.
Technical traders who follow
cycles think the corn market has
bottomed but it will take stronger
fundamentals to get much price
improvement. Domestic use will
continue to increase in the U.S. over
the coming years, especially with the
increase in ethanol production, but it
will be a gradual increase and the
question remains whether the
increase in demand can outstrip any
future production increases. As I have
said before, it will take a major
drought to impact prices to any great
extent.
In Ontario, basis levels have
softened once again which comes as
no surprise. The old crop market is
flooded with corn and projections
indicate the possibility of a record
crop this year leaving basis levels on
the defensive. Current levels are
below import values, so it is unlikely
that any new purchases of U.S. corn
will be made until early summer. The
fact remains that at some time prior
to 2002 harvest, we will need to
import more corn into Ontario and
basis levels will reflect this later in
the marketing year.
SOYBEANS
The USDA reduced projected
carryover by 15 million bushels
through a combined increase in
domestic crush and exports. It will be
interesting to watch Chinese soybean
imports once their GMO
requirements kick in on March 10.
Will the U.S. exports be cut off?
I think a more pressing matter is
the South American crop. We are
hearing that early yields are down
slightly from last year but a report I
read suggests that the Brazilian soy
crop is being underestimated because
of extra acres that have been
unaccounted for.
There is also a great deal of talk
about lowering the U.S. loan rate for
soybeans, but there is still a
difference of opinion between the
proposals of the Senate and House. If
no agreement can be reached by early
spring, the rate will not change.
In Ontario, both crushing plants
have had production problems. In
Windsor, workers are on strike and
management is operating the plant,
while in Hamilton an explosion in
early February halted production for
a few days. Despite these setbacks,
basis levels remain very strong and
still reflect import values. As stated
before, with the small Ontario crop in
2001 I expect imports will continue
to come in all year and since I have
not seen or heard anything to change
the outlook for smaller Ontario acres
in 2002, we should.see new crop
basis levels remain strong as well.
Grain prices have been generally