The Rural Voice, 2002-05, Page 56Grain Markets
Planting season brings optimism
Dare Gordon
isa
commodities
specialist
with LAC.
Inc.. Hyde
Park, 519-
473-9333.
By Dave Gordon
Oh the optimism that comes with
seed drills and planters hitting the
field! Even though we in Ontario are
quite wet. growers in the western half
of the Corn Belt are planting. The
eastern Corn Belt is another story,
especially in Ohio. which is saturated
with water. However, most observers
still expect corn acreage to be up
significantly and soybean acreage to
he down slightly.
In the U.S., the farm bill is still not
completed and although it appears
that the loan rate will be increased for
corn and lowered for soybeans,
planting conditions will still
determine the split of corn versus soy
acres. May 15-20 is the time frame
that would see a shift from corn to
soys.
CORN
The USDA issued a prospective
planting report on March 28 that put
corn acres at more than 79 million
acres - an increase of four per cent
over last year. This acreage was well
above the pre -report guesses and as a
result, we have seen new crop futures
continue to erode. As I have stated
many times, it will take a major
weather scare to strengthen prices
significantly.
As far as old crop is concerned,
the April projection for ending stocks
showed an increase of 25 million
bushels due to lower feed use as a
result of a warm winter. As well,
exports are not likely to reach the
1.95 billion bushels that the USDA is
expecting.
In Ontario, basis levels have
gained a considerable amount of
strength in the face of a stronger
Canadian dollar. This has happened
52 THE RURAL VOICE
because of little producer selling and
also the fact that elevators have
finished shipping the corn they
owned from last fall. There is a fairly
large quantity of corn left on farms
and producers would be advised to
move some now even though future
prices are soft. Do not be caught in
the position of needing to more corn
at the last minute.
The elevator basis level for old
crop corn is currently $1.20 over May
futures. New crop basis is $.80 over
December futures and holding steady.
We will see how much corn gets
planted in Ontario before any
changes will be made.
SOYBEANS
The USDA projected soybean
acreage at 73 million acres - a drop
of more than one million acres.
However, if Ohio and southern
Indiana do not dry out, a few more
acres of soys could get planted in the
eastern belt as well as in the delta
area.
The soybean loan rate is expected
to be lowered to about $5.05/bu,
which probably has had some impact
on acreage, but the final acres will be
determined by planting conditions in
May. On one hand, the proposed loan
rates favour corn production over
soybeans, but world demand for
soybeans continues to grow by leaps
and bounds fueling optimism that
soybean prices could strengthen some
more.
In Ontario, both old and new crop
basis levels remain strong and are
actually gaining strength when we
factor in the rising Canadian dollar.
Elevators are currently showing an
old crop basis of $2.60 to $2.70 over
May futures and a new crop basis of
$2.15 to $2.25 over November
futures. With Ontario soybean acres
projected to drop by two million
acres from last year, still expect new
crop basis to stay strong.
I have a real concern about
shipments of old crop grain.
Soybeans have stored well and there
does not seem to be a problem if a
producer wants to hold their stocks
into the sumnaer. However, I have
seen problems arise with stored corn
that producers have been shipping. I
know some growers have not shipped
any corn and those bins need to be
opened to be sure there is no heating.
Conditions in the fall and winter were
not conducive to keeping corn in
good shape even if the producer was
keeping a close eye on the bins. I
know many producers have not
looked at their bins in weeks. I think
it is imperative that producers keep
moving enough corn to keep their
grain fresh and not be in for a
surprise in June or July.
As I have said before, the only real
strength in corn prices will come
from a weather scare - real or
perceived. The fundamentals of today
just do not point to any strength and
when markets are flat, prices
generally erode. We need to see some
price action that would make the
shorts in the market cover their
positions.
Soybean prices have been a little
more volatile and we have seen
Ontario new crop prices reach $7/bu.
I think this targe.[ can be reached
again and for producers who store
soys on farm, winter 2003 prices are
currently well above $7 but we need
to see futures prices close near the $5
level to expect much push in the near
term. Once again, weather fears will
affect soybean prices. Let's hope that
crops in Ontario get planted on time
and we do not have a repeat of the
2001 weather conditions.0
Now you can
reach us by e-mail
Contact us at:
norhuron@scsinternet.com
or write to us the good
old-fashioned way at:
The Rural Voice,
P.O. Box 429, Blyth, ON NOM 1H0