The Rural Voice, 2004-08, Page 43Grain Markets
Good crop news brings bad market news
rain, crop conditions continue to
improve and many growers agree that
this is the best corn crop they have
ever seen. One noted agronomist has
travelled through most of the corn
belt and he notes that although the
Illinois and Missouri crops are not in
the bin. the prospects of a huge crop
are very good.
The situation with soybeans
may be a little different. Although
crop ratings are very good, the
majority of the soybean crop still
needs to make it through August and
most of September without a hitch to
achieve trendline yields.
CORN:
The USDA acreage survey
came as a huge surprise to most
traders. Because the survey was done
before planting was complete, there is
some contention that the final acres
will be lower than the reported.
However, even if acreage figures do
get reduced, yield potential is
growing by the day. Future prices
have fallen so far and so quickly that
one might surmise that the market is
indicating a yield of 150 bu/acre.
Some would also say that every
bearish piece of news is in the market
nnw, but until these lower prices start
to encourage more demand, prices
will likely not show much strength.
In Ontario, basis levels for
both old and new crop are easing due
to lower corn futures and a higher
Canadian dollar. Old crop basis is
$.95 over September and new crop is
$.85 over December. Both of these
figures are at or above import prices.
Therefore, we need to hope that
future prices go back up to see better
prices in Ontario because the basis
has likely topped out.
SOYBEANS:
The USDA put soybean
acreage within the range of estimates
which is about 1.4 million acres
higher than 2003. Most of the interest
has been focused on the old crop side
and we saw a squeeze play in the July
futures before the contract expired.
Crushers wanted to take delivery
against the futures and the shorts in
the market got caught. There has
been concern that the U.S. would run
out of soybeans before new crop is
available, but several large users in
Dave Gordon
is a
commodities
specialist
with LAC,
Inc., Hyde
Park, 519-
473-9333.
By Dave Gordon
July 23, 2004
On June 30, the USDA
drove a stake through the heart of
corn prices with a planted acreage
figure of 81 million acres — well
above any trade estimates. Although
soybean acres were within the range
of any estimates, prices followed the
corn into the sewer. Coupled with
moderate temperatures and plenty of
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40 THE RURAL VOICE