The Rural Voice, 2004-09, Page 52igho
Dave Gordon
is a
commodities
specialist
with LAC,
Inc., Hyde
Park, 519-
473-9333.
By Dave Gordon
August 20, 2004
Has the bleeding stopped? Is there
any hope that grain prices will
recover? It sure seemed that the
USDA drove the nail in the coffin
when they released their last
production report. The corn figures
approached 11 billion bushels, which
was well above the pre -report
thoughts. Soybean production was
lowered a little to just under 2.89
billion bushels but the main news in
the soybean complex was the fact that
old crop prices continued to break
with the realization that soy meal was
being imported into North America.
Since the USDA report of August
12, focus has shifted back to weather.
Some years we talk about heat and
drought, but this year it is the very
real possibility of an early freeze that
could devastate the northern states if
it comes before October.
CORN:
The USDA increased production
Grain Markets
Is there hope for recovery?
from last month but also increased
domestic usage so the carryover next
year did not reflect the full increase
in production. This week, the Pro
Farmer tour of the Midwest
confirmed huge yields — well, sort of.
The central theme of the tour is that
there is potentially a bin buster if two
weeks are added to the growing
season. Areas of northern Iowa and
parts of Minnesota are well behind
normal as are Michigan and Ontario.
So, the next six weeks will be critical
to determining the final crop. My
guess is 10.7 billion bushels or less.
In Ontario, the crop is lagging
although there is great potential in the
east and in parts of the west. As a
result, basis levels are holding very
firm in the face of a higher Canadian
dollar and lower corn futures. We are
getting calls from some corn users
who are concerned about the quality
of the new crop and I think back to
1992 when a great deal of higher test
weight corn was imported to blend
with our light crop. Contrary to some
reports, I have not found a processor
yet who can use light test weight corn
without adding fat to bring up the
energy level. This added cost of
blending or fortifying the light corn is
reflected in discounts.
Old crop corn is starting to get a
little harder to find and as a result the
import of U.S. corn has been
increased. With harvest probably
delayed until November, the need for
corn will stay strong relative to the
supply.
SOYBEANS:
The USDA lowered soybean
production by 63 million bushels
from their July number. Their
estimate was well below the pre -
report estimates of analysts and the
result was a $.30 move up from the
contract lows. Futures prices have
held in the $5.70 to $5.90 area since
the report. Once again, the Pro
Farmer tour is concluding that a good
crop is possible but more time is
needed. Instead of the aphids that
were seen last year, the observers are
finding sudden death syndrome
(SDS) and some white mold neither
48 THE RURAL VOICE
of which will likely do as much
damage as aphids did last year. The
main concern is an early frost.
In Ontario, the crop in the field is
quite suspect. The range of conditions
runs all the way from two to three
pods to 25 or 30 pods, which is not
conducive to a 40 -bushel crop. Some
aphids have been noted in eastern
Ontario, but I think' those producers
who did see plants that exceeded the
threshold of 250 aphids did spray,
therefore minimizing any damage.
However, I must emphasize that we
need six weeks of frost -free weather
and there is a full moon on August 29
to be very mindful of.
There is still a relatively good bid
for old crop soys of over $9/bushel.
Producers should not be left with any
old crop but, if they do — sell
immediately.
What started out as a crop year
with great promise has deteriorated to
a less -than -average year. The wheat
crop will likely turn out to be the
bright spot of the year even though
quality is a bit of a problem. Futures
prices right now are caught between
the USDA prediction of relatively
high production and the fear of an
early frost.
Corn usage will remain strong so
the supply will be the main variable.
Whether the crop is 10.9 or 10.6
billion bushels will likely make a
difference of $.40 in the futures
prices. The soybean crop, though, is
of great concern to anyone who has
been in a field of soys. Even fields
that look good from the road show a
lack of pods and with the days getting
shorter, even the chance of getting
all of the pods filled is going to be
tough.
Unless a producer is absolutely
sure about what he will harvest, no
new crop sales of corn or soybeans
should be made. I think it is prudent
to wait until harvest is underway
before committing to any further
sales. It will be a challenge this fall,
just as the rest of the year has been
and producers will need to stay in
close touch with their crop insurance
people.0