The Rural Voice, 1991-01, Page 24First Bank Agri -Services®
Bank of
Montreal
WE'RE COMMITTED
THE FUTURE OF
FARMING.
Branch locations
in the following communities:
Chatsworth
Clinton
Exeter
Goderich
Hanover
Hensall
Kincardine
Listowel
Lucan
Lucknow/Wingham
Markdale
Meaford
Mildmay
Mitchell
Mount Forest
Owen Sound
St. Marys
Stratford
Tara
Teeswater
Walkerton
Zurich
794-2100
482-3441
235-2810
524-2152
364-5113
262-2414
396-3404
291-3031
227-4487
528-3024
986-3357
538-4771
367-5613
348-8454
323-1770
371-2530
284-2490
271-8131
934-2700
392-6833
881-1311
236-4362
"Come in and talk to
the Account Manager
in your area"
20 THE RURAL VOICE
GRAIN MARKETS
41.
CORN STAGNANT,
SOYS TO MOVE
The 1990 harvest is finally winding
down after almost three months. Basis
levels for corn are rather stagnant but
soybean basis levels are showing some
improvement. Producers appear to be
making good use of the interest free
advance and the result will be a
spreading out of marketing.
CORN
Corn harvest is virtually complete
now and basis levels have improved
somewhat from harvest lows. Basi-
cally, the crop has found some sort of
cover (bins, barns etc.) until producers
decide which crop to market. I think
some corn should be sold now because
of several factors. First, the supply in
Ontario is very high especially relative
to the past two years. Stats Canada
have pegged the Ontario corn crop at
199 -million bushels (110.6 bu/acre) up
nine per cent from last year and the
Quebec crop at just under 71 -million
bushels, up 13 per cent from last year.
In a year of good demand, this size of
crop would be more than sufficient to
meet our needs but, in a year of slower
demand, such as we're experiencing
now, we often see basis levels drop to
export levels for a short period of
time. Right now, Quebec's buyers are
fairly aggressive in purchasing
Ontario corn, but I feel this will be
short lived and shouldn't give us a
false sense of security. Just because
Quebec producers are not selling corn
now, doesn't alter the fact that there is
a very large crop of corn in Quebec to
come to market.
Secondly, demand in Ontario for
corn is not especially brisk. With the
large wheat crop being used in feed,
mills have cut back their corn usage
slightly and are only buying their short
term needs. The commercial users are
being very careful in forward book-
ings and are not chasing the market
looking for corn. In fact, some users
bought enough com at harvest to fill
their needs for the next month.
The simple fact is, buyers are in
control of the market at the present
time and will be throughout the winter
months. With good supplies of corn
around, you might as well have some
sold now rather than hope to get your
storage costs out of it during the
winter. I just don't see basis levels
appreciating very much, if at all, over
the next two or three months.
Futures prices appear to have
topped out for the near term and will
likely trend down until more demand
comes into the U.S. market. Everyone
was counting on the U.S. government
to extend up to $3 -billion of aid to the
Soviets, but with less than 1/3 of this
amount extended, a quick fix for ex-
ports isn't in the cards. USDA will
probably reduce the export projections
in the next supply/demand report in
January leading to an increased car-
ryover in 1991.
Using present figures, carryover as
a percentage of total use is quite low
relative to other years at 15 per cent.
This situation could lead into a vola-
tile market next summer if any pro-
duction problems arise, but could just
as easily settle out further if growing
conditions are good. Even though the
carryover is low, we will not have to
ration available supplies unless serious
problems arise in corn -growing areas
of the world.
SOYBEANS
Stats Canada has estimated the
Ontario soybean crop at 46.885 -
million bushels. I tend to doubt this
figure and think it is too high, but we
probably won't know until next
summer when the domestic crush,
imports and exports can be calculated.
I said last month that basis levels
reflected export levels and would gra-
dually strengthen. In fact basis levels
at elevators climbed 25 cents in the
past two weeks and still have some
room to move because of relatively
strong basis levels in the U.S. This
should happen even if the dollar
strengthens some more. However,
1