The Rural Voice, 1991-12, Page 48GRAIN MARKETS
(continued from page 18)
existence of alternative protein and oil
crops, which act as a buffer against slight
deviations in crop size. As an example,
ending soybean stocks as a percentage of
use has only been higher than 20 per cent
three times in the last 24 years, while corn
has been higher than 20 per cent eleven
times in 24 years, and in the mid -eighties
the stocks maintained a level of more than
50 per cent of usage for three years.
Because of the genetic gains in plant
breeding, supply has the ability to easily
outrun the growing world demand, so it
takes a major crop disaster somewhere in
the world to force rationing through higher
prices. When stocks are relatively low,
futures prices do have a tendency to be
volatile if there is any talk of dry weather,
or delayed planting or harvest.
FEED GRAINS
Feed grain prices have definitely
strengthened since harvest, due in part to
tight producer holding in Ontario as well
as to the large export program from West-
ern Canada.
Today, Western barley is trading for
$113 to $115 per tonne at bayports, while
Ontario barley is selling from $100 to
$103. Western oats are worth about $130
at bayports, while Ontario oats, depending
on quality, are trading for $90 to $100.
Good Ontario mixed grain is worth about
$90. With corn basis strengthening in On-
tario, feed grains should hold their value,
but may not gain much more. It really
depends on how much grain was produced
this year, and I'm not sure if anyone really
knows that answer, as well as the cost of
bringing Western grain into Ontario.
In summary, basis levels for both corn
and soybeans have been well below export
values, and with the crops under cover, are
ready to strengthen. As producers, you
should ration out portions of your crop, but
you must plan ahead in order to know
when you need cash, and not get caught in
a position of having to sell grain at the last
minute. I do feel that Ontario will most
likely need to import both soybeans and
corn, but that doesn't mean that basis
levels will rise enough to cover your
storage and interest costs. You may want
to hold onto a portion of your crop until
next summer, or at Least take a look at
forward contracting for summer delivery.
The bottom line is: basis levels are
low, and have a high probability of
improving, and while futures prices are
lower than many people would like, they
may still have another phase of weakness
before showing some seasonal strength.0
Information supplied by Dave Gordon,
LAC, Inc., Hyde Park, 519-473-9333.
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To everyone we wish a safe and Merry Christmas and a prosperous 1992
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For quotations on FARM and HOME insurance
contact the nearest Broker or Agent:
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DECEMBER 1991 45