The Rural Voice, 1993-08, Page 19Grain Markets
flooded cropland, the temperatures in the
western corn belt have been cooler than
normal. My gut feeling is there has been
a great deal of damage done and that
futures prices don't reflect the extent yet..
With the size of the Ontario crop and
competition from feed wheat, I expect
supply to exceed demand this fall with a
resulting weaker basis. It appears that
we will be in an export mode this fall.
Producers who are looking to forward
sell some new crop corn will have a
good opportunity to sell some good cash
prices even though basis may be weak.
The demand for old crop corn is very
weak in Ontario and as we get closer to
harvest, it sure appears there will be corn
carried into the fall. Basis will likely
stay flat right into the new crop.
SOYBEANS
If there was ever a year for producers
in Ontario to plant more soybeans, this is
it. Prices have gained steadily over the
past two months. While many were
hoping to cash out new crop beans for
$7/bu just a few weeks ago, now we're
seeing prices of $8/bu.
Basis has strengthened right along
with futures prices because we are at
export support levels and several export
programmes have been put together.
With the crop in very good condition, it
looks like we are headed for a record
soybean crop and a large quantity will
need to be exported even after harvest.
Many producers have asked about
premiums for clear hilum soys. These
premiums are a result of supply versus
demand in the export market. Last year,
we saw healthy premiums because of the
small supply of suitable beans, but this
year, with a large supply of soys, there
may be a very small premium.
From the U.S. perspective, rains and
floods have prevented many acres from
being planted and damaged many acres
of soys. As with corn, the amount of
damage is unknown. But we all know
how soybeans react to standing water
and I have trouble believing yields will
be up to par. It certainly appears that
U.S. production will be lower than
originally predicted by USDA and in
fact they did lower their estimate in the
July 11 report. But., they also reduced
demand for the coming year. And, if
prices go higher, there will be rationing
and some further reduction in usage.
You have likely noticed that soybean
prices have strengthened much more
than corn has, and in fact the soy to corn
price ratio is 2.9:1. This has happened
for several reasons, all relating to supply
and demand. Demand for soys has been
very good and even with a large crop,
carryout was projected at a fairly low
level. Then, with a larger relative
portion of the soybean crop affected by
water, the supply was reduced. At this
point, prices could easily go higher on
speculators fervor, but other oils and
proteins will replace soy products and
prices will quickly fall back. The oddity
with this bull market is the fact that this
is the first time that too much rain has
fueled the market. Usually drought is
the cause of bull markets and any
mention of rain causes the market to fall
abruptly. However, in the reverse
situation, the prediction of drier weather
won't necessarily cause the market to
drop because no one seems to know how
much irreversible damage has already
been done.
FEEDGRAINS
As in past months, Ontario barley and
mixed grain prices are quite soft. Barley
has been selling for about $80/mt and
even at this price, movement has been
slow. I would have to say mixed grain
prices are about the same as for barley.
Ontario feed oats of good quality are
trading for about $100/mt.
Western feed wheat is selling for
$122 to $124 which means it is still
cheaper to use than corn. The small
quantity of Western barley that is being
used is selling for about $111/mt.
Over the past couple of years, prices
haven't been high enough to leave much,
if any, profit for producers and as a
result the GRIP has acted fairly well as a
safety net. However, prices for the 1993
corn and soybean crops have streng-
thened considerably and although corn
may not be too profitable yet, soybean
prices are high enough to provide ve.ry
good returns. It is even more important
to do a good job of marketing this year
in order to beat the average because the
GRIP will pay out very little if anything
and producers should be looking to the
market for their returns.
One last thought before I wrap this
up. Keep an eye on 1994 new crop
prices because soybean prices are well
over $7/bu and corn is close to 1993
prices.0
Information supplied by Dave Gordon,
LAC, Inc., Hyde Park, 519-473-9333.
Quality Breeding Stock For Sale
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519-371-2385
R.R. 8, Owen Sound, Ontario N4K 5W4
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519-925-5793
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PHONE: 519-523-4399
P.O. BOX 272
LONDESBORO, ONT. NOM 2H0
AUGUST 1993 15