The Rural Voice, 1998-06, Page 18TIGER
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L I M ITE
14 THE RURAL VOICE
Grain Markets
Watch the weather
Grain markets have chopped around
over the past month with corn and wheat
actually losing ground. Planting
progress is well ahead of normal for
both corn and soybeans, although Ohio
and Indiana are lagging because of
excessive moisture in late April and
early May. with temperatures well
above normal, emergence has been
quick — a far cry from last year.
Most traders are taking into account
what happened in 1983 and are trying to
track the weather this year versus 1983.
As a result, even though the potential for
bumper crops exists, they are not
prepared to take prices down to major
low prices just yet. Most are keeping a
close eye on the possibility of high
pressure ridges and they'll be buyers at
the first hint of heat.
For the time being, all we have to go
on is the potential for a large crop and
weak exports. So, until something
arises that will affect production, the
markets are going nowhere.
CORN
Corn prices have floundered a little
especially since the USDA issued its
1998/99 supply/demand report. They
are looking at the carryover in 1999
increasing to 1.609 billion bushels or
17.3 per cent of usage based on the
second largest corn crop in history (9.64
billion) and the second largest use of 9.3
billion bushels. A reduction in yield of
10 bu/acre would drop production to
less than nine billion and coupled with
less optimistic demand would still leave
a carryover of 1.6 billion bushels.
On the export front, not only are the
east Asian countries in financial turmoil,
but now Indonesia, India and Pakistan
are coming under scrutiny for various
reasons. Granted these countries are not
large buyers of U.S. grain, but if
sanctions are instituted, more grain will
be trying to go after fewer customers.
Today, corn exports are lagging behind
what is needed to hit 1.475 billion bush-
els and there is little hope of shipments
surging during the summer months.
In Ontario, basis has dropped slightly
in U.S. funds with both sellers and
buycrs remaining quiet. It appears that a
lot of corn will be sold in June by
producers who are in the "give up"
mode and unless demand picks up, the
Ontario market could get quite soft.
Speaking of demand, Stats Canada
figures don't makc a lot of sense
because, although they showed excellent
use from January 1,199810 March 31,
1998, the carryover is projected to in-
crease by 10 million bushels. My guess
is that supply (production plus imports)
has been overstated and that carryover
on September 1 will be unchanged or
lower than in 1997. Keep in mind that
the current marketing year will actually
be shorter than usual with the late
harvest last fall and the probability of an
early harvest this fall. The bottom line,
though, is that supplies of old crop corn
appear adequate to satisfy users' needs.
SOPS
Soybean futures finally broke lower
after Argentina raised production by 1.1
million tonnes and U.S. planting
progress showed good headway was
being made. As of this writing (May
20) weather concerns are non-existent.
As well, USDA released the first supply/
demand report for the 1998 crop and
even though crush is projected at an all-
time high, carryover will almost double
to 410 million bushels. Of course all
figures are based on assumptions of
projected acres and trendline yields so
changes in producers' intentions and
weather patterns are not factored in.
However, in the current year, demand
for U.S. soybeans should remain intact
and we could end up with a carryover of
slightly more than 200 million bushels.
In Ontario, basis levels have remained
relatively strong given the fact that we
probably only have 75 to 90 days left in
which to ship a large percentage of the
old crop. We could see some new crop
soys harvested in late August and
coupled with the fact that the crushers
will shut down for maintenance,
pressure will be on to move any old crop
soys quickly. The bottom line is that
Ontario may carry a Targe quantity of
soys into the next crop year.
It appears that new crop acreage and
production will be down in Ontario, but
along with the large carryover from this
crop, we should end up with a more
normal carryover in 1991.
FEEDGRAINS
The feed grain price story never
seems to change with western barley