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14 THE RURAL VOICE
Grain Markets
Grain markets stall
trade sideways
By Dave Gordon
Grain markets have stalled and arc
trading sideways. The USDA's
updated production numbers couldn't
break prices, but we haven't seen any
sustained rally either. It seems that
the funds pushed all markets lower
prematurely and the rebound off the
lows has been simple short covering.
As of September 13, corn harvest was
eight per cent completed and soybean
harvest sat at two per cent completed,
not enough to move markets one way
or the other. However, because of the
low prices, some analysts are starting
to show higher corn and soybean
usage which is necessary if prices are
to move higher. I think yield figures
will be closely followed over the
balance of harvest to see if the crop
measures up to predictions. By the
time you read this, the verdict should
be in.
Outside markets have stabilized
but only the Canadian dollar has
shown much strength. The stock
markets have stopped bleeding, but
show very little strength as they
continuc to chop around. It actually
seemed that the grain market stopped
eroding when the chaotic stock
markets and world currencies finally
stopped free falling.
CORN
The USDA issued a production
figure (9.738 bill bu.) that was well
above the average trade's guess and
they increased carryout to 1.922
billion showing a slight increase in
usage. Since this report was issued, at
least one analyst has indicated a still
larger usage. As a result of all this,
the market dropped by five cents to
seven cents, but quickly recovered in
the ensuing days as a result of short
covering. The action of the market in
recent days would indicate that the
bottom may be in the futures market,
but only time will tell.
In Ontario, spot corn basis is
holding fairly firm relative to general
new crop, but I think this premium
will be gone by September 30. There
certainly is a large amount of 1997
corn still sitting in bins as evidenced
by the calls we've had recently. The
only spots in the province where
producers should even consider
holding com through this harvest are
the droughted arca, because the
majority of Ontario has a very good
crop. There are two corn growing
areas in Ontario that have been hit
hard by dry weather and they are
Huron and Brant counties and, except
for a few spots here and there, the rest
of the crop appears to be in good
shape. (Ed. note: though 70 per cent
of Bruce County's corn crop will be
below average because of the
drought, at 75,000 acres Bruce is not
considered a major corn growing
arca.) I still think some areas will be
deficit space and there will be a short
window of time when corn prices will
get cheap.
SOYBEANS
The USDA raised soybean
production to 2.909 billion bushels
and increased the carryout by 55
million bushels to 485 million. The
soybean market did drop after the
report but soybean prices have been
much more resilient than corn prices
with more support under the market.
But harvest in the U.S. has just begun
so we haven't seen any hedge
pressure because of harvest and only
time will tell if yield targets will be
met.
In Ontario, harvest in some areas
is well underway and, in fact, some
spots will have harvest wrapped up
before others really get started. Yields
are quite variable ranging from the
drought areas all the way to 60 plus
bu/ac, but early indications point to
some good yields in general. There
was a premium to ship soys early but
so many beans were shipped by
September 16 that the premium was
dropped and there is now one price
for all soybeans. If you are looking at
which crop to sell, right now soybean