The Rural Voice, 1987-09, Page 29MARKET UPDATE
Com harvest is beginning in isolated
parts of the corn belt as cool, dry weather
is causing a fast dry -down of the crop. A
fair amount of corn will be harvested in
August, with September likely to be the
peak of harvest.
At current prices, farmers will be
reluctant sellers as long as storage space
is available. Forced sales will be less
common than a year ago due to a better
storage situation. The most attractive
PIK and ROLL activity involves later
delivery of corn. To the extent that
farmers are able to store the crop, basis
levels and cash prices will likely be
firmer than a year ago. The CCC may
have to continue providing incentives
for farmers to PIK and ROLL. With the
exception of a narrow band from
Lambton County through the London
area and across to Haldimand-Norfolk,
the local corn crop appears to be well
above average. The harvest locally
could also be two weeks earlier than
normal.
USDA Crop Production estimates
for corn, released August 11, were set at
7.23 -billion bushels with yield predic-
tions of 121.4 bushels per acre harvested
from 59,553,000 acres. This report,
with its higher than expected production
estimates and record yields, has proven
bearish to the corn market.
LOCAL CORN BASIS
Old crop corn has been trading generally
neutral. There seems to be limited quan-
tities available but some concern is sur-
facing about whether old crop will be
used up before the expected early har-
vestbegins. Very limited demand. New
crop basis has been in the 35 to 45 cents
over December futures range.
Tight pipeline stocks are likely to char
acterize the 1987/88 marketing year if
cash prices remain near the CCC loan
rate. Farmers will be very tight holders,
having the protection of the loan pro-
gram. The CCC resale price should be
an effective cap on price, at least early in
the marketing year. The CCC still owns
in excess of 250 -million bushels of
soybeans that would become available
to the market at the resale price.
Tight pipeline supplies persist in the
face of tight farmer holding and excel-
lent export and crush demand. New
crop soybeans will be available earlier
than normal this year, and the CCC
resale value drops to $5.15 on Septem-
ber 1. Those prospects tend to limit
advances in new crop contracts.
The potential for post-harvest price
recovery is probably greater for soys
than for corn. The continuation of the
expansion in world-wide protein con-
sumption and only modest acreage in-
creases in South America point to a high
rate of use of U.S soybeans. Stocks will
be drawn down, opening the door for a
price rally if the South American crop
runs into trouble, or if export demand
exceeds expectation.
LOCAL SOYBEAN BASIS
Old crop stocks appear to be almost
completely sold in this area. New crop
bids are in the 90 cent plus November
futures range.
.GENERAL
[COMMENTS
Several months ago we were alerted to
the possibility of a significant rally in the
grain and soybean complex markets.
The rallies came. Inspired by weather,
prices moved substantially higher.
Then, also as a function of weather,
prices began to slide and erased a con-
siderable amount of their gains. Now
that the markets have set back to impor-
tant technical support levels, the bears
have resurfaced with predictions of
lower prices and a resumption of the
bear market.
The complex should be watched
closely for marketing opportunities
which may surface due to weather con-
cerns, strength in precious metals, or
fluctuation in the value of the dollar.0
The information herein is taken
from sources that we believe to be
reliable, but is not guaranteed by us
as to accuracy or completeness.
Ag -Com Trading Inc., located
in Exeter, is a cash grain merchan-
dising firm. Telephone numbers
are 235-2520 and 1-800-265-7046.
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EQUIPMENT
BRUCEFIELD, ONT.
CaII for information and prices.
(519) 527-0138
Ontario's oldest MC dealer
and distributor
SEPTEMBER 1987 27