The Rural Voice, 1987-11, Page 18RI- ISION
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16 THE RURAL VOICE
MARKET UPDATE
CORN
Corn harvest is nearing completion in
many areas due to excellent weather
conditions and low moisture content
coming off the field. Many producers
are making use of as much storage as is
available.
Local corn yields are proving better
than average and demand remains weak
as deliveries locally are satisfying some
of the requirements of end users.
In the U.S., domestic demand con-
tinues to be excellent, but foreign buy-
ing so far has been disappointing. Given
the large number of PIK certificates that
will become available to the market in
October and again later in the year, it is
difficult to become very friendly to this
market in the intermediate term. This
could change if export demand im-
proved considerably. In the short run,
relatively slow cash movement may
continue to shore up or even propel the
market somewhat higher from the cur-
rent level.
In its September report, the USDA
lowered the anticipated corn yield and
production from its August estimates.
The October report remained basically
the same and has had little impact on
prices. Potential changes in foreign
production will be more significant for
price direction. Although the projected
carry-over is still huge, the direction of
the domestic stocks -to -use ratio down to
60.6 per cent points to an improving
price outlook and re -affirms that, in all
likelihood, long-term lows were made
early this year.
On a global level, we also see a
draw -down of carry-over stocks to
136.7 million metric tonnes compared
to 148.1 in 1986-87. Reductions from
last year are due primarily to smaller
crop estimates in Thailand, Eastern
Europe, and the U.S. The next several
world supply -demand reports may well
reduce the projected carry -outs for corn
and coarse grains further as damage
sustained by crops because of adverse
weather in the Balkans, India, and
Southeast Asia is not likely to have been
fully reflected in the crop reports so far.
The problems experienced in these
areas may well eventually translate into
higher U.S. corn exports than the 1.6
billion bushels currently projected.
Corn futures dropped sharply in
sympathy with the stock market crash of
October 19 but regained most of the
losses on rumours of sales of some
775,000 tons to the Soviet Union up to a
possible 2 million tons. Corn futures
seem to be in a solid sideways pattem for
the time being.
SOYBEANS
The soybean harvest is virtually com-
plete, with excellent yields and good
harvesting conditions.
The potential for higher prices in the
soybean complex continues to improve.
Soybean stocks project to show a slight
decline for the second consecutive year.
Soybean oil stocks also project to be
much lower than earlier forecasts.
Prices are expected to remain buoyant
until high volume Commodity Credit
Corporation (CCC) soybean sales are
triggered or until the market senses that
a significant increase in the South
American oilseed crop is assured.
Total 1987-88 marketing year sup-
ply is estimated at 2,376 million bushels
in the U.S. compared to 2,476 million
bushels last year. With 270 million
bushels in CCC stocks, free supply
would be 2,106 million bushels, repre-
senting only 103 per cent of 1986-87
usage, a relatively low level of free
supply.
The combination of disciplined
farmer selling and record projected
September to February usage suggests
that an ample infusion of CCC stocks
may be needed by early 1988, particu-
larly if a relatively large quantity of
soybeans are put under loan during har-
vest. If crop problems develop in South
America or demand exceeds expecta-
tions, the market may need to draw out
all CCC stocks.
Ending stocks for the 1987-88 mar-
keting year are estimated at 367 million
bushels compared to 436 million the