The Rural Voice, 1998-08, Page 18BODMIN
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14 THE RURAL VOICE
Grain Markets
Stock markets
rebound
By Dave Gordon
Last month I talked about all types
of markets in North America under
pressure for one reason or another. In
the last four weeks, however, the
stock markets have rebounded and
are back setting new highs. Grain
markets made some impressive price
gains in late June only to fall flat and
the Canadian dollar just keeps
tumbling into more all-time lows.
These are turbulent times in the
markets and the results are not
exactly what analysts had predicted
or hoped.
It has been evident since mid-
January that storage of grain would
not pay a decent return, and yet most
producers held out hope that prices
would rise, instead of looking at the
process logically. Now the time
period to move grain is getting short,
both because of the large quantity and
the short time to move it. Harvest of
soys and probably some corn will
likely start in September, a full month
or six weeks earlier than last year.
CORN
Corn futures moved higher in late
June when several private forecasters
predicted extreme heat moving into
the corn belt. But when the reality set
in that temperatures were not going to
be as high or stay around as long as
first thought, prices fell dramatically.
Even though many areas in the U.S.
have had too much rain, and the crops
are shallow rooted, it appears the
most critical stage has passed without
heat and drought.
The USDA released an updated
supply/demand report on July 10 and
increased the 1998 carryover by 175
million bushels directly related to
lower domestic use. Wheat prices in
the U.S. are low enough to replace
some corn in feed plants in the
southern states and as a result wheat
usage was increased at the expense of
corn. As well, projected ending
stocks was raised by 235 million
bushels in September 1999 because
of the increased carryover from this
year and slightly lower usage figures
in 1998/99. Now traders are of the
opinion that prices will have to get
low enough to stimulate demand
especially from the export side.
In Ontario, old crop basis levels
have continued to drop because users
have covered their needs into
September. Producers are going to
have a tough time moving corn if
harvest gets started by mid-
September. Storing old crop into the
fall is not an option for most because
of the question of quality.
As far as new crop corn is
concerned, there is a good crop
coming along in Ontario. Some areas
are dry but these areas are offset by
outstanding crops -in eastern Ontario
where ample rain has fallen and the
crop started pollinating the first week
of July. Basis levels have held well so
far, but I think levels will gradually
back off into harvest.
SOPS
Soybean futures followed the same
pattern as com in late June and gave
producers an excellent opportunity to
sell old crop soys and forward
contract some new crop. However,
soybean acreage in the U.S. is huge
and so far the crop is looking good.
The USDA shifted numbers
around a little bit in their
supply/demand report, reducing this
year's carryover by 25 million
bushels and increasing the 1999
carryover by 10 million bushels. Old
crop basis levels in the U.S. are
strong enough to entice some Ontario
soys over the border, as well as some
imports of Brazilian beans. This is an
indication that the old crop soy
supply is tight and the U.S. crushers
are reaching for available stocks.
In Ontario, basis levels have held
firm even though the supply seems to
be never ending. Elevators are still
paying in the area of $2.80 over
August futures for old crop sot's, but
be aware that as we get closer to
harvest, basis will likely back off. If
you have stored soybeans, get rid of