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The Rural Voice, 1983-01, Page 20by John DePutter Corn Market Awaits Word On USDA Programs: Chicago corn futures made their major 1982 bottom the last week of October. Since then, futures and basis levels improved. Factors keeping price gains in check include huge supplies in storage in the U.S. American carryover af- ter this marketing year is pegged at 3.447 billion bushels. Farmers have been tight holders recently, but will have to sell sometime. On the plus side, there are discussions within Washington that could sharply reduce 1983 acreage. USDA already has a 10% reduced acreage program and 10% paid land diversion (which a large portion of producers are expected to comply with). Now, the Reagan Administration will add to that, a program called PIK. In return for sharply reducing their 1983 acreage, farmers would get paid not cash, but grain (payments in kind) from government stocks. This would shave the '83 crop to a manageable level. while simultaneously reducing government owned stocks. USDA is also offering aggressive credit programs for foreign buyers. Hog And Cattle Analysts Are Frisky. At the US and Canadian Agricultural Outlook Conferences held in early December. every livestock analyst you could find was forecasting higher prices in 1983. They just don't see the supplies out there. USDA analysts, for example, predicting choice steer prices to average between about $65 and $70 during 1983, with the peak being above $70 (U.S.) in late spring or early summer. (Currently, Omaha choice steers are about $59.) USDA analysts said hog supplies would be down enough to hold prices around the $60 area for most of 1983. (Currently, they are $54 - $56.) In Ontario, speakers at a pork outlook meeting in Komoka were talking about profits in 1983: Swine Specialist Andy Bunn said 1st quarter hog prices might range as high as $92 to $97, with progressively lower levels during the rest of 1983. Pork Board Sales Manager Jim Rollings predicted "a lot of hogs in the mid 80's, but not too many in the 90's." Performance Of Canadian Dollar. An Im- portant Element In Ontario Prices: A weak dollar relative to U.S. currency means higher Ontario prices relative to U.S. prices. A strong Canadian dollar weakens our relative price levels. One firm, Wood heavily on oil revenues and taxes. THE GOOD OLD DA YS Farms for sale. Dairy and stock fauns in all parts of Carleton county. Twenty year terms at 4%. FARM MARKET PERSPECTIVE Gunby Ltd., of Toronto, recently predicted that our dollar would trade around 80.5 to 82 (U.S. q) for the next month; gaining in early 1983 to average 81 to 83& for the first half. But Dr. Morton Shulman of Toronto. a well known investor and author, said in a recent interview that the dollar could fall. He said that a surprise overnight devaluation by the Canadian government is conceivable. To emphasize the impor- tance of the dollar to the Ontario grain basis, here is an example for soybeans, which are currently on an import situation: $5.50 U.S. per bushel at an 854 Cdn. dollar would translate to $6.47 Canadian per bushel. $5.50 U.S. PER bushel at an 80C Cdn. dollar would tran- slate to about $6.88 Canadian per bushel. Cash Crop Farmland Still Under Pressure But Hog Facilities Could Find Buyers: Since depressed corn and bean prices are only now starting to pressure certain cash crop farmers into selling some of their holdings. the downtrend in cropland prices is not expected to turn around yet. But one farmer and consultant from the Embro area. Carl Moore, told a meeting in Komoka recently that prices for swine facilities could rise by spring. Moore ad- vised farmers who wish to expand, to shop for existing facilities instead of building new ones. He said many swine producers will be looking at their tax statements in January and February, and will recognize that "a good barn with a good producer can make money at today's prices." One other factor in land markets: Extension of the Ontario Farm Adjustment Assistance Program could keep a few operators in business who otherwise would have been forced out. Also. when the Farm Credit Corp. lowers its rates to come in line with the market, the odd established producer may start bargain -hunting. The World Oil Market Looks Precarious At Time Of Writing. OPEC members are set to meet this month. They had been hoping for cold temperatures in North America to boost demand a little this winter. So far, temperatures have been above normal. OPEC can't get agreement among its members to cut production to bring it in line with weak demand. Some analysts predict lower prices as a result. If heating oil and crude do head lower, then more in- ternational bank problems could occur. Mexico, for example, is relying on oil ex- ports to bail itself out of its $80 billion debt. If oil falls, it might offer farmers cheaper fuel. But it would be tough on the Canadian government which replies The Canadian Countryman 1939 PG. 20 THE RURAL VOICE, JANUARY 1983 Dairy: Troubles In U.S. And Canada. At time of writing, US Agriculture Secretary John Block is considering giving Poland 100 thousand tonnes of excess U.S. butter. This would go a long way in reducing huge American surpluses, built up by dairy farmers who over -produced with the incentives of U.S. price props. It would certainly be a less disruptive way of reducing the U.S. oversupply than dum- ping it on the world market. Block had earlier threatened the European Economic Community that he'd drown them in a surplus of butter and cheese if they didn't stop their subsidizing of agricultural exports. Here in Canada, dairy production is running too high, and one local dairy farmer commented recen- tly that he figures "a lot of dairy farmers are going to be hurting before this is all over." Outlook Conferences Had Good News On The Input Side: While U.S. and Canadian outlook conferences held in early Decem- ber gave no good news in regard to crop prices, they did predict steady to slightly lower production costs. At the Ottawa conference, it was predicted that the machinery industry would raise prices by about 50/0 in 1983, but poor demand would result in discount pricing and favorable financing arrangements to meet com- petition. Interest rates were said to be declining. Flat demand for fertilizer and chemicals were forecast. Total operating costs were pegged at 10/0 below 1982. It was roughly the same outlook from the U.S. side. The Inflation/Deflation Outlook: Some economists are afraid that eventually, high inflation will again grip Canada and the U.S. They fear an explosion in gover- nment deficits; shaky conditions among banks with heavy international loan ex- posure: public pressure on governments to spend and inflate. But for the next few months at least, the trend is disin- flationary. Continued drops in the Con- sumer Price Index almost certain. Most analysts therefore would suggest to ex- pect lower interest rates at some point in the future. Many consumer items will be cheaper down the road than they are now. Inflation hedges are out and a surging healthy economic recovery is unlikely. Most Australian Farming Regions Are Reminiscent Of The Great Western Canadian Drought In The '30's. Livestock are being shot for lack of feed and water. One province has been declared a drought area for 44 consecutive months. Sharp cuts in Aussie grain production are not boosting world markets, but wheat prices would probably be even lower than they are, if not for the drought down un- der. Recent rainstorms occurred in some areas of the continent. But in most far- ming regions, the only storms are dust storms.