The Rural Voice, 1983-09, Page 61
by John DePutter
This column prepared Aug. 15/83
CATTLE: NEXT MOVE MAY DE.
PEND ON DAIRY CULLING PRO.
GRAM. Cycle patterns on nearby
weekly futures charts point to an up -
move soon. But before cattlemen buy
calves/feeder cattle this fall they
might want to watch Washington. If
lawmakers there put through a pro-
gram to cull the dairy herd, a lot of
extra cow meat could pressure 1984
markets.
HOGS ARE IN THE PROCESS OF
TURNING INTO A LONG-TERM
UPTREND. Some analysts say the
31/2 year cycle bottom is already
behind us. Others say it's due as late
as October. Whatever the case, higher
feed prices are turning the cycle
earlier than some observers expected.
Sows are coming to town in the U.S.,
some of them pregnant. Packers are
buying hogs avidly, paying over $50
U.S. for the best ones. Bacon and
tomato eating season is spurring
usage. Pork producers who play
futures were generally rewarded the
past year by hedging. Now that the
trend is turning, the upcoming year
will not be a time to employ ag-
gressive hedging or forward contrac-
ting.
SOME SPECULATORS PLAYED
THE BULL GRAIN MARKET BY
BUYING HOGS. They bought defer-
red 1984 futures contract months
around the $40 to $45 price range and
easily rode them up for a $5 per cwt.
gain. Those deferred contracts got
bullish when analysts realized that
higher grain prices would prompt
herd liquidation. Also, the same heat
that damaged the corn crop seriously
reduced conception rates in the corn
belt states. It was too hot in the
breeding barns.
THE BULL MARKET OF
FARM MARKET PERSPECTIVE
1983...Alexander Paris, a U.S. in-
vestment analyst, said early this year
that the government usually steps in
to try to turn markets higher just
when the market is ready to turn up
by itself. This was the case for
agriculture. USDA trimmed a couple
billion bushels off the corn crop with
its acreage reduction schemes and
then mother nature clipped more than
1 billion bushels off the crop too.
There are red faces in Washington.
THE CORN CROP WILL BE
DOWN 38 PER CENT FROM 1982,
said a USDA crop report issued
August 11th. It should be 5.236
billion bushels, according to the Crop
Reporting Board. The news was not
unexpected. Some private firms had
already pegged the crop at under 5
billion bushels before the report came
out. USDA pegged yields at 99.9 bu.
per acre. Some private analysts said
actual results by harvest could be
even lower. December futures of
more than $3.55 reflect the worst
drought since 1980.
OTHER FEED GRAINS: DOWN,
TOO. Sorghum production should be
562 million bushels, down from the
July USDA estimate of 650. Oats 504
million, down from the previous
guess of 519. Barley 554 million,
down from 559. Wheat supplies are
ample, although even total wheat
production should be down from Last
year's record, said the August 1 lth
report.
HAVOC IN SOYBEAN FIELDS:
This crop was pegged at 1.84 billion
bushels in the USDA report, down
from the July crop estimate of 1.99
billion bushels. Most traders
disregarded the figure, saying hot dry
weather in the western corn belt
through most of August should fur-
ther reduce the soya crop, possibly to
1.75 billion bushels. The bull market
continued in soybeans, soaring before
and after the crop report.
WHEN WILL IT ALL END? Look
at the demand side for clues. This has
been a supply -driven bull market.
Once traders start to focus on the cuts
in demand, things will get nervous.
The U.S. dollar is at a record high
against some European currencies,
meaning foreign buyers are already
paying more than at the 1980 peak.
The credit though is dry compared to
1980. Inflation in 1980 was about 18
per cent and now it's under 5 per cent
in the U.S.
A REPORT ON AUGUST 12TH
CONFIRMED THAT HIGHER
PRICES WILL TRIM DEMAND.
USDA cut its estimate for corn use in
livestock feed by 6 per cent from its
previous guess. 41/4 million bushels
should go through livestock, officials
said. USDA clipped its corn export
projection by 50 million bushels.
HIGHER PRICES FOR SOY-
BEANS WILL CURB DEMAND
FOR MEAL, added USDA, saying
American soybean exports for the up-
coming marketing year should be 60
million bushels less than previously
thought. Carryover stocks at the end
of the 1983-84 marketing year should
be adequate despite the wild bull
market, they said.
RUSSIA IS STILL LOOKING AT A
200 MILLION METRIC TON
GRAIN CROP, said USDA analysts
in mid-August. Canada should make
a record wheat output.
IT'S DRY IN EUROPE. That's why
the Russians were so anxious to ink
the recent grain agreement, some
traders reason. Moscow weather wat-
chers saw a lower European crop for-
cing them to buy more from the U.S.
than they'd like to.
DETAILS ON THAT AGREE -
BOB EQUIPMENT
EDIBLE BEAN WINDROWER
• Tire size 5L15 wide flotation.
• Sealed roller bearings on tooth bars.
• Heavy duty 11/4" bearings and shafts on all rotors.
• Heavy duty 6 -bolt hubs and wheels
Call collect
519-527-0138
A.J. Haugh Equipment Ltd.
Brucefield, Ontario
PG. 4 THE RURAL VOICE. SEPTEMBER 1983