The Rural Voice, 1983-10, Page 6Ward & Uptigrove
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PG. 4 THE RURAL VOICE. OCTOBER 1983
FARM MARKET PERSPECTIVE
FvvAA,v1
This column prepared Sep . 14/83.
by John DePutter
CATTLE MARKETS LOOK
BRIGHTER FOR WINTER. Cattle
futures charts gave bullish signals the
week after Labour Day. Meanwhile,
ideas by the Reagan Administration
to dramatically reduce milk produc-
tion by encouraging dairy cow culling
are being delayed and watered down.
It looks like the extra cow meat that
would have resulted from big dairy
liquidation is no longer a threat to
winter or spring beef markets. On
September 14th, USDA said cattle-
men in the seven major beef produc-
ing states placed 10 per cent fewer
cattle into feedlots than a year ago.
All this news points to higher prices
by winter.
HOGS: LOOK AT USDA REPORT
WITH CARE. At writing time, the
all-important hogs and pigs report
has not been released. It's due
September 20th. By the time this is
published, the news will be out.
Warning: If the report sounds bear-
ish, indicating heavier supplies than
people expected, it could mark the
final gasp in the bear market, and
make for a boomerang upmove. If
bullish, it could pave the way for
long-running, strong hog markets.
The point is, don't get too bearish
about hogs at the bottom of the cycle,
which is probably where we are.
CORN CROP DISASTER CON-
FIRMED BY USDA. On September
12, the U.S. government issued a
report pegging production at 4.39
billion bu., down about 48 per cent
from last year. Average yields are
expected to be 85.1 bu/acre, com-
pared with 114.8 bu/acre in 1982. The
short crop will result in a reduction of
carry-over by the end of the 1983-84
marketing year. It is pegged at about
900 million bushels, compared with
last year's figure of 3.43 billion.
USDA predicted national average
prices to U.S. farmers for the
upcoming marketing year of $3.50 to
$3.75. Today's national average corn
price is $3.26.
SAME STORK FOR SOYBEANS:
USDA's Sept. 12th crop estimate:
1.535 billion bushels compared to
1982 production of 2.277. Average
yields of 24.9 bu/acre, compared to
32.2 bu/acre in 1982. Carryover for
the 1983-84 marketing year will be cut
to a barely adequate 150 million
bushels, said USDA. Usage of beans
will be cut, as higher prices ration
demand.
THE DAY THE USDA CROP
REPORT CAME OUT... marked a
surprise. The afternoon of September
12th, Chicago analysts gathered for a
news conference that had all the
major U.S. network reporters and
newspapermen in attendance. Some
analysts predicted $ l0 soybean
futures. One was forecasting $15. Joe
Public jumped into the market to
speculate on Tuesday morning, as the
market rose to near limit gains on the
Chicago Board of Trade. The bulls
went home for lunch, though, and
markets plunged, leaving Joe holding
the bag. The chart action that day
illustrated clear bearish reversal sig-
nals. Whether the signals will even-
tually turn out to represent a major
top is unclear as yet. What is clear, is
that markets can peak on bullish
news.
WHEAT SUPPLIES STILL BUR-
DENSOME: USDA said on Sept.
12th that total wheat production this
year will be 2.408 billion bushels,
down only slightly from last year's
big crop of 2.808 billion. Canadian
production should be up slightly at
about 271/2 million metric tons.
World wheat production will be
almost as much as last year at about
480 million metric tons. World ending
stocks for the 1983-84 marketing year
should be about 105 million metric
tons, up from this year's ending
stocks of 97.3. The good news for
wheat is improved demand, as feedlot
men see it as cheap relative to corn.
Foreign buyers view it similarly.
USSR WAS A BIG BUYER DUR-
ING AUGUST& SEPTEMBER. The
Russians came to the trough for
American corn and wheat in a big
way, fueling the already powerful bull
market. U.S. President Reagan and
Ag -Secretary Biock swear they won't
slap an embargo against Russia for its
dastardly jetliner deed. But the inter-
national tension places a potential
danger on world grain trading.
DAIRYMEN STILL OVERPRO-
DUCING IN U.S. As mentioned in
the above cattle outlook, the Rcag.in