The Rural Voice, 2000-06, Page 52USDA ups estimates
of carryover
By Dave Gordon
Corn and soybean planting is well
ahead of normal as of May 14 and in
fact, corn planting sits at more than 91
per cent complete. Weather is still the
key to price direction with short term
versus long term playing tug of war.
With the crop getting planted early,
prices would normally be under
pressure at this time of year. However,
no matter what report comes out,
weather still dominates the market.
On May 12, the USDA released
supply/demand reports for both the
U.S. and the world, which showed an
increase in U.S. carryover for corn and
soybeans but a huge drop in wheat
Grain Markets
carryover. World ending stocks
followed the same pattern. The
markets shrugged off these reports and
ended higher on a perceived lack of
moisture.
CORN
The USDA will normally use trend
line yields when they deliver the first
report of the year, but, on May 12, they
increased the expected yield by about
two bushels to 137 bushels per acre.
This resulted in a carryover increase of
200 million bushels projected for
September 2001. A minor change was
also made to the current year's usage
with a drop of 25 million bushels in
exports.
Domestically Stats Canada issued a
stocks report as of March 31, 2000
which showed that total corn stocks in
Canada were at record levels. This
report confirmed what most traders
already thought. I think most of this
extra corn is in eastern Ontario and
Quebec and we probably need to
export some excess corn even though
planting delays will lead to a later
harvest this year.
Export buyers are constantly calling
for quotes to ship corn offshore but
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48 THE RURAL VOICE
Ontario values are too high relative to
offers out of the U.S. or Argentina.
Canada and Argentina can both sell to
any country in the world but the
Argentine's hold the advantage right
now having just completed a very large
harvest.
Basis levels in Ontario have moved
very little even though futures prices
and the Canadian dollar have been
volatile. Old crop basis ranges from 55
to 60 cents over July futures while new
crop is bid at 65 to 70 cents over
December futures.
SOYBEANS
The USDA used a 40 -bushel -per -
acre yield in their calculation of a
projected 2000/2001 supply -demand
report. Even though total use was
increased substantially, the ending
stocks increased from 300 million
bushels to 495 million bushels. As it
stands, world stocks could also
increase if suggested yields are
attained. Given this relatively negative
news, futures prices have held up fairly
well. We've seen a 30 cent drop since
the report but speculators have not
exited their positions yet. If the funds
maintain their long position over the
next week or so, it will show that they
are counting on drought conditions to
re-emerge this summer. As of May 14,
57 per cent of the soybean crop had
been planted in the U.S., well ahead of
normal.
In Ontario, basis levels peaked in
Canadian funds early in May when
soybean futures peaked along with a
low Canadian dollar. The dollar has
had one brief spark since that time, but
it will take some time for the loonie to
strengthen especially if the U.S.
treasury keeps raising interest rates.
There is a great deal of interest in
forward contracting I.P. human
consumption soys this year. If you plan
to put white hilum soys into a bin for
later sale, be sure to keep in touch with
buyers and be ready to supply samples
before winter sets in.
FEED GRAINS
Feed grain prices have tracked the
movement in corn prices to a small
degree. I expect producers will get
antsy to move any remaining small
grains before harvest and if you
haven't already sold your barley or
mixed grain and you need the bin
space, don't wait too long.
Ontario barley is trading for about
$105-$110 per metric tonne while
mixed grain is worth $85 to $90 per