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The Rural Voice, 2000-09, Page 72Check your quantity and quality before selling By Dave Gordon At 8:30 a.m. on August 11, the USDA issued their first prediction. based on surveys, of crop size and the numbers were humongous. Even though all production figures were within the range of pre -report estimates, they were still astounding with corn coming in at 10.37 billion. soybeans at 2.99 billion and wheat at 2.263 billion bushels. Most of the attention has been focused on corn since the report, but no one has discredited the production numbers. Anecdotes from producers in Illinois and Iowa have tended to confirm the USDA's findings. Now, we must wait until combines hit the field for confirmation. The soybean crop is much more vulnerable to weather extremes in August and final yields have a greater chance of dropping from the August report. CORN: The futures market was expected to open sharply lower after the USDA report but, contrary to popular opinion, buyers stepped in immediately before momentum had a chance to push prices lower. However, there has been little rebound since the report and I think it will be tough to push prices much higher with a 10.37 billion bushel crop hovering over the market. At these Iow prices, the U.S. producer is letting the nine-month loan mature and selling the corn in to the market. But at least the U.S. farmers has a good safety net, unlike the Ontario grower. In Ontario, basis levels are very strong and well above important levels. Producers who think basis can get stronger are holding on to false hopes. Three factors need to come 68 THE RURAL VOICE Grain Markets together to push basis higher. First, the U.S. basis must strengthen: second. corn futures need to rise: and third, the Canadian dollar needs to drop. It looks unlikely that any of all of these factors will occur in the short term so, if you have old crop corn to move. you will likely have to bite the bullet and sell. I've looked at forward prices and there isn't enough carry to cover the cost of storage and interest until February. So. unless you want to keep corn for blending. the potential for keeping old crop is limited. Right now. 1 would• suggest that producers avoid forward contracting any nett crop until they see how the crop develops. You may not have enough crop to fill a contract and as well, the price is relatively low even though the basis is quite strong. SOYBEANS: The USDA production figure for soybeans was slightly above last year's record crop but. as I mentioned earlier, a dry or hot August can reduce yields from the 40.7 bu/acre estimate. In fact, yields declined from August until the final figure in four of the last five years. The USDA increased usage in the August report which in turn, reduced the carryover by 16 million bushels and although the market hasn't gone straight up, it has stabilized because of the relatively low prices and a slight uncertainty concerning crop progress. In Ontario, there appears to be plenty of old crop soys to get crushers through until new crop and although prices seem to be Iow, they have gone 4'25 to 30 cents in the last week. We will probably have six weeks left (prior to August 18) to move old crop soys before harvest begins. The 2000 crop in the field is well' behind normal and although foliage is thick, the pod count is very Iow and it is getting late to add more pods unless the temperatures stay relatively warm. And, with the cold nights we're experiencing, the odds of improving the crop are slim. Yield and quality will both suffer as a result. FEEDGRAINS: Western feedgrains may not be too much of a factor in the Ontario market this year as it looks like there will be very little feed wheat in Western Canada and the barley crop will get used locally. In Ontario, new crop barley is selling for about $80/mt fob farm while Ontario oats are trading for $85 to $105 depending test weight. A producer needs to have a 40 Ib. Itst weight to get the high end of the price range. Toxins will be an issue in teed grains this year so, if you have some Iow toxin barley that has been tested. you might be able to pick up a few extra dollars from the right buyer. Hindsight is always 20/20. but we can't beat -up ourselves forever about what we should have done. Instead. we must face reality and the reality is there is a huge crop of corn in the U.S. And, the soybean crop isn't far behind. Producers tend to hear only what they want to hear and we've all heard from truckers who tell about poor crops in some particular area that they've driven through. I'm sure that there are some poor looking crops especially in the northern states, but crop tours travelling across the whole corn belt agree that crops look very good overall. Yes, the yield estimates might be out by a bushel or two, but so what! The corn crop is basically "made" and now, the only remaining hurdle is to get the crop harvested. The soybean crop does need some time to finish and dry, hot weather can affect the final yield, but we all need to avoid getting caught up in any hoopla of supposed problems. We must strive to keep the big picture in view at all times and take advantage of selling opportunities because there is a strong potential to have an oversupply of grain in the U.S. for the next year. Ontario producers need to be cautious in the coming year, especially prior to harvest. Be sure of the quality and quantity before making sales of any grain to be sure that you can deliver the goods. Also, check every source of government aid for farmers when, and if, it becomes available because I think it will be tough to depend on market prices to show much, if any, profit this year. One producer told me he couldn't wait for next year to arrive and I think he spoke for many others as well. This is a year that will test producers' usual optimism more than ever before.0 Information supplied by Dave Gordon, LAC, Inc., Hyde Park, 519-473-9333.