The Rural Voice, 2000-10, Page 48Marketing needs
extra skill this fall
By Dave Gordon
The corn and soybean harvest has
begun in the U.S. with 15 per cent of
the corn crop and seven per cent of
the soybean crop off by September
16. Early yields are a little variable.
We've heard of corn yields from 90
bu. to 210 bu. depending on weather
conditions in a particular area. Most
analysts believe the USDA will have
to lower corn yields by a bushel or so
which would still give them a crop of
about 10.2 billion bushels.
However, even though soybean
yields are improving as harvest
progresses, the USDA may still
reduce yields from today's 39.5
bu/acre which, is already down from
the August report of 40.7 bu/acre.
This uncertainty is so far, adding
some support to prices.
CORN:
Even though corn harvest is
progressing at a rapid pace, producers
are not selling any new crop corn. In
fact, redemptions of old crop corn
probably make up the bulk of the
U.S. sales. The U.S. elevator operator
is prepared for a big corn crop and he
will do everything possible to handle
the crop. And, if the producer is not
forced to sell corn, he won't. He will
take the LDP or put the corn under
loan thus keeping it off the market.
Futureswise, the commercial firms
are long and won't sell until cash
corn is bought. The spec funds are
short for the corn market and have
been for several months. They will
not buy their position in until prices
move above $2/bu. As a result,
December corn futures will probably
trade between $1.85 and $2.00 with
the possibility of the odd stab outside
of this range.
In Ontario, basis levels continue to
44 THE RURAL VOICE
Grain Markets
be very strong for both old and new
crop corn. Ontario producers
continue to hold on to old crop stocks
with the hope that there will be a
shortage of corn before harvest
begins. The scenario likely won't
come about because we are already
getting calls about corn that is under
30 per cent moisture and ready to
harvest and there is a good supply of
corn in Michigan ready to move.
A few comments to Ontario corn
producers. Basis levels will likely
stay firm due to the small Ontario
crop. In fact, quasi -official statistics
show the Ontario crop reduced by
7/bu/acre, which is still higher than I
personally expect. Secondly, if
producers haven't already looked at
gas and hydro costs and drying rates,
you will see about a 17 per cent to 30
per cent increase in drying charges
across the province. Thirdly, we are
seeing a great deal of stalk rot in corn
that is nearing maturity and producers
will need to be vigilant as more corn
matures. It seems that Mother Nature
and the markets are both ganging up
on producers with less than ideal crop
conditions and higher gas costs,
which will also affect fertilizer prices
next spring.
SOYBEANS:
The USDA's September report
reducedsoybean production and last
year's usage resulting in lower 2001
ending stocks of 365 million bushels.
According to yields we're hearing
from this crop, production may be
reduced another one to two bushels
by the time harvest is complete. Total
soybean use continues at a good pace
with projected use sitting at 2.8
billion bushels, not too far off
production estimates of some
analysts. The uncertainty about yields
has put a good support under prices,
which will hopefully hold through
November.
In Ontario, we're already seeing
early soybeans coming in to elevators
while, at the same time, producers are
trying to empty their bins of old crop.
As of this writing (September 22)
there is still a fairly hefty premium
for soys that are ready to ship by the
end of September. Once we get into
the harvest a little deeper, basis levels
will back off if only for a month. I
don't think yields are going to be too
robust in many parts of Ontario, so
there should be little pressure to sell
right off the combine. However, if
prices do hold or go up a little, be
ready to sell a portion because down
the road we're looking, at South
America and the U.S. both planting
more acres of soys and as we found
out this year, you cannot always
count on a drought scare to push
markets higher.
FEEDGRAINS:
The most notable fact concerning
all feedgrains is the presence of
fusarium. Any feedgrain with low
toxin levels should be in demand
because of the fact that most cereal
crops contain some level of fusarium.
And, one agronomist told me that the
Ontario corn crop has the probability
of relatively high toxin levels given
the incidence of fusarium that is
present in this year's corn crop.
Low vomitoxin wheat and barley
will be needed by feed manufacturers
to help offset high levels in other
grains. At this time, we are not totally
sure of the quality of western feed
grains but typically the western grain
has relatively low toxin levels.
I know that grain producers are
feeling pretty low these days given
the prices of grain, the poor weather
conditions this year and a very
inadequate support program in
Canada at a time when other
countries are not dropping their
support programs. I say Canada,
because I don't understand why the
provinces need to be involved at all
in support programs that are national
and international in scope.
However, the reality is that grain
must be and will be sold and in fact,
many producers have locked in some
great prices on a portion of their
crops. Hindsight is always 20/20 and
if we'd all been so smart, everyone
would have sold all the old and new
crop grain during the first week of
May. Since only a small portion of
new crop corn and soybean has been
sold, what do we do now?
The first thing to look at is the
storage of crop development. Has the
plant shut down because of cool