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The Rural Voice, 2000-12, Page 4642 THE RURAL VOICE Grain Markets Turbulent times in the corn market By Dave Gordon In this column, I will spend a considerable amount of time discussing the corn market because of the turbulent times we are experiencing. In Ontario; we have a shortage of corn to get us through the year; in the U.S., the biotech event called "Starlink" is causing big problems, and then we see a trade panel slap a countervail duty on U.S. corn imports into western Canada. The USDA reports of November 9 lowered corn yields to 137.7 bu/acre and Left usage unchanged. This report alone should have pushed corn futures higher but, "Starlink" has caused a big reduction in corn exports to date and as a result, futures prices have edged lower. "Starlink" is a bt gene that is approved in the U.S. for feed use only. It is unapproved in Canada and many other countries. But, the biggest problem is the fact that "Starlink" corn has become co - mingled with a large quantity of approved corn and as a result, Japan — the largest importer of U.S. corn — has stopped importing until the U.S. can guarantee purity in their shipments. In Ontario, we don't have quite the same concern because most of our truck imports come from Michigan and vessels that are loaded in Toledo can be tested with a great deal of confidence. The vast majority of the "Starlink" corn was grown in Iowa and Minnesota, which could show up in corn shipped over Chicago. But from Ontario's point of view it is relatively easy to avoid shipments over Chicago or out of Duluth and concentrate on the region bordering Lake Huron and Lake Erie. In Ontario, growers have seen reduced yields even in the better growing areas and as a result, I think our corn crop may be down at least 30 bu/acre from last year's 128. This leaves Ontario with production sitting at 60 to 65 million bushels less than usage. Many commercial elevators did not fill with local corn and decided three or four weeks ago to bring in some corn from Michigan to fill the empty space. This in turn has been a factor in some recent strength in the Michigan basis. The domino affect has since caused the Ontario basis to move radically higher. Today, (November 17) elevators are paying at least $1 over December futures but it should be noted that most of the strength is in the nearby market although there is still some carry from today's prices. The true test of the strength of the Ontario market will come when the end users step to the plate to cover their needs for the winter. Will we see import basis levels sustained into the spring of 2001? Or will the Ontario basis follow the pattern of 1992-93 when it peaked in early December, dropped a little and levelled out until late winter then fell dramatically? It really depends on how much corn gets imported through March 2001. We also need to keep an eye on the U.S. producer's selling pattern. As prices move higher and the LDP is reduced to zero, he may decide to sell corn in the new year. Since most producers in Ontario are "flat price" sellers, they tend not to be concerned with the basis or the effect of the low Canadian dollar. But, we need to take a look and figure out the mechanics of a low dollar and relatively low corn prices versus a stronger dollar and stronger corn prices. I worked some numbers out for a producer last week and generally speaking a 200 -point gain in our dollar with corn futures staying flat would lower the basis by 10 cents. However, a 200 -point gain in the dollar and a 40 -cent gain in corn futures would take basis up by seven cents. Of course, this is assuming that the basis in U.S. funds stays the same. When you figure these numbers out, it is very important not to compare your results to the adjusted basis charts that are used in Happy a' '__ Holidays from :...... McGavin's Mb J 1. ) To All Our Valued Customers: Thank You! Thank You! We at McGavin's would like to thank all our customers for their patronage in making our 641h year in business a busy one! Avoid down time next year and take advantage of our Winter Fix Up program �a on now. Call for details. Be sure to look for , our Parts Fair special coming in the spring as well as our great oil program and toy specials on now! For your farm equipment needs, check out New Holland's Winter Programs or winter discounts from one of our 50 Shortline companies for your year-end buying. Once again we appreciate and thank you for all your support and patronage over the past years and look forward to many more. From our staff at McGavin's, we would like to wish you and - your families all the best this holiday season. Keep Smiling and Happy Holidays! AI. '''. ' illifittiliiiii, Book your equipmentpntin for our W1VTERFI NEW HoLLAND Ask for J' e{ ff ",,tot,./..slitlilVa‘,71.4 t... , ,•,,,,.. ,...... ......... --r --- •W _ • • ' a `"' t L. • c4. � I. ix For the experienced collector or Christmas Gift Giving ... lb See our farm toys at the ryAfe,� Seaforth Farm Toy, Sports Card, Teddy Bear, Doll, Gin & Craft Show .047 & Sale. December 2 & 3 Up to 20% OFF 4, We have a Targe selection of qe new and used snowblowers McGavin 4i Farm Supply Ltd. 1iE1A1H01i"14) (519)527-0245 WALTON (519)887.6365 fut!1!NO,LL?!0 Ask for Brian, Jeff, Burt or Steve AFTEG rEt']i ©IIJ[ [DOOM Cjv BURT LOBE. Blyth .(519) 482-8811. JEFF McGavin, Brussels ...(519) 887-9998 BRIAN McGavin, Seaforth ..(519) 527-2394 STEVE Corker, Brussels ...(519) 887-9289 42 THE RURAL VOICE Grain Markets Turbulent times in the corn market By Dave Gordon In this column, I will spend a considerable amount of time discussing the corn market because of the turbulent times we are experiencing. In Ontario; we have a shortage of corn to get us through the year; in the U.S., the biotech event called "Starlink" is causing big problems, and then we see a trade panel slap a countervail duty on U.S. corn imports into western Canada. The USDA reports of November 9 lowered corn yields to 137.7 bu/acre and Left usage unchanged. This report alone should have pushed corn futures higher but, "Starlink" has caused a big reduction in corn exports to date and as a result, futures prices have edged lower. "Starlink" is a bt gene that is approved in the U.S. for feed use only. It is unapproved in Canada and many other countries. But, the biggest problem is the fact that "Starlink" corn has become co - mingled with a large quantity of approved corn and as a result, Japan — the largest importer of U.S. corn — has stopped importing until the U.S. can guarantee purity in their shipments. In Ontario, we don't have quite the same concern because most of our truck imports come from Michigan and vessels that are loaded in Toledo can be tested with a great deal of confidence. The vast majority of the "Starlink" corn was grown in Iowa and Minnesota, which could show up in corn shipped over Chicago. But from Ontario's point of view it is relatively easy to avoid shipments over Chicago or out of Duluth and concentrate on the region bordering Lake Huron and Lake Erie. In Ontario, growers have seen reduced yields even in the better growing areas and as a result, I think our corn crop may be down at least 30 bu/acre from last year's 128. This leaves Ontario with production sitting at 60 to 65 million bushels less than usage. Many commercial elevators did not fill with local corn and decided three or four weeks ago to bring in some corn from Michigan to fill the empty space. This in turn has been a factor in some recent strength in the Michigan basis. The domino affect has since caused the Ontario basis to move radically higher. Today, (November 17) elevators are paying at least $1 over December futures but it should be noted that most of the strength is in the nearby market although there is still some carry from today's prices. The true test of the strength of the Ontario market will come when the end users step to the plate to cover their needs for the winter. Will we see import basis levels sustained into the spring of 2001? Or will the Ontario basis follow the pattern of 1992-93 when it peaked in early December, dropped a little and levelled out until late winter then fell dramatically? It really depends on how much corn gets imported through March 2001. We also need to keep an eye on the U.S. producer's selling pattern. As prices move higher and the LDP is reduced to zero, he may decide to sell corn in the new year. Since most producers in Ontario are "flat price" sellers, they tend not to be concerned with the basis or the effect of the low Canadian dollar. But, we need to take a look and figure out the mechanics of a low dollar and relatively low corn prices versus a stronger dollar and stronger corn prices. I worked some numbers out for a producer last week and generally speaking a 200 -point gain in our dollar with corn futures staying flat would lower the basis by 10 cents. However, a 200 -point gain in the dollar and a 40 -cent gain in corn futures would take basis up by seven cents. Of course, this is assuming that the basis in U.S. funds stays the same. When you figure these numbers out, it is very important not to compare your results to the adjusted basis charts that are used in