The Rural Voice, 2002-11, Page 40Grain Markets
Fasten hour seatbelts for a rough ride
Dave Gordon
is a
commodities
specialist
with LAC,
Inc., Hyde
Park, 519-
473-9333.
October 18, 2002
By Dave Gordon
The market action of the last
month has been so bumpy that
producers and traders needed to have
a seatbelt firmly in place. The USDA
issued two reports covering grain
stocks in all positions and
supply/demand. On September 30,
USDA indicated that'com and wheat
stocks we're slightly lower than the
average guess while soybean stocks
were higher. And, on October 11, the
supply/demand reports showed an
increase in corn production and a
reduction in wheat production while
soybean production was left virtually
unchanged.
Prices of all three commodities
have been falling since mid-
September and the stocks did nothing
to stop the fall. However, a very
price -friendly wheat scenario sent
wheat prices higher and stopped the
drop in corn prices.
CORN
The USDA lowered old crop
stocks in late September but raised
new crop production in early October.
Some of the yield reports coming out
of parts of Iowa and Minnesota are
simply incredible and the thought is
that this production will make up for
the poor yield in Ohio, Indiana,
Kansas and Nebraska. Com futures
continued to fall into the
supply/demand report and made a
low on October 14, which many
traders believe will be the harvest
low.
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36 THE RURAL VOICE
Basis levels in the U.S. are
generally very strong as producers
hang on to their grain. Tight farmer
holding is typically friendly in the
short term but is negative to prices in
the long term. Because of this, U.S.
basis levels will likely soften in the
new year.
In Ontario, harvest is well
underway with yields in areas south
and west of London absolutely
terrible while yields to the north and
east are outstanding. I've heard of
corn yields ranging from 30 bushels
to 175 bushels in the area from
Kitchener and west. As a result of
this large disparity in yields, basis
levels exploded south of London
early in October and strengthened
somewhat less in areas where the
crop is good.,This difference in basis
will see corn move from the north
and east to the London area and west.
The Ontario crop size is similar to
what we saw in 2001 but two of the
biggest users are in London and
Chatham where the crop is generally
poor. We will need to import 30 to 40
million bushels in 2003 but this
movement may not start until the
spring of 2003.
SOYBEANS
The USDA raised old crop
soybean stocks slightly and left 2002
new crop production unchanged.
Yield reports from the U.S. indicate
some very good yields but not to the
degree of corn yields. We can expect
some changes to soybean production
but the thought is that yields won't
increase into the January report.
Soybean basis levels in the U.S. are
also very strong with producers
taking a very bullish stance. All they
hear about is world demand and
although demand is very good, keep
in mind that the higher prices go, the
larger the acreage will be in South
America.
In Ontario, soybean harvest is
winding down and although
production will be much higher than
in 2000, yields will probably end up
in the 32 to 33 bushel area which is
well below the norm. The talk in
southwestern Ontario has been about
green soys — beans that are green all