The Rural Voice, 2002-12, Page 55by 10 million. This fact indicates a
very strong demand for soys and soy
products throughout the world. Soy
oil prices are climbing steadily due to
the smaller canola crop in Canada
and Australia, but with an increase in
crushing for oil, a glut of soymeal
could be the end result.
South America is projected to
have record soybean production once
again, but right now Brazil is getting
too much rain in the south and not
enough in the north which is slowing
planting. If South America gets all of
the intended acres planted, they will
need close to optimum weather
conditions to produce an 80 plus
million tonne crop.
In Ontario, the soybean crop is
pretty well harvested and yields are
below normal although well above
the disaster of 2001. Basis levels
remain very strong with cash prices at
elevators in the $8.80 bushel area —
not a bad cash price.
It's interesting to read so many
different opinions after reports are
issued. There are so many "what ifs"
to consider. There are times when the
North American supply/demand
dominates thinking while at other
times we need to look at the world
picture. In the 12 -month view, I think
we need to look at the world
supply/demand situation.
Western Canada had a severe
drought this past summer while
Australia is experiencing hot, dry
conditions today. Both the Canadian
and Australia wheat boards are
virtually withdrawn from the export
market and in fact both western
Canada and Australia will need to
import corn or sorghum to feed
livestock. And these two countries
are not alone in having smaller wheat
stocks. Even though China "found"
wheat stocks, their stocks are
declining as well.
It has just.been reported that
Brazil has dropped the import tariff
on corn and is looking to import one
million tonnes of corn before their
corn crop is harvested this coming
winter.
We've said for a few years now
that wheat prices should move higher
and lead other grains. Finally, wheat
prices are trading on the higher side
of historical ranges which should
have some effect on corn prices. It
has recently been said that the world
is one crop away from either an
undersupply or oversupply of grain
and the world wheat situation is a
prime example of this thinking. Even
though demand for U.S. corn isn't
overly strong, another nine billion
bushel crop would tip the balance to
undersupply.
Ontario producers should already
have some corn and soybeans sold
and if not, a portion of both crops
needs to be sold right away. This will
produce some near-term cash at
reasonably good prices. Then,
producers can focus on selling the
remainder of the 2002 production as
we get into the new year. As always,
sellers must try to avoid selling into a
weaker market but reward any
strength in demand.
1 sense that patience will be
needed in the coming year but world
fundamentals suggest that grain
prices will have a reasonably strong
tone. A good rally in grain prices
should be used to sell out old crop
stocks and to make a start on
marketing next year's crop.0
Information supplied by Dave Gordon,
LAC, Inc., Hyde Park, 519-473-9333.
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DECEMBER 2002 51