The Rural Voice, 1991-05, Page 20GRAIN MARKETS
WHAT WILL
BE PLANTED?
What crops are you planting this
spring? According to some localized
surveys in Huron County, soybean
acreage could see an increase of 40 to
50 per cent in anticipation of planting
more wheat this fall. Corn acreage
will likely be increased in the south-
west, while oat acreage across the
province looks like it will be down
sharply, which could provide an
opportunity for those who do grow
oats. Meanwhile, producers have
continued to hold on to both corn and
soybeans at commercial elevators.
That in turn has led to a slight firming
of elevator basis levels in early April.
CORN
OMAF statistics indicate that corn
stocks at elevators are about 200,000
metric tonnes higher than a year ago,
and, coupled with lower domestic
usage, the outlook doesn't look pro-
mising unless a fairly major export
program takes place. The potential of
some corn being exported isn't out of
the question with basis levels falling
back this week by five cents per bu-
shel. With a flurry in future prices on
April 1, producers with on farm stor-
age started to do some selling of corn,
which has carried on up until now.
We feel that stored com will really
start coming on to the market in June
and July when fertilizer bills are due.
If possible, you should try to avoid
that period and to make sure to either
aim for May or August/September.
It's hard to say what might happen
to basis levels in the summer, but
unless a large quantity of corn is
exported this spring, I don't see much,
if any, strength in old crop basis
levels, and, in fact, we could have a
carry over into new crop.
This week, new crop basis levels
dropped by five cents, partly due to
the anticipation of a larger crop of
corn being planted this spring. If ini-
tial ideas on corn acreage are realized,
basis levels could go lower. But we
won't know this until the crop is ac-
tually planted.
Futures prices strengthened after
the USDA planting intention report of
March 28, but since that time have
gradually weakened back to the $2.53
level on May futures. This report
indicated less acres of corn than most
traders anticipated. In fact, after the
report, there was some skepticism
about it because soybean acreage also
came in at the low end of the range,
and you have to wonder what really is
going to be planted.
Futures prices should hold in the
present trading range of $2.55 to $2.65
on December futures, and the $2.60 to
$2.65 area on July futures until the
1991 com crop is planted and grow-
ing. With any weather scare, prices
should pop, but I don't see any major
futures price gains unless severely dry
weather appears in June or July.
Current elevator basis levels are 10
to 15 cents over May and December
futures for both old and new crop
corn.
SOYBEANS
After the USDA report on planting
intentions, soybean futures jumped
dramatically into the $6.30 range on
the November contract, and the price
has held above the $6.11 per bushel
level since that time. With export de-
mand very light and South American
production coming close to expecta-
tions, there has been little reason for
traders to get too bullish on soybeans.
However, the low planting intention
gave them some cause to come alive.
Barring a drought, though, futures
prices will not likely see prices too
much higher than the $6.40 area.
Basis levels in Ontario improved
slightly in early April, but has recently
dropped down by five cents, mainly
due to the strong Canadian dollar.
Currently, elevator basis for old crop
soybeans is 30 to 35 cents over May
futures and about 30 cents over No-
vember futures for new crop. Right
now, there is a great deal of concern
about the logistics of moving soybeans
in the fall. With a larger acreage and
reduced storage at crushing plants, a
fairly large portion of the 1991 crop
will be exported, which could lead to
problems with the timeliness of ship-
ments.
I don't see any reason to be bullish
on basis levels. With the Canadian
dollar holding strong, futures prices
not showing strength, and a larger than
normal crop of soybeans to be planted,
basis in Ontario will be dictated by the
export market, and may well drop
under export prices in the middle of
harvest.
FEED GRAIN
Once again this month, feed grain
prices remained static. The one
change is that more grains are being
offered for sale. In the case of oats,
quality has been a big problem as
these oats can't be used for milling or
for export, but have to go into the feed
market. In this market, relatively
cheap mixed grain continues to pre-
vent stronger oat prices. If there is
one grain that might be considered
tight, it would be barley, and there are
many days when even this grain is
offered up rather freely.
Western grains have arrived in
Goderich and are a little bit weaker
than a month ago. Western barley is
worth about $116 to $117 per tonne at
Goderich, western wheat is worth
about $132 per tonne, while Ontario
barley is trading between $105 to
$110, Ontario oats are worth $80 to
$100, depending on quality, and
mixed grain is valued at $85 to $90
per tonne.
As you're getting ready to go into
the planting season, don't forget your
marketing, and keep an eye on the
grain in your bins. We have seen a
great deal of grain that has gone out of
condition already this year, and this
quality of grain not only loses a large
portion of its monetary value, but it
tends to compete with other grains.
Price wise, if you see any opportu-
nities during the month of May, take
advantage of them, and try to avoid
marketing in June and July unless
drought conditions begin to appear.0
Information supplied by Dave Gordon,
LAC, Inc., Hyde Park, 519-473-9333.
16 THE RURAL VOICE