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The Rural Voice, 1993-01, Page 20The bad gets worse It's hard to believe that crop conditions could get any worse than they were last month, but we've seen the arca of poor quality corn move further south to the London area. As has already been reported, it is expected that 25 per cent of the Ontario corn crop will be plowed down while at the same time a good portion of the soybean crop remains unharvested. This year, unlike last, Ontario will need to import corn and soys as well as western grains. CORN In Ontario, corn basis levels have climbed significantly from 60 cents over December futures to 85 cents to $1 over March futures in southern Ontario for grade 2 or 3, an increase of 35 cents to 45 cents. This large increase was not because of demand as much as it was a result of a short supply, especially elevator -owned stocks. Producers were reluctant to sell corn they had harvested until the magic $3/bu was reached. Coupled with this lack of selling was the large number of contracts that were sold back to producers because the producers did not have sufficient coin to fill their commitments. Producers to the north have seen basis levels that aren't as high as in the south but the price has been based on grade 4 or 5. As well, elevators to the north have been charging lower drying rates above 36 per cent moisture. Now, the question is, how do we best market all of this lower grade corn? The bottom line is the fact that livestock will provide the main outlet. If feeders can use lower test weight corn, they should look at the value relative to higher 16 THE RURAL VOICE Grain Markets quality corn. I fully realize that feeders need good test weight corn for such feeds as pig starters but other users may be able to get some good value from grade 4 or 5 com. I have had the feeling that many feeders panicked about buying corn and they need to be assured that there is plenty of grain available and will be throughout the year. One of the more troubling practices I've noticed this fall has been the willingness of feeders to pay almost any price for high moisture corn. Just because you have a feeding program based on high moisture corn doesn't mean that changes can't or shouldn't be made. From an economic point of view, most users would be much better off to buy grain as they need it.. As one dairyman said to me, "When did it become illegal to think for one's self?" It's time to look at alternatives to your present methods and ideas. With an abundance of corn in the U.S. and feed wheat in western Canada, 1 am of the opinion that corn prices will slowly soften in Ontario this winter. When we begin to focus on 1993 corn planting, futures prices will reflect weather conditions and acreage intentions in the U.S. which could eventually move prices higher. However, corn prices won't get out of line relative to other grains. The underlying message I've been trying to get across is about the strong basis levels we have in Ontario and the fact that we are at or above import prices. SOYBEANS The soybean harvest in Ontario is far from complete and the quality left in the field is dropping with each day. There is probably more than 20 per cent of the crop left to combine, but no one is suggesting that any of the crop will be plowed down yet. However, the production figures released by StatsCan of over 50 million bushels appears to be grossly inflated when we talk about low yields and harvest problems. In fact, crushers have already imported some U.S. soys to supplement the Ontario supply. Futures prices have moved slightly higher to the $5.70 area (January futures) because of good demand for soy products while in Ontario, basis levels have stayed relatively strong because of the weak Canadian dollar as well as the delayed harvest. The next major item traders will consider is crop prospects in South America, where acreage and production are already projected to be higher than in 1992. In Ontario, there is already good interest in the price for the 1993 crop. Elevators have posted prices that are generally higher than $7/bu and considering prices of the past few years, many producers are forward -selling part of their crop for delivery next fall. FEEDGRAINS Feedgrain prices have stayed firm despite the large supply of wheat in western Canada. Feed wheat is selling in the $122 to $125 range while western barley is trading in the $124 to $126 area. Ontario barley and mixed grain are not readily offered by growers who are probably holding their grain for feeding at home. Other users may need to depend on western grains until next summer. In trying to summarize my thoughts I have to focus on those of you who will need to buy grain over the next year. Even though the Ontario corn crop will probably be the smallest since the mid -seventies, there exist many alternate feedstuffs that feeders should consider. You should work closely with your feed nutritionist, but this may be the year you need to make changes to your rations. If you can use lower quality corn and supplement it with other feeds economically, do it. I realize this advice may not work for every feeding situation, but, for instance, there is no reason why a feeder can't switch from high moisture corn to dry corn. We are in for a full year of dealing with the 1992 crop and feeders will have to make tough decisions rather than simply following the same path of tradition.0 Information supplied by Dave Gordon, LAC, Inc., Hyde Park, 519- 473-9333.