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The Rural Voice, 1993-03, Page 20Markets suffer mid -winter blues It's February and we are experi- encing the winter blues. Local corn demand is slow, futures prices are stagnant and the February USDA report was neutral. The only bright spot in marketing is found in soy- beans. Basis levels remain strong for both old and new crop and fu- tures prices are fairly stable. There has been very good demand and movement over the past two months. CORN In Ontario, we continue to be swamped with lower grades of corn. The price for grade 5 corn has continued to drop and is now offered at $30 to $32 /mt discount from grade 3 prices. What we arc seting is somewhat of a snowball effect because elevators have stopped trying to blend the grades up and are now offering grade 5, and farmers who are trying to finish up harvest are generally getting grade 5 or sample and want to sell it immedi- ately. As I said last month, Ontario now has an ample supply of corn if grades arc not considered, but because such a large portion of the stocks arc lower grades, the price of these lower grades will either have to compete with western wheat in feed rations or find an export market. If we don't get rid of the lower grades, they will be carried over into the next crop year. Basis levels in Ontario are steady but not showing any strength because of the strong Canadian dollar. Considering the fact that we are on an import market for grades 2 and 3, the basis will continue to reflect the exchange rate. The last USDA report indicated a 16 THE RURAL VOICE Grain Markets projected carryover of 2.237 billion bushels, 10 million less than last month. However, it remains to be seen whether or not the billion bushels of corn unharvested as of December 31, 1992 in the U.S. gets harvested and into the pipeline. Corn acreage in North America this year should be lower than in 1992 but unless weather becomes an issue, I don't expect to see any major strength in basis or futures in the coming year. SOYBEANS The demand for soybeans and soy products has been very strong throughout North America. There is good worldwide need for oil, and meal use in the U.S. has remained strong. However, with a bumper crop on the horizon in South Ameri- ca, a large supply of beans will come to market between now and May. In Ontario, soybean sales by producers have been brisk in both old and new crop. It is estimated that 80 per cent of the 1992 crop has been marketed which will leave the crushers in Ontario buying at import prices for the balance of the crop year. It appears that a much larger acreage of soybeans will be planted this spring and total production could reach 50 to 60 million bushels in Ontario this fall. If this does happen, Ontario will need to export heavily at harvest As a result, I think basis levels for new crop will fade through the summer if we have good growing conditions. Basis levels for old crop soybeans are $1.05 to $1.10 over March futures and $1.00 to $1.05 over November futures for new crop. FEEDGRAINS Feed grain prices have softened slightly and show no sign of regaining any of the losses. In Western Canada, there is enough feed wheat to supply Ontario for several years and right now demand has diminished from the feverish pace in December. Western wheat is trading for about $120/mt, western barley is selling for $125/mt and Ontario barley has dropped to about $100/mt. The demand for barley is not brisk because of all the cheap alternate feedstuffs available and the main barley requirement will only be in fixed formulas. The whole grain trade in Ontario, meaning producers, elevators, and users, is still struggling with the poor corn crop of 1992. Feed mill operators haven't all been convinced that lower grades of corn can be used with supplementation. Some feeders that I have spoken to have indicated no problem feeding lower grade corn with proper supplements. One fact that has been proven is that protein levels are lower this year throughout most of North America which could be due to nitrogen leaching out of the soil early in the growing season. And, early energy testing by OMAF showed an average drop of nine per cent for grade 5 versus grade 2 corn. However, I have heard of virtually no toxin problems in corn this year, contrary to comments made by some journalists. Basically speaking, users in Ontario will consume all of the Ontario feed grains, soybeans and wheat, but corn will have to compete price wise with western feed wheat and it seems that grade 5 corn at $85/mt is not low enough to replace wheat. A government credit pack- age providing food aid to a third world country would be a good move for both Ontario's corn produ- cers and the recipients. However, when any government agency is involved, don't hold your breath for quick action or any action at all. Looking ahead in 1993, it is unlikely that we will experience another year of weather like 1992. According to many meteorologists, we should see more normal temperatures which would definitely give us better growing conditions. I feel producers should gear up for a more normal year, but be slightly conservative in hybrid and variety selection. My biggest hope is that we see a year of good quality crops and good prices for producers.0 Information supplied by Dave Gordon, LAC, Inc., Hyde Park, 519- 473-9333.