The Rural Voice, 1993-11, Page 21What a difference
a year makes
Just think for a moment about
what producers were doing one year
ago. Crops weren't mature, rain was
followed by mud time and time again
and we were just beginning to realize
the severity of the situation in
Ontario. This year, it's almost the
reverse. Soybean harvest is nearing
completion while com harvest is
getting into full swing.
SOYBEANS
Soybean harvest is virtually
complete and it appears that the
provincial average will be about 36
bu/acre. This will produce a record
crop of 60 million bushels. So, why
didn't basis levels crumble and
futures prices fall in the midst of
harvest? Give credit to the Ontario
grain trade and the political
uncertainty in Canada. Ontario grain
traders were ready, for the most part,
for a large crop and had export sales
already in place and even with
crushers running at full capacity,
there have been some backups at the
main receiving points. However, the
weak Canadian dollar has helped
keep bean levels relatively constant at
$1.35 to $1.45 November futures.
Futures prices have rebounded
from the $6 level for several reasons.
First, the USDA has pegged the U.S.
crop at 1.89 billion bushels which is
their lowest estimate yet. Secondly,
harvest has been delayed slightly in
the U.S. and as a result there has been
little hedge pressure. Thirdly,
soybean prices have been stabilized
by strong corn prices. The end result
has been stronger prices than we've
seen in Ontario for a few years.
Producers who are storing should
Grain Markets
look at prices being offered right now
for winter or spring sales. You will
find there is good storage return
reflected in these prices.
CORN
I've been of the opinion that corn
futures would gain strength in
October and November but all the
while prices were falling. However,
USDA surprised most traders with
the production report of October 12.
The crop estimate was dropped to
6.96 billion bushels, a drop of more
than 2 billion bushels from 1992.
The report also reduced harvested
acreage in the U.S. by 800,000 acres,
most in Minnesota where only 35 per
cent of the crop is rated mature. In
fact, recent reports tell of observa-
tions that are similar to Ontario of
1992. Corn moisture levels are 30 to
50 per cent and test weights range
from 40 to 50 lbs.
In Ontario, corn harvest is nicely
Corn harvest is
nicely underway
underway as moisture levels continue
to fall. Yields are quite variable
throughout Ontario and at this point,
it appears that the crop will be
slightly below average. Quality
appears to be excellent except in
certain parts of the province and with
certain corn hybrids. We have
already seen instances of low test
weight in some varieties, but overall
there should be little concem.
Early harvested corn attracted
some healthy premiums but by the
last week of October, prices fell back
to general new crop values. I would
have to say that almost all of the
decent quality old crop corn has been
used leaving a fairly large quantity of
low grade corn in bins.
This year, producers are seeing
some strange aberrations in elevator
basis levels. You may see an elevator
at a 30 cent basis with one nearby
paying 25 cents over December
futures. The difference depends on
whether or not an elevator is on a rail
line, because rail values are 10 to 15
cents higher than for truck. With
weak demand from feed manufactur-
ers, this difference will likely not
change until industrial processors
come into the market for dry corn in
December.
I feel that producers will sec better
than normal cash prices during the
harvest period. However, basis levels
for the months after harvest show a
good deal of return to storage and
producers should take advantage of
this situation. In other words, you
may like the prices offered at harvest,
but if you ask your elevator operator
for the price of corn if you sold your
com in a future month, the difference
should pay you more than your
storage and interest costs.
FEEDGRAINS
Western feed grain prices have
strengthened over the past month
with feed wheat leading the way.
Wheat has gained about $10/mt and
is currently trading at $118/mt. Part
of the price increase is due to a lack
of rail cars in position to move wheat
to users in Ontario who still have
good demand. Western barley prices
have also increased, but since there is
little demand, price is almost
irrelevant. Ontario barley and mixed
grain prices continue to struggle and
are both selling for about $80/mt.
We should be hearing sighs of
relief from producers with the
soybean crop pretty well in the bin
and good field conditions for corn
harvest. What a far cry from last
year.
I've already alluded to the rela-
tively good cash prices. However, I
can't stress enough the importance of
asking for the prices being offered by
your elevator for various months.
The opportunity to get an excellent
return for storing grain isn't always
as apparent as it is this year. There is
good carry in the futures market and
basis levels for the winter months are
stronger than for November. It is
always prudent to spread out sales,
but this year your best opportunity
may come in the next two months.°
Information supplied by Dave
Gordon, LAC, Inc., Ilyde Park, 519-
473-9333.
NOVEMBER 1993 17