The Rural Voice, 1995-11, Page 18NEWS...NOTHISTORY
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Don McLennaghan
RR 1, Brucefield
Phone/Fax 519-233-3136
RIPLEY
ELEVATORS
a division of
Thompson Feed & Supply
Buyers of
CORN
SOYBEANS
Elevator 519-395-5959
Mill 519-395-5955
Res. 519-395-5550
• Manager
Bob Thompson
Ripley
14 THE RURAL VOICE
Grain Markets
Prices create
momentum
Grain prices are acting like a train
that is still gaining momentum and
hasn't reached top speed yet.
Production reports and
supply/demand reports continue to
provide plenty of fuel for higher
prices which most analysts feel have
not topped out. With North American
livestock numbers up about three per
cent from last year and export demand
at unprecedented levels, price
rationing hasn't occurred but will
eventually.
CORN
USDA released an updated report
on October 12 that showed a 300
million bushel drop in corn production,
but in a questionable move, only
lowered the 1996 carryover by 50
million. Some traders think it may
take until the March report to get the
numbers sorted out.
U.S. harvest progress is slightly
ahead of average with 41 per cent off
by October 15 and the farther the U.S.
farmer gets, the poorer the yields. If
the yield drops to 115 bu/acre, the
production goes under 7.5 billion but
no matter how close the yield is to
today's estimate, the ending stocks to
use ratio is projected at an all time low
of eight per cent. Since this number is
too low for comfort, prices will
increase to ration usage and eventually
leave a higher 1996 carryover.
In Ontario, harvest in the south and
west will be complete by October 31
and, while yields are quite variable in
the southwestern five counties, they
are well above normal from east
Huron eastward. Basis levels are
holding at 65 cents to 70 cents over
December future despite an inability
to move corn quickly. The
referendum vote result in Quebec will
likely have more impact on Ontario
basis than anything else because of its
effect on the Canadian dollar.
With corn prices at very high
levels, it's difficult to predetermine
the Ontario supply and demand. Since
most corn is fed on farm rather than
sold through commercial channels, it
remains to be seen whether or not
cattle feeders fill their lots again and if
hog feeders continue to expand. If
livestock numbers do fall in Ontario,
not only will the demand for corn be
reduced slightly but more corn will be
sold in the market.
Most market analysts firmly
believe that corn prices have not
topped out by any means. The corn
market will likely act much as the
wheat market has, gaining strength
after harvest before peaking in the
months immediately after harvest. As
this is being written, December wheat
futures topped $5/bu and December
corn closed at $3.32/bu - contract
high.
SOYBEANS
The USDA report of October 12
lowered soybean production to
slightly over 2.1 billion bushels as
well as took 30 million bushels out of
the 1996 carryover. Early soybean
yields in the U.S. were better than
expected, but the September frost hit
the late planted soys with losses of
about 60 million bushels.
In Ontario, yields are phenomenal
right across the province with few
exceptions and, as a result, crushers
are under the gun to receive more soys
than normal in a shortened time frame.
Fortunately, several vessels were
loaded for export and relieved some
pressure but there are still a lot of soys
in bins around the province which, in
turn, is reducing storage space for
corn.
Because of the inability to move
soys, basis levels slipped in early
October and haven't quite recovered,
but should as shipments in the country
slow down. Demand for Ontario
soybeans should remain quite brisk
through the new year and coupled
with strong futures, cash prices should
remain profitable.
If you look ahead, November 1996
futures and cash prices are higher than
today's prices which puts them well
over $8/bu. Today may not be the
time to forward sell part of next year's