The Rural Voice, 1996-06, Page 18NEWS... NOT HISTORY
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Don McLennaghan
RR 1, Brucetield
Phone/Fax 519-233-3136
Grain Markets
Markets strong,
very volatile
There were no major surpriscs in
the last USDA supply/demilnd
reports on May 10 with corn still
being the centre of attention. They
boosted corn exports by 50 million
bushels for 1995/96 and left other
usage unchanged, allowing the
carryout to drop to an impossibly
low 317 million bushels.
Soybean carryover figures did not
change and the preliminary 1996/97
numbers show slightly lower
production and lower exports.
Wheat carryover for 1996/97 was
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14 THE RURAL VOICE
projected at 329 million bushels, but
in order to get this high exports were
reduced to 975 million bushels of
which 20 per cent is already on the
books.
All markets have become very
volatile lately and I expect this to
continue until at least late June or
early July.
CORN
Com export sales continue
unabated at a phenomenal one
million tonnes per week with both
old and new crop actively selling
and it doesn't seem that enough
domestic rationing has taken place
yet. It's true that cattle numbers are
dropping, sow slaughter is up
slightly and ethanol plants have cut
back production, but so far the cuts
are not significant enough given the
small supply.
It has been noted that Japan may
have overbought by about two
million tonnes and other countries
may have done the same. However,
with the present rate of sales each
week, rationing is out of the
question. Keep in mind that in
terms of many foreign currencies,
North American grain and meat are
not considered expensive. In fact
corn prices in Japan are lower now
than in mid-1980s.
In Ontario, cash corn prices at the
farm bin have just topped $7/bushel.
Unbelievable! In U.S. funds, the
basis has dropped to export levels
from import levels several weeks
ago, mostly because of the constant
supply of corn that is ready to ship.
This has tended to keep basis from
rising with the futures prices, and
new exports to the U.S. have taken
place as recently as May 15. It's
almost impossible to accurately
estimate the Ontario corn stocks, but
at this time of year we should not be
exporting corn. As a result, I think
the Ontario basis will strengthen in
the coming weeks.
Future prices have continued to
move higher and who knows where
it will end. The blow off phase is
not evident yet because we still have
fundamentals that are directing
prices. Usage of old crop corn