The Rural Voice, 1996-11, Page 18NOW IS
THE TIME
to plan
for 1997
We can help with:
• Barn Designs
• Equipment Needs
Parts &
Service for most
makes of barn
equipment
LYNN LOWRY
FARM SYSTEMS LTD.
R.R. 1, Kincardine, Ont.
519-395-2615
Wingham Area (John) 519-357-2018
We Handle Everything (Almost)
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
USDA projections
surprise many
During the last month, the USDA
has raised its production estimates for
both corn and soybeans. The potential
of a better corn crop is not a surprise
considering the lack of frost, but I
think most observers are questioning
the soybean estimate even though the
early planted acreage has yielded
better than expected. It has been
shown in Ontario that later planted
soys aren't yielding as well as earlier
plantings.
The corn production figure may be
fairly realistic at nine billion bushels
simply because of improving test
weights in later planted areas, but we
probably won't get a final production
number until early 1997.
These higher production figures
have suddenly turned fund
speculators bearish and, as a result,
corn and soybean futures prices are
now lower than we expected.
CORN
USDA raised the 1996 corn
production estimate to nine billion
bushels and increased the projected
1997 carryover to 900 million
bushels. The effect of a larger feed
grain crop in Western Canada has not
been felt yet in corn prices simply
because western grain prices have
continued to hold strong.
In the U.S., basis levels have
remained abnormally strong given the
fact that corn harvest is about 30 per
cent complete. This is due to the fact
producers are not selling cash corn
and the industry needs corn to refill
the pipeline. Typically, the U.S.
producer will not sell grain until he
needs cash and coupled with tax
considerations, January could be the
first month of heavy selling.
In Ontario, basis levels have also
remained very strong with early
harvested corn attracting some very
high premiums. Full -bore harvest
should begin throughout most of the
province by October 25 and then
we'll see if the strong basis levels can
be maintained. The crop in eastern
Ontario and Quebec looks excellent
while the rest of Ontario looks quite
variable because of rainfall and
planting date. Demand for corn at
harvest should be strong, so basis
strength or weakness will depend on
producer selling. Traders are well
aware that basis levels are extremely
high and will eventually drop, but
there is no agreement as to when that
will happen. I feel that basis could
remain strong into the new year and
then gradually fade throughout 1997.
SOYBEANS
The last USDA reported raised
soybean production to more than 2.3
billion bushels with an average yield
of 37 bu/acre. This yield seems to be
very high considering the planting
conditions and the lack of heat during
the summer. It's true that rainfall was
never an issue and that only a small
portion of the crop was affected by
frost, but the later -planted acreage
has not had a chance to develop
completely with shorter days and
cooler temperatures.
As with corn, U.S. producers are
not selling as they harvest and with
over 50 per cent of the crop
harvested, they will likely sit back
and see how markets develop.
Producers are well aware that the
world oilseed acreage was down this
year and oilseed stocks are very low
and I think they arc willing to wait
for higher prices.
In Ontario, the soybean harvest is
complete in many parts of the
province and yields are quite
variable. Some producers are
reporting above normal yields, but I
think the majority of growers have
seen yields that are down five to 10
bushels per acre. Basis levels are
strong because of slow farmer selling
and because the crop is not as large as
expected. With strong demand
anticipated from the two crushers, it
appears that basis levels should
remain relatively strong throughout
the crop year.
FEED GRAINS
Feed grain prices have remained
strong especially given the drop in