The Rural Voice, 1998-05, Page 21APP
Grain Markets
anticipated decent planting weather
caused prices to lose another 5 cents
right after Easter.
The comment has been made that
the corn chart looks similar to last
year's chart, but if gains this summer
are to be realized, the impetus will
have to come from the supply side
rather than from the demand side. In
other words, something of the
magnitude of a drought will be
needed to make a big dent in the 1998
production.
In Ontario, basis levels have
softened as demand over the next few
months has been pretty much
satisfied. There will be opportunities
in May to get some push in the basis
if a producer is prepared to ship
during planting, but I think a large
percentage of the crop will be sold by
producers in June.
Basis levels for old crop corn is
sitting between 80 cents and 90 cents
over May futures and new crop is
selling for 85 cents to 90 cents over
December. The new crop basis in
particular is very strong in historical
terms, but don't expect too much
change until the crop is made.
SOPS
The USDA's planting intentions
showed acreage of 72 million acres,
an all time high and the number may
grow before planting is complete. The
quarterly stocks report showed an
increase in available stocks of 14 per
cent over last year. However, the
supply/demand reported showed a
reduced carryover for 1998 of 235
million bushels, with a significant
increase in residual use. This may
mean that the 1997 production was
not as large as originally figured.
Soy prices dropped about 25 cents
after these reports which was not
much when compared to the losses
experienced in the corn pit. Since the
drop, there has been a significant
amount of short covering by
speculators as some traders think
weather is already a problem. If corn
planting gets delayed, it will mean
more soybean acres getting planted
later.
Basis levels in Ontario are sitting
around $2.35 over May futures but
producers should be aware that
crusher bids through June show no
carry at all. This is an indication that
the basis in Ontario will stay rather
flat which won't pay for storage. New
crop basis levels are in a range of
$2.05 to $2.10 over November
futures, a little stronger as a result of a
softer Canadian dollar.
FEED GRAINS
There has been little change in
feed grain prices relative to corn
prices. Western feed wheat is selling
for $167 and western barley for S149
while Ontario barley is trading for
about $130/mt. You can see that these
prices are still quite high if feed
grains are to replace corn in feed
rations.
Grain markets always have bulls
and bears. This is what make markets
move up or down. Right now the
bears are controlling old crop corn
while the bulls are keeping a premium
in the new crop. With the large corn
stocks in the world and weakening
demand, the bears should win for a
while. I can still see a 15 cent to 20
cent drop in old crop futures before
weather concerns set in. The corn bull
is depending on an El Nino -induced
drought and not even the weatherman
can give him a clear answer yet.
Supply and demand fundamentals are
stacked against the bull with export
inspections well under what is needed
to prevent a reduction in annual
exports and domestic feed use slowly
backing off.
The soybean market is in
somewhat the same situation except
for the fact that demand is still quite
good, whether for soymeal or soyoil.
You can't say that the bulls or the
bcars are winners in the soybean pit
but, at least neither is losing out yet.
From the Ontario producers
perspective, a large portion of the old
crop corn and soybeans should
already be sold. If not, the main thing
to keep in mind is that you shouldn't
bet the whole enchilada on a summer
drought -induced -rally. It just doesn't
make good business sense. With the
large stocks of both corn and
soybeans in Ontario, you might not
want to wait to pull plug. After all,
you don't want to be selling when
everyone else is.0
Information supplied by Dave Gordon,
LAC, Inc., Ilyde Park, 519-473-9333.
BODMIN
SWINE GENETICS
• BOARS • GILTS
All Stock Delivered
Boar Store - viewing
area located just east
of Belgrave
RR #5, Brussels, Ont. NOG 1H0
OFFICE
Phone: 519-887-9206
Fax: 519-887-9880
(Evenings)
Phil Smith 519-764-2898
Rick Beunen 519-631-2341
TOP QUALITY
EXTERIOR PAINTING
Painting Contractors since 1946
• All types
of exterior painting
• Sand blasting
• Pressure washing
• Repainting pre -finished steel
• Boom trucks
�-''
GLEN EATON
PAINTING
R.R. 3, Chesley, ON NOG 1L0
519-363-2595
1-800-667-0138
eaton @ sos.ca
MAY 1998 17