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58 THE RURAL VOICE
Grain Markets
O1 NIS
Corn more promising,
says still in trouble
By Dave Gordon
I did not write a column last month
and probably it's a good thing. f that,
time. grain prices were still in a spiral
and in fact soybean futures hit 23 -year
lows. Fortunately, prices have started to
rebound. There is an old saying that the
best cure for low prices is more low
prices that will either reduce production
or increase demand. In the case of corn,
the pace of exports out of the United
States has picked up.
The soybean complex is another
story. Prices are low and we are still six
weeks from the end of the South
American harvest. In other words,
supply in the next two to three months
will tend to keep a lid on price rallies
and we will find out this spring whether
or not the U.S producer will add to that
supply.
CORN
Corn futures finally dropped out of
its trading range in February but did not
approach the lows of last fall. Prices
have rebounded to January levels and
appear to have stabilized. I think the
funds that are short the corn market will
cover their positions before the planting
intentions report is released on March
3 I .
On March 31, along with the
planting report, a quarterly stocks
report will be released and even though
all eyes will be on the plantings, the
stocks as of March I will tell us how
good corn usage has been.
In Ontario, basis levels have
strengthened by 10 to 15 cents since
late February even though local users
have covered most of their short-term
needs. The demand has continued to
come from the export market and I am
sure that surplus corn from the 1998
crop will disappear by early summer.
New crop corn prices are fairly
strong right now compared to old crop
prices but, 1 think there will be better
pricing opportunities in the next few
months than we have seen for several
weeks.
Just another item to keep an eye on
is the possibility that the U.S. may
reestablish trade relations with Iran and
Libya, two traditional Canadian
customers when we have a surplus to
export.
SOYBEANS
For a few weeks the soybean market
looked like it couldn't find a bottom
but, led by stronger wheat and corn
prices, soybeans have at least had a
dead -cat bounce. The Targe U.S.
soybean crop, followed by huge South
American crop, has kept old crop under
pressure while the generous U.S. loan
program, which will encourage extra
acres'this spring, has pushed new crop
prices lower. In the last few days, the
U.S. soybean growers have put pressure
on their government to offer soybeans
for food aid.
In Ontario, old crop basis levels con-
tinue to be very strong as crush contin-
ues at a good pace. Even though cash
prices have fallen drastically producer
selling has continued at a steady pace.
With prices at relatively low levels,
producers are -looking to alternative
crops to grow and corn acres should see
a slight increase, as should edible beans
and specialty soys. Old crop basis
levels are in the realm of $2.15 to $2.20
over May futures while new crop soys
are holding near $2 over November. Of
course, prices wouldn't look as good if
the Canadian dollar was valued higher
than the current 66 cents U.S.
FEEDGRAINS
Feedgrain prices have not become
any more competitive relative to corn
and only minimum quantities are being
used in feed rations. Western feed
wheat is selling for $167 while western
barley is trading for $137. Meanwhile
Ontario barley and mixed grain is
selling for $110 to $120 depending on
loading conditions. It will take much
stronger corn prices to push the demand
for feed grain higher.
Sometimes, as a trader, I get a sense
of which direction the price of a certain
commodity will go well before the
move happens. Right now I have that