The Rural Voice, 1999-12, Page 45BERNIE McGLYNN
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42 THE RURAL VOICE
Grain Markets
Prices will be flat
throughout winter
By Dave Gordon
The USDA production report on
November 10 confirmed what many
traders suspected: corn yields are
higher and soybean yields are lower.
However, corn production was higher
than the average guess and no
adjustment was made to the demand
side of the supply/demand report.
Soybean production came in slightly
lower than expected but demand was
also reduced resulting in an increase in
carryover of 10 million bushels.
The problem that arises is the fact
that ending stocks of both corn and
soybeans keep increasing even though
total use is also increasing. Production
levels over the last two crop years has
outpaced demand and North America
is now projecting carryovers that are
too big to be ignored by the market.
Corn: The USDA raised the 1999
production figure by 70 million
bushels or 1 bu/acre from their
October report. Yes, we've heard of
acres where yields were poor but even
these areas achieved yields that were
not thought possible in August. Basis
levels in the U.S. fell to 20 -year lows
in the middle of harvest but have since
recovered to normal levels. In Illinois
basis has gained about 25 cents/bu
from the low and in Michigan,
improvement has been in the 12 to 14
cent range. Something in the three
million bushel range has been
imported in to southwestern Ontario
since October 1 to fill storage and
supply some end users.
In Ontario, corn harvest is still
going full bore from Toronto through
central Ontario where yields are
excellent and total production will
outstrip storage space. On the flip side
of the import coin, corn has been
shipped to the northeast U.S. by rail
and to the Maritimes by vessel.
Overall, production in Ontario is still
estimated high enough to meet
domestic demand.
Basis levels throughout most of
Ontario have remained relatively
strong mostly due to lack of producer
selling. Today, the elevator basis is at
least 10 cents a bushel higher than
normal in the U.S. and with the
Canadian dollar moving higher, I don't
expect the Ontario basis to have much
more strength.
I don't see futures prices moving
out of the range that we've seen over
the past month because of the large
stocks available throughout North
America. It will take major weather
problems or some unapected demand
to move prices higher but I don't think
we will see any positive news over the
next four or five. months.
Soybean: The USDA lowered soybean
production by 23 million bushels but
increased the projected carryover by
10 million. Both crush and exports
were reduced, reflecting slower than
expected crush and very poor export
sales. The biggest yield disappoint-
ment came from Iowa where the
average was lowered by 3 bu/acre to
45 bu. However, the overall drop in
production was insignificant. Weather
in South America is pretty good for
planting and the USDA raised their
production by one million tonnes.
In Ontario, basis levels are still
very strong due to little producer
selling and a smaller crop than in
1998. Yields this year are off 3 bu/acre
on fewer acres. One of the main
concerns today is the marketing of
various types of soys i.e., white
hilums, roundup ready's, non-GMO
crushers or identity -preserved soys and
white hilums can be tested to be sure
that no con -conforming soys are
present. It is imperative that producers
know what varieties they have planted
and harvested and that they be truthful
about the product they have. This will
become even more important next year
and the year after. There will be
premiums for certain varieties or non-
GMO soybeans and maintaining
integrity of these soybean types is
paramount.
Feedgrains: Feedgrain prices have not
shown any strength because of the low
corn prices. Barley, in particular, has
to displace corn in feed rations and, so