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The Rural Voice, 1988-04, Page 34NORTH AMERICA STEEL BUILDINGS Quality Arch Buildings That Must Move Spring Clear Out Specials 22 ga. 40'-14'x50' - $7,250 Delivered 22 ga. 28'-13'x30' - $4,700 Delivered 22 ga. 35'-17'x42' - $6,850 Delivered 18 ga. 47-18'x60' - $12,500 Delivered Excellent Buys! Excellent Quality! Complete Buildings from North America Steel Buildings Corp. Call Toll Free 1-800-387-2380 NOW CSA Approved z ,> nlwea rc:ticrn IML PE H9 fi• PEL ENERGIZERS Powered by main -line hydro, dry - cell battery, or wet -cell battery with solar options. PEL manufactures a range of advanced modular design energizers with energy outputs to suit all requirements. A complete line of fencing components by P� Dealer Inquiries Welcome B & L FARM SERVICES Chesley, Ontario NOG 1L0 519-363-3308 32 THE RURAL VOICE MARKET UPDATE CORN: Faced with the prospect of 1.4 -billion dollars of payment in kind (PIK) certificates being issued, the corn market started to beat a retreat in late February, but quickly rallied again when Russian corn purchases were an- nounced. Bullish Factors: • trader and farmer sentiment is bullish, • the cash pipeline is rather thin, the basis firm, country movement modest, • demand, both domestic and foreign, is better than forecast. Feed levels will continue to be high, • southern hemisphere crops are not as good as anticipated earlier in the year. Bearish Factors: • as this goes to press, futures are 27 cents above the national loan level of $1.82. Also, in many locations, cash prices are considerably above the loan, • CCC corn inventory is huge. If farmers do not move corn, the CCC may, • 1987 corn will not be allowed into the reserve. Extended loans will not be extended again. This, however, is only a bearish factor long term, • $1.4 billion of PIK certificates will be issued in March, • loan redemptions are increasing. Despite the recent good rally, we still cannot rule out a decline to the $1.90-1.95 per bushel level basis May. Intermediate term (around planting time), we could see prices advance to $2.20-$2.25 or higher basis May futures given planting conditions. Longer term, prices will depend on crop progress. It is felt that the USDA's export projections for the 1987/88 crop year are considerably underestimated. Merrill Lynch is estimating exports of 1,850 - million bushels compared to USDA estimates of 1,700 -million. The USDA is currently working with aplanted acre- age estimate of 67 -million acres for the 1988/89 crop year. This projection is not based on any survey, but simply on a number of as- sumptions. Merrill Lynch expects planted acreage to be somewhat higher given the current improved price out- look. The USDA is to release its first planted acreage estimate on March 31, 1988. A failure of the plantings report to show an increase in corn acreage would likely push deferred contracts to new highs. Those prices will also be influ- enced by soybean prices. SOYBEANS: Prices in the soybean complex are expected to trade in a broad range into early summer. The market's focus appears to be preoccu- pied with the declining trend in U.S. soybean stocks and the limited ability of U.S. production to recover. The sce- nario of almost unavoidable new crop supply tightness in the U.S. has excited speculators, whose impact has now been bolstered by the quadrupling of position limits for soybeans and the tripling of those for soybean meal and soybean oil. The predominantly bullish outlook, in vogue as of late February, is dotted with potential potholes. A major one may be that speculators have gotten too bullish too soon, prompting the market to make the necessary adjustments to the anticipated imbalances. The obsession with the U.S. supply situation may have overlooked the potential impact of sharply increased South American pro- duction and the warning signals of a dwindling meal trade, despite increased USSR buying. It is also uncertain how aggressively the USDA will continue to use the export enhancement program for soybean oil, which allows U.S. soybean oil prices to hold large premiums to foreign origins. In the event that normal U.S. weather develops and U.S. exports diminish in the months ahead, U.S. stocks may not tighten as much as cur- rently expected. However, current bull- ish resolve may not waver until there is confirmation that South American (cont'd) %CY410y /I ryyc•a i 1 t i A..•AT4�1 Male it 76 .l11 Allo lit/ .\I/ CORN: Faced with the prospect of 1.4 -billion dollars of payment in kind (PIK) certificates being issued, the corn market started to beat a retreat in late February, but quickly rallied again when Russian corn purchases were an- nounced. Bullish Factors: • trader and farmer sentiment is bullish, • the cash pipeline is rather thin, the basis firm, country movement modest, • demand, both domestic and foreign, is better than forecast. Feed levels will continue to be high, • southern hemisphere crops are not as good as anticipated earlier in the year. Bearish Factors: • as this goes to press, futures are 27 cents above the national loan level of $1.82. Also, in many locations, cash prices are considerably above the loan, • CCC corn inventory is huge. If farmers do not move corn, the CCC may, • 1987 corn will not be allowed into the reserve. Extended loans will not be extended again. This, however, is only a bearish factor long term, • $1.4 billion of PIK certificates will be issued in March, • loan redemptions are increasing. Despite the recent good rally, we still cannot rule out a decline to the $1.90-1.95 per bushel level basis May. Intermediate term (around planting time), we could see prices advance to $2.20-$2.25 or higher basis May futures given planting conditions. Longer term, prices will depend on crop progress. It is felt that the USDA's export projections for the 1987/88 crop year are considerably underestimated. Merrill Lynch is estimating exports of 1,850 - million bushels compared to USDA estimates of 1,700 -million. The USDA is currently working with aplanted acre- age estimate of 67 -million acres for the 1988/89 crop year. This projection is not based on any survey, but simply on a number of as- sumptions. Merrill Lynch expects planted acreage to be somewhat higher given the current improved price out- look. The USDA is to release its first planted acreage estimate on March 31, 1988. A failure of the plantings report to show an increase in corn acreage would likely push deferred contracts to new highs. Those prices will also be influ- enced by soybean prices. SOYBEANS: Prices in the soybean complex are expected to trade in a broad range into early summer. The market's focus appears to be preoccu- pied with the declining trend in U.S. soybean stocks and the limited ability of U.S. production to recover. The sce- nario of almost unavoidable new crop supply tightness in the U.S. has excited speculators, whose impact has now been bolstered by the quadrupling of position limits for soybeans and the tripling of those for soybean meal and soybean oil. The predominantly bullish outlook, in vogue as of late February, is dotted with potential potholes. A major one may be that speculators have gotten too bullish too soon, prompting the market to make the necessary adjustments to the anticipated imbalances. The obsession with the U.S. supply situation may have overlooked the potential impact of sharply increased South American pro- duction and the warning signals of a dwindling meal trade, despite increased USSR buying. It is also uncertain how aggressively the USDA will continue to use the export enhancement program for soybean oil, which allows U.S. soybean oil prices to hold large premiums to foreign origins. In the event that normal U.S. weather develops and U.S. exports diminish in the months ahead, U.S. stocks may not tighten as much as cur- rently expected. However, current bull- ish resolve may not waver until there is confirmation that South American (cont'd)