The Rural Voice, 1989-02, Page 14AGRICULTURAL
EMPLOYMENT
SERVICES*
• Formerly Canada Farm Labour Pool
NEW NAME - SAME RELIABLE SERVICE
Provide employment planning
assistance to the agricultural
industry
Recruit workers for agricultural
employment
Assist worker orientation and
transportation
Promote good employment
standards
Provide information about
government employment
programs
OWEN SOUND WALKERTON
371-9522 881-3671
Mutual Fire Insurance Company
HEAD OFFICE 393-6402
P.O. BOX 10
SEBRINGVILLE, ONT.
NOK 1X0
ALL LINES OF FARM
AND URBAN INSURANCE
For quotations contact:
Ken Hutchison 273-2458
Doug Jacob 271-7894
John McKay 271-2148
Edward Doerr 393-6402
Mutual Mlla117.1cry
Serving the
community
for 105 years.
Let us serve
you in 1989.
12 THE RURAL VOICE
MARKETS ... MARKETS ... MARKETS
T
he first month of 1989 hasn't
brought too many surprises in
the commodity market, but it has been
by no means dull.
The Canadian dollar has dipped
below 83 cents U.S. a couple of times
since the election but seems mired in
the 83.50 range for now. While it has
remained relatively stable against its
American counterpart, the European
currencies seem to be succumbing to
the advancing U.S. stock markets,
which bring renewed strength to that
same U.S. dollar.
This move may be deceptive. It's
possible that the interest may be
coming from those investors who sold
their portfolios in December to incur a
tax profit or loss and are now re-
entering the market as buyers. This
has historically driven the market in
January but it may not be enough to
hold it. This stock market strength has
caused the U.S. dollar to react and
reach recent highs against most
currencies, in particular the Japanese
yen and the German mark. We
believe this will be short-lived, as the
U.S. economy isn't as strong as they
would have us think.
We are fortunate in this country to
have that caped crusader, Bank of
Canada Governor John Crow, leading
the way against the tyranny of infla-
tion. The mere whisper of that word
seems to bring about a jump in the
bank rate and, ultimately, in what we
pay to borrow money. While this does
accomplish one goal, namely de-
creased borrowing by the public, thus
limiting our spending, this policy is
likened to walking a tightrope. If the
rate is increased too much too quickly,
we could slow the economy down to a
point of reversal. We don't want a
dramatic jump in inflation, but we do
want growth to continue.
There is one great advantage of
this policy for the public. While most
financial institutions are paying 5 to 6
per cent interest on savings accounts,
these interest rate hikes mean an
investor will earn upwards of 11 per
cent guaranteed on the purchase of
Government of Canada treasury bills.
This summer's drought not only
affected the grain market in a big way
but also had a heavy impact on live-
stock markets. Feed prices reached
unprecedented levels and mass
liquidation of herds was the result.
Livestock prices traditionally
reach their lowest point around the
end of November, just following the
U.S. Thanksgiving. While they
haven't increased a lot since then, it's
important to take note of the differ-
ence between the price of the cattle
and hog contracts. Even though the
cattle numbers seem to indicate that
cattle should be stronger, the price of
competitive meats, namely pork, is
cheap enough that this may be the
short-term substitute for beef.
The U.S. Department of Agricul-
ture published its quarterly hog and
pig report January 6. The initial
reaction to the report was bullish.
Reductions in the breeding herd were
more than was generally expected, but
the upward revisions in the 1987
report were thought to stem any major
advances in the immediate term. The
report must stili be viewed as con-
structive for the market, especially
during the third quarter.
Hog slaughter is projected to
remain above the levels of a year ago
throughout most of the first half of
1989. Reduction in farrowing
intentions in the December -May
period will reduce supplies in the
second half of 1989 and into 1990.
Also supportive to the market was the
expected reduction in pigs per litter
during the second half of 1988.
The near-term cash prices are
projected to work somewhat sideways.
After rallying $10 U.S. since early
December, barrow and gilt prices in
the interior of Iowa have slowed
somewhat. Packer profit margins
have kept hog prices from reaching
much over $45 U.S. while producers
have shut off interior runs when bids
drop to the $42 to $42.50 range.
Retailers have not been as aggres-
sive in featuring these cheap prices as
had been anticipated and hoped. This
lack of demand has eroded packer
margins to the point where they are
running 1.50 to 2.00 in the red.
Pork bellies face a dubious future.
As mentioned earlier, there is a