THURSDAY, APRIL 7, 2011
VOL. 89 | NO. 14 | $3.75
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Tight corn stocks bolster wheat Corn market hot | A recent USDA report pegged corn stocks down 15 percent from last year SASKATOON NEWSROOM
When viewed in isolation, the wheat market outlook is rather dreary for the coming crop year. “What the Canadian farmer has to be super happy about is that wheat ain’t in isolation. Wheat is tied in directly with corn,” said Canadian Wheat Board market analyst Neil Townsend. “God bless corn. God bless America.” A report released last week by the U.S. Department of Agriculture added fuel to the already smoking hot corn market, which in turn provided strength to wheat. It was the quarterly stocks report, rather than the much anticipated prospective plantings report, that was the real market mover. The USDA reported corn stocks of 6.52 billion bushels on March 1, down 15 percent from the same time last year and about 170 million bu. below trade expectations, prompting a price rally to match the record highs of 2008. The USDA already expected corn stocks to dwindle to only 18 days of supply by the end of the crop year, the tightest in 15 years. This new reduction could cut it to 14 days, the tightest ever. The department also announced corn exports of 2.23 million tonnes for the week ending March 24, the
highest weekly total in more than seven months. Traders said it was confirmation of rumoured sales to China. Errol Anderson, an analyst with ProMarket Wire, said it’s clear that efforts to ration corn demand haven’t worked. “The exports right now are still too brisk. They have to slow them down. In our mind, these corn prices just have to go higher.” Townsend, who has been “unambiguously bullish” on corn for a long time, has become “super-bullish” after the release of the stocks report. “It’s going to take a lot of good fortune for corn to cure their supply and demand balance issues in the next 12 months.” Corn will be in for another big price rally if production problems occur this year. Townsend believes prices have not peaked and wonders why nearby futures contracts are getting all the strength. “That December corn contract is vastly underpriced,” he said. Canadian wheat farmers should take comfort in the tight corn outlook because feed wheat is a substitute for the crop. “That is going to provide a very good floor (price) for wheat,” said Townsend. Corn is protecting wheat from what
BY BARBARA DUCKWORTH CALGARY BUREAU
Record high prices have rewarded beef producers nearly every week this year, but like a roulette wheel, who knows where it might stop? Last week, cattle analysis firm Canfax reported Alberta average steer prices were $115.56 per hundredweight, up $22.85 over the same period last year. Heifers were not far behind at $114.16 cwt. Good quality cows ranged from $70-$87 per cwt. United States cattle futures hit a record March 30 at $120.80 per cwt. for finished cattle and feeders closed at $133.55 while the cash trade saw packers trading up to $125 per cwt. For Alberta cattle feeder Doug Price those prices end a decade of uncertainty and red ink on the balance sheet. “We’re quite excited. Everything is profitable right now,” said Price, who is president of the Alberta Cattle Feeders Association.
God bless corn. God bless America. NEIL TOWNSEND CWB MARKET ANALYST
would normally be a bearish outlook as world supplies continue to grow. The crop is in good shape in Europe, the Middle East and North Africa and in very good condition in Ukraine. The only problem area is the U.S. winter wheat crop, which is suffering the effects of drought. SEE TIGHT CORN STOCKS, PAGE 2
SEE CATTLE PRICES, PAGE 2
APRIL 7, 2011 Return undeliverable Canadian addresses to: Box 2500, Saskatoon, SK. S7K 2C4
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14 days
of U.S. corn supply could remain by the end of the crop year, bolstering wheat prices and counteracting what would be a bearish outlook for the crop
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The Western Producer is published in Saskatoon by Western Producer Publications, which is owned by GVIC Communications Inc. Publisher, Larry Hertz Publications Mail Agreement No. 40069240; Registration No. 10676
BY SEAN PRATT
Cattle prices hit record high, ending years of red ink