Look into Futures
Peter D. Forbes
THOMSON MCKINNON SECURITIES INC.
GRAINS
Prices at the Chicago board of
trade continue their firming trend
this week based on poorer crop
conditions and prospects increasee
exports activity.
Crop condition updates for this
week indicate that there has been
some further deterioration in both
com and soybean areas. For
example, 61% of the com in Illinois
was rated good to excellent
compared with 72% a week ago.
Soybeans in Illinois were rated
46% good to excellent compared
with 62% a week ago.
Rumors of U.S.S.R. grain pur
chases continue to effect the
future’s market. However, some
believe that the actual amount
could be less than what the market
expects. The U.S.S.R. may have
purchased as much as 300,000 tons
of U.S. soybeans in August for fall
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delivery. We are told that the
activity of major commercial
buyers, like cArgill & Dreyfus, has
linked to this Russian buying.
What’s of note is that these
market rallies have been followed
by aggressive cash movement of
Midwestern grain, both com and
soybeans. What has happened is
that farmers see a strong price at
the board of trade and cash for
ward contract and grain through
local elevators. The elevator in
turn sells the futures contract to
protect himself against price
decline thereby insuring that the
farmer can receive the agreed
upon price.
This heavy contracting, after the
market closes, has led to several
weak openings on the board. One
must interpret this as a sign that
farmers feel very comfortable
with both the condition of the crops
.xjpr'fc.
THE PILLSBURY COMPANY
*iSS
-s-Nir.
(609) 784-0839
and these price levels. I have
always believed that cash
movement of grain is much
better indicator of crop condition
than any satellite computer.
In general, new crop corn is
showing excellent support at $2.75
per bushel and great resistance at
$2.88 per bushel. Likewise new
crop soybeans show support at $6
and resistance on the way from
$6.40 to $6.60. One can expect to see
prices remain in these trading
ranges until weather patterns for
September become more ap
parent. One of the most interesting
developments in the futures
market concerns the spread
between September and December
corn, december corn clearly
represents the new crop while
September corn represents the
transition from old crop to new
crop. This year, with the crop
planted late, uncertain weather
patterns and a severe shortage of
physical corn in Chicago, the
September contract will behave
both as old crop and new crop.
Participants in the September
contract are either short or long.
This means that they will either
deliver com to Chicago at a
specified price (short) or they will
take delivery of that same com
(long). Traditionally, as new crop
supplies hit the market during the
month of September, the premium
of September over December
disintegrates ie: September
Call us today for more information
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ingredients
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com becomes worthless as buyers
wait for cheaper com as the
harvest continues.
This year there is virtually no
com in deliverable positions in
Chicago. This means that those
people who are short in the market
will either have to find cash com to
deliver or they will have to buy
back their contracts. As the longs
stand willing for delivery, they
could force a squeeze on the shorts
thereby causing the September
premium to skyrocket.
In the last 13 years, this spread
has always gone to even money
September loses its premium.
What concerns the market this
year more than any other year int
the past is that cash cron in
Chicago is nonexistent and it is
uncertain whether any new crop
com will move into CHicago before
the end of the delivery period. With
basis levels remaining firm in
Chicago and at the Gulf of Mexico
($4l & $5l over the September,
respectively), the market will
remain very, very nervous until we
start harvesting com and moving
it into Chicago.
Some of our clients have locked
in basic contracts against the
September contract and are
waiting for a squeeze on the shorts
in order to lock in their board
price. This is a tactic used only by
farmers who can harvest and
■-V
& X
J - -a-irt.
‘C; Y v
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Hi-Nella, NJ 08083
Lancaster Farming, Saturday, August 25,1984—*17
delivery corn in the month of
September. We would be eager to
discuss these more sophisticated
techniques of grain marketing with
those farmers who are interested.
LIVESTOCK
In the pork complex, the black
could of smuggish product
movement still hangs over the
market. Live hog prices have been
pressured due to poor out
movement of frozen bellies and
hams from storage.
The cashmarket is adequately
satisfying the need for products
and thus the frozen stocks remain
in storage. Therefore, pressuring
hog prices is an increase in
animals available for slaughter.
This week slaughters move above
300,000 and are expected to con
tinue on an upward trend for at
least the next month. Unis should
keep live hog prices pressured
near the $5O mark. However, some
analysts belive that once we move
this near term glut of animals
through the market, prices should
rebound to the $55-|57 area.
The same bearish scenario
exists for cattle with a large
backlog of boxed beef at the packer
level. With cut-out value down and
cash movement sluggish, we do not
see a significant move up in cattle
prices the next few weeks. In short,
we do not anticipate hedging any
cattle or hogs until we see a
significant upturn in markets.
PPF to hold
marketing
order meeting
LANCASTER The Penn
sylvania Poultry Federation will
hold an informational meeting on
egg marketing orders on Tuesday
evening, August 28, at 7:30 p.m. at
the Lancaster Farm and Home
Center.
Jerry Weber, general manager
of Midwest Egg Producers and
chairman of the United Egg
Producer’s Egg Marketing Order
Committee will be the featured
speaker. He will present and ex
plain the options open to producers
regarding a marketing order.
Christine Bushway, general
manager of Northeast Egg
Marketing Association, will also be
on hand to address specific
problems and questions.
The meeting is open to all egg
producers and allied industry
personnel. For more information
contact the Pa. Poultry
Federation, 717-652-7530.
guides available
YORK York Co. Conservation
District has a large supply of
resource guides available free to
teachers and other educators.
Pennsylvania Environmental
Education Resource Guide For
Teachers lists environmental
education centers and
organizations throughout the
state, as well as describing events
and mapping major hiking trails.
Agriculture Education Resource
Guide describes teaching
materials which enhance a
student’s knowledge of where food
comes from and how it is grown.
The guide lists grade levels and
costs of materials (if any). The
agriculture resource guide is
available in limited quantities
from the District. Contact K.J.
Heffeman, 755-0406, York Co.
Conservation District, 118
Pleasant Acres Rd., York, PA
17402.
Teaching