Prices for coarse grains will fall about 10 percent from last year, following corn prices in the United States.
The head of the market analysis department at Agriculture Canada told last week’s Grain World conference here he expects global supplies and consumption to rise this year.
“One of the big uncertainties will be the relationships between corn and soybeans,” said Fred Oleson.
Futures prices for December corn run around $2.90 per bushel while November soybeans are about $7 per bushel.
Oleson said the ratio slightly favors soybeans, and corn prices will have to rise to draw acres back to corn.
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“It’s almost a trade-off at those levels, which way they will go,” said Oleson, adding one to two million acres could be affected at the most.
Farmers produced about 888 million tonnes of coarse grains around the world in 1996, Oleson said. Almost every country planted high numbers of acres and enjoyed excellent yields.
In 1997, production could be off by about five million tonnes.
“If we have good weather, we should end up with a production estimate similar to last year,” Oleson said.
Overall, the stocks-to-use ratio of corn is still thought to be historically low.
Oleson pointed out corn yields in the U.S. tend to vary, and prices are volatile. He said there’s a probability stocks could drop by the end of next year.
Flooding problems here and in the U.S. mean farmers could change their minds on what they’ll plant until late spring.
China will be the big unknown in the market, since there’s always a lot of uncertainty whether it will be a net importer or a net exporter of corn.
Oleson said he thinks the country will import more than it exports. While demand in China continues to be strong, production is at its limit.
He said future increases in production need to come from higher yields through new varieties or more use of inputs, and improvements in the country’s infrastructure.
Canadian oats exports into the United States should remain strong this year, he said. Production in that country has been dropping since the 1980s but consumption has dropped at a much slower rate.
He forecasts Canada to export 1.25 million tonnes of oats, taking into account transportation problems.
