The latest Agriculture and Agri-Food Canada supply and demand tables left Canada's corn ending stocks unchanged from the previous month at a record 2.6 million metric tons as of Aug. 31 2017. This would be a record carryout for corn in Canada and would represent 17.7% of total disappearance, up from 15.4% from 2016/17, and would reflect the highest stocks/use ratio seen since 2005/06. The five-year average is 12.9%.
Despite the expected build in stocks expected on both sides of the Canada/U.S. border along with Canadian dollar strength, the cash corn basis in Ontario was reported at mostly 55 cents to 95 cents over the March contract on Jan. 31. This leads to a range of cash prices from $4.17/bushel to $4.57/bu. given the Jan. 31 close. Current basis is above the five-year average of 34 cents over the March, as seen on week 4 of the red line on the attached graphic. The blue line represents the trend in the 10-year average, which is calculated at 48 cents under the March contract.
While the weekly average price reported by Ontario's Agriculture Ministry dipped as low as low as $4.07 in mid-December, a weekly average below $4 has not been reported since October 2014.
The five-year average trend would indicate basis to remain mostly flat through February while the tendency is for a weakening to a marketing week low of 24 1/2 cents in Week 20 during the month of May. The five-year and 10-year trends point to strengthening basis through week 37, or the last month of the crop year.
DTN 360 Poll
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Cliff Jamieson can be reached at firstname.lastname@example.org
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