Market Insight: Man. corn values hold steady

Despite the volatility in U.S. corn futures, local Manitoba cash prices have been holding
steady in recent weeks. Bids range from $6 to 6.25 per bushel across the province, which is about
where they have been for a few months.

It is interesting to note that corn futures gains do seem to be helping lift barley prices, even
though the cash market for corn in Western Canada has been flat. Although, the tight old-crop
carryout and threat of inadequate supplies in 2008-09, among other factors unique to barley,

are also contributing to the increase seen in Prairie prices of about 50 cents/bu. over the past
couple of months.

New-crop corn isn’t actively traded yet, but fall prices are basically in the same area. Some
$6.50/bu. was available briefly, delivered to a processor, but freight costs back to Manitoba
producers’ yards basically made that price equivalent to the FOB farm values other buyers
have been quoting.

Production and supply concerns in the U.S. have moved futures up into a new, higher trading
range in the $6/bu. area. With the delays in seeding that may have reduced acres and yield
potential, the market will not feel comfortable trading much below this level until the crop
size is better known. The resurgence in energy markets in recent weeks is also improving
ethanol economics and therefore demand for corn.

Downside risk is limited in old-crop corn due to these factors, but sometimes delivery
opportunities can disappear this late in the crop year. And as can be seen from the way local

cash prices have divorced themselves from futures in recent weeks, a high futures price isn’t
all that matters to finding the best marketing opportunities for corn.

Note: September/October delivery periods are still considered old-crop in the case of corn, which is
harvested later than other spring-seeded North American crops. By that time it will be much
clearer whether the current supply and demand issues facing the market will be solved for
2008-09. As with most markets, in the weeks and months ahead, the weather will be a key
consideration.

— The FarmLink Market Insight was researched and produced by FarmLink Marketing Solutions, a marketing advisory service for Prairie farmers, and is published here with permission of the authors.

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