Market Trends Commentary – October & November

It’s harvest time across the greater North American corn belt, albeit where the weather permits.  Good harvest weather in the northeastern corn belt has been countered by cold freezing weather in the northern US plains.  Needless to say, its still early, and combines will surely find their place over the next few weeks.  The crop, which was so difficult to get planted in the Eastern corn belt, has yet to give up the truth.

 

The USDA is the US government agency that constantly re-sets the goalposts.  On October 10th, the USDA weighed in with their latest W

 

ASDE report.  USDA pegged US national corn production to come in at 13.8 billion bushels, based on a US national yield of 168.4 bushel per acre.  This was based on harvested acreage of 81.8 million acres.  The USDA pegged beginning stocks for this year at 2.11 billion bushels and after adjustments for an increase in feed usage and decreasing ethanol use, ending stocks stood at 1.93 billion bushels.  The corn ending stocks to use ratio is now 13.8% compared to last month at 15.5%

 

USDA pegged national soybean production to come in at 3.55 billion bushels based on a US national yield of 46.9 bushels per acre.  This was 1 bushel lower than the September estimate, with harvested acreage also trimmed to 75.6 million acres.  New crop ending stocks were pegged at 460 million bushels.  This number is still huge, but about half of the 913 million bushel old crop number pegged in the report.  This was down from the 1.005 billion bushels in the September report.  The ending stocks to use ratio for soybeans dropped to 11.4% from 15.9% last month.  Wheat production was reduced to 1.962 billion bushels. 

 

On October 12th, corn, soybean and wheat futures were higher from the last Market Trends report. December 2019 corn futures were at $3.97 a bushel.  The November 2019 soybean futures were at $9.36 a bushel.  The December 2019 Chicago wheat futures closed at $5.08 a bushel. The Minneapolis December 2019 wheat futures closed at $5.32 a bushel with the September 2020 contract closing at $5.76 a bushel. 

 

The nearby oil futures as of October 11th closed at $54.70/barrel down from the nearby futures of last month of $54.85/barrel.  The average price for US ethanol on October 12th in the US was $1.79 a US gallon higher than the $1.58 recorded in the last Market Trends report.

 

The Canadian dollar noon rate on October 11th was .7577 US, slightly higher than the .7543 US reported here last month. The Bank of Canada‘s lending rate remained at 1.75%.

 

 

In Ontario, soybean harvest has started in earnest across the province.  Essex county is a bit behind, but after Thanksgiving should be in full overdrive.  Soybean yields are variable considering the late planting dates of this year’s crop. 

 

Frost earlier this month in parts of Eastern Ontario and the northern counties may surely impact corn quality come harvest.  Ontario corn has been later than normal and avoiding frost would still be the choice for many producers heading into November.  Black layer in corn this year has been an ongoing concern. 

 

The old crop basis new crop basis change has taken place.   It’s made quite a difference for corn, as the old crop stocks into summer became much more valuable based on futures appreciation.  VOM concerns dissipated, as well did the $1.90-$2.00 basis level we saw last month.  Old crop corn basis levels (for the crop about to be harvested) are current $1.25 over in southwestern Ontario.  Little corn has been harvested, but when it begins, farmers need to be vigilant of basis.  These opportunities may emerge depending on crop size and quality. 

 

 

Source: GFO