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Market Trends Commentary – September/October

U.S. and the World
It is that time of year when harvest is starting up in the main US corn belt and in Ontario. With October clearly in the cross hairs, combines will surely start to roll soon. It has been a very uneven growing season especially coming out of a very late spring in the Eastern Corn Belt. That late start has defined much of the market narrative throughout the summer. As we careen into fall, the combines will surely tell the yield story, which has been so difficult to grasp coming out of June.
On September 12, the (United States Department of Agriculture) USDA dropped U.S. national corn production down to 13.799 billion bushels. This was based on a U.S. national yield of 168.2 bushels per acre. This was down from the 169.5 bushels per acres reported last month. USDA lowered ethanol demand and food and industrial use, while keeping export demand the same as last month. This put projected ending stocks for 2019 – 1920 at 2.19 billion bushels, which was up 9 million bushels from the August report.
The USDA dropped U.S. national soybean production down to 3.633 billion bushels, from 3.680 billion bushels last month. This was based on a U.S. national soybean yield of 47.9 bushels per acre, which was 0.6 bushels per acres vs. last month. Old crop ending stocks ended up at 1.01 billion bushels, but with the lower production and yield, 2019 – 1920 ending stocks are projected down to 640 million bushels. This is 115 million bushels less than projected last month. Global ending stocks for both old and new crop were lowered in the report. U.S. wheat production is set to come in at 1.980 billion bushels. Global wheat stocks, both old crop and new are at new record highs despite drought in some areas such as Australia. 
On September 13, corn futures were lower from the last Market Trends report. Soybean and wheat futures were higher. December 2019 corn futures were at $3.68 a bushel. The November 2019 soybean futures were at $8.98 a bushel. The December 2019 Chicago wheat futures closed at $4.80 a bushel. The Minneapolis December 2019 wheat futures closed at $5.02 a bushel with the September 2020 contract closing at $5.52 a bushel. 
The nearby oil futures as of September 13 closed at $54.85/barrel down from the nearby futures of last month of $54.87/barrel. The average price for U.S. ethanol on September 13 in the U.S. was $1.58 a U.S. gallon the same as the last Market Trends report.
The Canadian dollar noon rate on September 13 was .7543 U.S., slightly higher than the 0.7527 U.S. reported here last month. The Bank of Canada‘s lending rate remained at 1.75%.
Harvest will likely be ramping up shortly in parts of Ontario. It is hard to put a good face on harvest based on the tough spring planting conditions in much of the province. However, since the end of June weather has been conducive to crop development. There have been exceptions with drought conditions in Bruce County and other areas of the province. There is of course land not cropped this year throughout the deep southwest. Needless to say, we still need a wide-open fall, to get this entire crop to mature. September has been kind so far. 
Basis continues to hang in their for both corn and soybeans. The new crop corn basis has retreated to a small extent compared to last month. Both old crop and new crop soybean basis have decreased slightly since last month. Weather will be a key element to basis as we move forward. If there are frost issues in Ontario within the next 4 weeks, the crop will surely be compromised and basis should respond.  Coverage levels could also be an issue for industrial ethanol use in Ontario. Keeping abreast of weather reports and basis values will surely be key.
A wide open fall is what producers need to get the crop to maturity, but its also important for a renewal of winter wheat acres for 2020. Large acreages, which were unseeded this year in the deep southwest of Ontario, will surely get that September planting started. Getting back over that 1 million acres of Ontario wheat would surely be a good goal, especially with rotation taking a bath for some farms this year. 
Old crop corn basis levels are $1.90 to $2.00 over the December 2019 corn futures on September 13 across the province. The new crop corn basis varied from $1.20 to $1.40 over the December 2019 corn futures. The old crop basis levels for soybeans range from $2.00 cents to $2.07 over the November 2019 futures. New crop soybeans range from $2.00-$2.10 over the November 2019 futures level. The GFO cash wheat prices for delivery to a terminal on September 13 were $6.88 for SWW, $7.14 for HRW, $6.81 for SRW and $6.31 for Red Spring Wheat. On September 13 the U.S. replacement price for corn was $6.22/bushel. You can access all of these Ontario grain in the marketing section at
Source : Grain Farmers of Ontario