Many U.S. farmers have opted to store much of their corn crop as they marketed more soybeans than normal right out of the field. The question now is when farmers may market more cash inventory and the answer is likely sometime after the first of the year. Even then sales may be limited due to the high volume of deferred pay terminals across the country are reporting. This may keep the cash supply of commodities tight, but at the same time, open windows of opportunity for needed sales.

This willingness of farmers to hold inventory is being closely monitored by cash buyers. For one they want to see what it will take to finally encourage movement when needed. Another is what long term storage may mean for quality. For the most part very few issues were noted with this year’s crops which should make them easier to store. That does not mean there will not be issues later in the year though, especially if weather conditions become unstable.

Rising cases of COVID-19 around the world remain a factor for not just commodities, but for all markets. Rising cases have caused several countries to again limit services, including dining and non-essential travel. The likelihood of this taking place on a global scale is also rising, even in the United States. Some U.S. cities are again restricting dining options and concerns over other closures are possible. Not only would this again disrupt commodity demand, but energy demand as well.

While there remains a considerable amount of uncertainty in the entire commodity market, the most centers on the soy complex. Even though they are currently improving, there is a chance of adverse weather conditions still cutting South American production. There is also a chance of more demand on the U.S. crop than trade is predicting. The greatest of these remains Chinese demand which many analysts claim is higher than trade is predicting. The combination of these factors is helping keep soybean values elevated, especially in the nearby contracts.

Trade is starting to pay more attention to Chinese pork demand. China was a huge buyer of U.S. pork to start the calendar year but has decreased since. Of the revenue generated by pork sales to start the year 25 percent came from China. By September, China’s share of revenue generation was down to 4 percent. This same trend has taken place in beef. China is buying less meat from the United States as its domestic production has been rebuilding.

We are also seeing questions arise over Chinese soybean demand. While China remains a steady buyer of U.S. soybeans their pace has definitely slowed in recent weeks. In fact, last week’s share of the weekly sales total to China was the lowest amount in the past 11 weeks. Sources in China claim the country has immediate needs covered and is now looking at buying for reserves. While the amount of inventory China can buy for this is substantial, the question is if buyers feel comfortable doing it at today’s elevated values.

World food values have been on a steady rally for the past five months. This is mostly from cereal grains which were up 7.2 percent in the month of September. From a year ago cereals have risen 16.5 percent in cost. The majority of this is from wheat, but corn is also at a six-year high. The concern is these are getting to levels where food inflation costs are becoming problem for consumers.

We are starting to see more buyers and consumers in the global market shift away from corn as a feed grain. Many have shifted to wheat, which even though it is more expensive, it is more available in the global market. We have also seen buyers shift to buying sorghum as a feed grain. The most notable of these is China. If this trend continues it could negate some of the support from the possible production losses in South America.

A topic that is starting to be more closely monitored by trade is export demand versus domestic usage, mainly on corn. The United States already has 1.3 million bu of corn commitments booked, three-times the volume of a year ago. This has already driven corn values higher and to a point where domestic processing margins are being pressured, with most interest on ethanol. There are some thoughts that corn loadings are front loaded and will back off in the next few months. If this does not happen and economics do not improve, we could see domestic demand suffer.

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