Harvest has just wrapped up across the United States, but farmers have already marketed a large share of their new cop bushels. This is especially the case on soybeans where an estimated 75% of the US crop has been marketed. On corn and estimated 50% of newly harvested bushels have already been marketed. Much of this selling was done prior to harvest taking place. The question now is when the remaining bushels will be sold, and the likelihood of this happening anytime soon is low. 

We are starting to see more of a disconnect in the market between cash and futures. In areas where country movement of inventory has been greater, we are seeing basis values fade as buyers are comfortable with reserves. This is especially the case in regions where processing margins in local markets are being pressured. In others we are seeing basis values rally to encourage movement, even with elevated futures values. This makes it more important for a seller to monitor local cash bids rather than futures movement. 

Now that harvest is over, we are starting to see elevated interest in next year’s crops, and along with it, potential market returns. Economists are staring to predict higher fertilizer values for the next crop cycle as more acres are expected to be seeded to corn and soybeans. There is also a belief that farmers will spend more on inputs as they have adequate cash from both commodity values and government payments from the previous crop. It is also believed that energy costs will be down next year, offsetting much of the higher fertilizer cost. 

We are also seeing more interest on the South American crops and what their total production will be. One beneficial factor for Brazil is that recent expansion to crop production has been in regions where more favorable weather has been taking place. This may limit crop loss in the country. As a result, forecasters are keeping Brazilian crop sizes and in turn exports at high levels. There is less optimism on the Argentine crops where more of the country is being impacted by drought conditions. 

The crop that seems to have the most potential is Brazilian corn. The latest official CONAB estimate was for 105 million metric tons of corn production in Brazil this year, but private firms are putting the crop closer to 107 mmt, even with less than ideal weather. This is from an expansion to corn plantings which is expected to reach 48 million total acres. This would be a 5% increase from last year. 

Trade is keeping a close eye on global wheat values. The Black Sea market has been driving global wheat values, especially when it has come to sales into Asia. Australia has started to export its excess supply though which is considerably larger than in recent years. Right now, Australia is selling wheat into Asia at a $10.00 per metric ton discount to Black Sea sources. In turn, this is driving down the entire world wheat market. 

One buyer that has stepped up its US corn imports recently is Mexico. So far this marketing year Mexico has imported 12.23 million metric tons of US corn, a 3.6% increase from a year ago. Of this total 10.8 million metric tons has been sourced from the US which is a 5.3% increase from a year ago. This increase is from tight corn supplies in Brazil where Mexico’s imports are down 5.6%. 

The Census red meat export totals for October have been released. During the month the US exported 258.4 million pounds of beef. This was enough to bring yearly beef exports to 2.4 million pounds which is just 5% under the 2019 volume. October pork exports totaled a record 589 million pounds which was enough to bring the yearly total to 6 billion pounds. October makes the 16th consecutive month of record US pork exports. 

While it seems early, trade will soon start to shift its attitude into a holiday mindset. In many years this starts just before the Thanksgiving Holiday and lasts through the end of the year. To see reduced trade volume during this time span is not uncommon. This does not necessarily mean a reduction in trade volatility though, and in fact, it tends to increase. 

We will also start to see positioning for year end over the next several weeks. Funds continue to hold sizable long positions in commodities so to see liquidation would not come as a surprise. One difference this year is the global outlook on commodities, especially in soybeans, where stocks are tightening. Long speculators may be more willing to hold their positions over year end as a result.

RISK DISCLAIMER: The risk of loss in trading commodity futures and options is substantial. Before trading, you should carefully consider your financial position to determine if futures trading is appropriate. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results. The information contained in this report is believed to be reliable but is not guaranteed to accuracy or completeness by AgriVisor, LLC. This report is provided for informational purposes only and is not furnished for the purpose of, nor intended to be relied upon for specific trading in commodities herein named.  This is not independent research and is provided as a service.  As such, this is considered a solicitation.