Internal logistics this fall could become a significant issue for some grain terminals. This is because of the record large corn crop that is being predicted by some analysts, and how many commercial terminals may not be equipped to handle a huge flush of corn.

The real issue could come if the entire corn crop needs to be dried. An increase in on-farm storage and the fact that old-crop inventory will be at minimal levels will help ease logistics issues.

These possible logistics issues are filtering into the global market, as well. In the past few weeks we have seen buyers opt to book needs with other sources over concerns these issues will lead to export delays. This is more the case for corn, as soybean buyers have already shifted a portion of their demand to South America.

The buyer who is getting the most interest is China, as that country prefers to not book an excessive amount of its commodity needs from one origin point to begin with.

Trade is starting to place more interest on how much double-cropping with soybeans may take place this growing season. Wheat harvest will happen up to three weeks early this year in states as far north as Wisconsin. This means harvest will be complete in late June, which leaves plenty of time to plant a crop of soybeans if desired.

While these soybeans tend to yield just 60 percent of a normal crop, they will help cushion the low inventory the United States is expected to have at the end of the marketing year.

Soybean balance sheets remain one of the most overlooked topics in the commodity market at present. China’s soybean appetite is expected hold at 55 million metric tons for at least another year.

The world market would have struggled to satisfy this demand even without production losses in South America. Given this production loss and the steady demand in China for soybeans, it is going to create a 982 million-bushel void in the world soybean market.

The question is, what impact this will have on soybean futures. Most economists believe this soybean shortage will lead to higher futures, but that may not be the case.

Soybean processing margins are getting tighter around the world, and buyers are less willing to pay a premium for soybean inventory. Instead, these buyers are looking more toward alternatives oilseeds, such as palm, canola and distiller grains.

We are starting to see a division take place in the futures market. Trade is starting to place more emphasis on new-crop acres, supply and demand than it is on old-crop carryout.

The first official look at these numbers will come in the May USDA supply and demand report. If there is not a bullish surprise in this release, it would not be surprising to see the current old-crop/new-crop inverse removed from the market, especially on corn.

Not only will we see more volatility in the futures market in coming weeks, but in basis, as well. We are still seeing pushes paid for immediate-ship grain, but these are becoming fewer and fewer.

New-crop basis is starting to react more to updated crop forecasts and demand outlooks. The real volatility in basis will likely come in late summer, though, especially if producers hold old-crop corn or soybeans into the new-crop months.

Karl Setzer is a Commodity Trading Advisor/Market Analyst at MaxYield Cooperative. His commentary and market analysis is available daily on radio, in newsprint and on the Internet at www.MaxYieldCooperative.com

The opinions and views in this commentary are solely those of Karl Setzer. Data used for this commentary obtained from various sources believed to be accurate.

This commentary is intended for informational purposes only and is not intended for developing specific commodity trading strategies. Any and all risk involved with commodity trading should be determined before establishing a futures position.