Closing Comments; Wednesday, November 13th, 2019

Trade was on the negative side for much of today’s session, but losses in corn and soybeans were minimal. Wheat took the biggest hit early in the session as the contract simply could not find any buying interest. Wheat also suffered from high crop ratings and the lack of a bullish story. Corn and soybeans were more stable, with slow harvest supporting corn and a 106,000 metric ton sale to an unknown supporting soybeans.

The Brazilian firm CONAB was out this morning with revised production figure on the 2019/20 corn and soybean crops. CONAB raised the soybean crop estimate to a record 120.9 million metric tons compared to last year’s 115 mmt. This is mainly from an increase to soy plantings of 2.3%. CONAB is projecting Brazilian corn production at 98.37 mmt, down from last year’s 100.5 mmt due to the slow start to soy planting and dry pockets of soil. The firm is projecting steady yearly exports of 72 mmt for soybeans and 34 mmt on corn.

According to last night’s figures, the United States still has 27.8 million corn and 11.34 million soybean acres to harvest. There are some concerns over this following the heavy snow that fell across the Upper Corn Belt this week. Even if minimal, at least some yield loss has taken place with this event. Normally this would give the market more support than it has, as slower demand has negated the crop loss possibility.

The real issue with these standing crops is what is happening to quality. While crops will likely stand through the snow, conditions are preventing drying in most areas. At the same time, propane restrictions are preventing commercial drying in parts of the Midwest. This has caused some farmers to harvest the crops wet and place in storage to dry later. While this can be done, the risk of damage can be high, especially if temperatures warm and humidity climbs.

Given current weather outlooks, some of these regions will see present conditions linger for at least the next week. While parts of the Corn Belt will be dry for the next week, some will see chances of precipitation, mainly in the upper regions. Not only can this be a factor for getting crops out, but for fall tillage as well. Reports are already coming in of farmers not being able to apply fall fertilizer as hoped, which can be a factor for acres next spring.

There is one factor in the current market that seems to be over-looked by most, that being world corn reserves. In the latest balance sheets report world corn stocks were reduced from 302.6 mmt to 296 mmt. While this is still an adequate volume of corn, there is a well-defined trend that is taking place. Ever since a high of 350 mmt in 2016, the world corn supply has been in a period of contraction. This is not necessarily from low production, but from elevated demand. Corn reserves are still well above previous years, but the decrease still needs to be monitored.

Not only have fundamentals failed to give the current market structure much support, neither have the technicals. In the past week, several points of technical support have broken on corn, soybeans, and wheat. While this has put the contracts into short-term down trends, long-term patterns are still positive. The issue is that right now the path of least resistance is down and will likely remain until we uncover fresh buying interest.

Even though China and the US are still at odds on trade, and China is having issues unloading vessels currently in port, the country continues to book US soybeans. It is being reported that China has already booked 7 US vessels of soybeans this week. The primary reason for this is price, as US soybeans are currently the cheapest offered in the global market. Chinese crush margins have also improved in recent weeks. This has negated some of the concern over the lack of a trade war resolution.

This commentary is the sole opinion of Karl Setzer, Senior Commodity Risk Analyst for AgriVisor, LLC. This is intended for informational purposes only and not to be used for specific trading recommendations. The information used to generate this commentary is gathered from a variety of sources believed to be accurate. If you have any questions or would like additional market information, feel free to send an e-mail to


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