The 2018 corn harvest had been progressing nicely this fall as producers turned their attention to corn due to inclement weather which caused delays to the soybean harvest.
When the weather improved, soybean harvest picked up and corn harvest slowed to a more normal pace.
“The corn market is relatively quiet,” said Luke Swenson, president of The Money Farm, West Fargo, N.D., adding that corn harvest was in line with the five-year average as of Oct. 30. With dry weather across the Midwest, corn and soybean harvest crews made good progress.
“I don’t think, barring the current forecasts, we’re going to look at anything like we were in 2009 when we were dragging into the middle of November and dealing with a significant amount of harvest loss,” Swenson said.
He noted that some areas of the U.S. received heavy rains that will hurt yields.
“They’re going to have damage and loss there, however it’s not going to be anything monumental, but it is something that USDA will need to account for,” he said, adding that at some point, either in the November report or in the winter months, the market will probably see some offsetting of residual usage because of that.
On the futures side, the market slid down to the 50-day moving average and bounced again on Friday (Oct. 26).
“The traders can sell because there is nothing better to do, and there’s not really much conviction to go any other direction,” he said. “That’s not really going to change.”
One reason for that is the stalemate situation regarding the ongoing trade war with China. There were no new developments taking place as both countries were bickering ahead of the mid-term elections in the U.S.
“Chinese President Xi is not going to back down on anything before the election; he’s going to wait this out and see if he’s going to be in a better negotiating position or not come Nov. 7,” Swenson said.
Looking at the demand side of corn, another factor with a potential bearish headline is the fact that crude oil can’t get any legs under it and as a result the market is actually pulling back on ethanol prices as well.
“That’s the one thing hurting demand domestically a little bit as we go forward,” he said.
Local cash prices remained in the low $3 range. At one elevator in west central Minnesota regularly followed in this column, cash prices as of Oct. 31 were $3.14/bushel and the basis was 50 cents under. Looking ahead, April 2019 prices were at $3.25 and basis was 59 cents under.
As for recommendations for farmers, Swenson offered this: “Right now we’re sitting at 60 percent cash sold and we’ve got 40 percent left and we’re probably going to stay that way into the winter.
“We’re going to get through this harvest and see what everyone is looking at for final yields and what they’re looking at for storage and see where the export positions are sitting,” he continued. “We’re not in a hurry to add more sales. You’ve got a decent price average just shy of the $4 mark, and we don’t really want to add to it just with the way basis is at the moment.
“It’s going to strengthen out and they’re hopefully going to pay us a little bit for that carry, and then in the winter we’re going to take advantage of that carry going into next summer,” he added.
Swenson doesn’t foresee a repeat of last March when USDA averaged up the yields and test weights.
In the meantime, Swenson doesn’t feel there will be much change in the market as producers work their way toward completing this year’s harvest and wait for new developments in the ongoing trade war.
“Outside of the word ‘China’ there really hasn’t been much for developments in the last five months, unfortunately,” he concluded.