Market Trends Report – October & November 2024
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US and the World
It is that time of year again when you can almost hear the noise from the fields. Combines are rolling across the great North American corn belt. At the same time planters are rolling in Brazil attempting to put in another record soybean crop. The US corn harvest was approximately 30% complete and soybean harvest being 47% complete as of October 6th. A beautiful open mid-October helped in this harvest progress. On Friday October 11th the USDA weighed in with their latest WASDE report.
The USDA estimated domestic corn production to be at 15.203 billion bushels which is up 17 million bushels from their September estimate. They also increased yield by .2 bushels per acre to a record 183.8 bushels per acre. USDA kept harvested acreage at 82.7 million acres. The USDA also lowered ending stocks for 2024-2025 by 58 million bushels to 1.999 billion bushels. They also lowered old crop carry over by 52 million bushels to 1.76 billion bushels.
On the soybean side of the ledger the USDA cut their national yield estimate for soybeans by .1 bushel per acre to 53.1 bushels per acre. This overall production declined by 4 million bushels coming in at 4.582 billion bushels. This is a record crop. Brazil and Argentina soybean production came in at the status quo, 169 MMTs and 48.2 MMTs respectively. US wheat production was estimated to be 1.971 billion bushels in October which was down slightly from the September estimate of 1.982 billion bushels.
On October 11th, corn and wheat futures were higher than the last Market Trends report. Soybean futures were lower. December 2024 corn futures were at $4.15 a bushel. The November 2024 soybean futures stood at $10.05 The December 2024 wheat futures closed at $5.99 a bushel. The Minneapolis December 2024 wheat futures closed at $6.43 a bushel with the July 2025 contract closing at $6.39 a bushel.
The nearby oil futures as of October 11th closed at $75.56/barrel up vs the nearby futures recorded in the last Market Trends report of $68.65/barrel. The average price for US ethanol in the US was $2.03, below the $2.11 a US gallon recorded in the last Market Trends Report.
The Canadian dollar noon rate on October 11th, 2024, was .7267 US, down vs the .7360 US reported here in the last Market Trends report. The Bank of Canada‘s lending rate remained at 4.25%.
Ontario
In Ontario farmers benefited by wide open warm weather thru early and mid-October which came to an end with rain showers on October the 13th. However, this wide-open period of weather was instrumental in the vast majority of soybean harvest reaching the finish line. At the same time producers were able to plant a lot of wheat into very good planting conditions. This should set up the spectre for 1 million plus acres of wheat this fall.
Soybean yields have been impressive especially in areas where too much rainfall in late spring did not cause damage. However, where there was too much rainfall waterlogged soybeans did show their true colours with reduced yields. Ontario corn harvest has yet to ramp up in a big way but that will certainly happen within a few days as we head into later October.
Basis levels for both corn and soybeans are similar to what they were in the September Market Trends report. The Canadian dollar currently fluttering at the .7267 US level has added stimulus to these Ontario cash grain prices at a time when futures prices are down. As we head into the next few weeks it would not be unusual for basis to weaken further under harvest pressure, especially as Ontario corn starts coming into local elevators.
Old crop corn basis levels are $0.80 to $1.21 over the December 2024 corn futures on Oct 11th across the province. New crop corn basis levels were $0.80 to $1.00 over Dec 2025 futures. The old crop basis levels for soybeans range from $2.55 cents to $2.85 over the November 2024 futures. New crop soybeans range from $2.55 to $3.00 over the November 2025 futures. Ontario SRW wheat prices are in the $6.74 bu range. For July 2025 new crop the bid is in the $7.43 bu range. On October 11th the US replacement price for corn was $5.99/bushel. You can access all these Ontario grain prices in the marketing section at http://gfo.ca/marketing/daily-commodity-report/
The Bottom Line
Here we are, big crops seemingly everywhere. However, it is also an interesting time geopolitically and this will be affecting our grain markets. We have the conflict in the middle east which is like a tinderbox, and we also have had Russia take missile shots at Ukrainian grain ships several times over the last couple of weeks. The markets are at a point where they are usually quiet this time of year. However, there is much going on including an American election and this all might come together in unknown volatile market influence in the coming weeks.
It has been no secret that we have had tremendous harvest weather across North America and of course this is partially reflected in the great weather here in Ontario. The question could be asked are prices affected by the big production numbers or the pace of harvest? The answer is probably a little bit of both, but pace is certainly having a dampening effect. The same type of weather in Brazil for planting would certainly add a bearish element to this grain market.
Some rains have come to Brazil, but it has been unusually dry for the start of their planting season. Central Brazil is very vulnerable because essentially, they had no soil moisture in that region. Argentina has also had limited range in the southern and eastern regions of the country. However, it is always difficult to really know. As it is, we are in a continual weather market from South America and it’s something that producers here should take very seriously.
Clearly, as it stands now there is a common lament about crop prices especially in a year when we saw hardly any price rallies on a seasonal basis. As of October 11th, grain prices are just under $13 and corn prices are just above $5.20 a bushel in Ontario. Producers will need to know their carrying costs for grain and determine whether it makes sense to carry it into the future. They could also possibly sell cash and take positions in the futures market to mitigate the risk going forward. However, there are big risks involved in that as well. Knowing your costs will be key.
Commodity Specific Comments
Corn
15.203 billion bushels of corn predicted by the USDA does not lie. That’s a lot of corn then we look around and we can see the resultant low prices from that. We have to be cognizant that as the corn piles get larger during this great harvest season basis might suffer further. Of course, that might depend on many things, one of which is whether farmers lock the bin door shut.
Keep in mind that corn usage is off the charts currently forecast in the United States to be at 14.99 billion bushels for this crop year. That is an amazing figure especially when you consider the tremendous record crops, we’ve been getting over the last two years. In other words, we need these record crops to keep up with record demand. At a certain point there’s going to be a fracture in this equation and prices will boom to the upside. However, where we are now is still bearish based on this big production.
The December 2024 corn contract is currently priced at 17.25 cents below the March 2025 contract which is a bearish indication of new crop corn demand. Seasonally, we know that corn prices tend to peak in early June and bottom out in early October. The December 2024 futures contract is at the 21st percentile of the past five-year price distribution range.
Soybeans
Do soybeans have any friends? It wouldn’t seem so especially with big stocks in the United States and that global production machine down in Brazil and Argentina. You could make the argument that soybeans will be followers because of their bearish market fundamentals. However, we also know that soybeans are always the great liars. So, we wait to see if there will be any surprises in the soybean market.
One such surprise might be South American weather. Going into the week of October 11th soybeans have lost about $0.25 over the previous week largely because of rainfall predicted for Brazil. Having said that, it is still dry in many Brazil production areas, rivers have lower water levels, and it remains a concern. Needless to say, we are in a South American weather market. It will always be a challenge knowing exactly how this weather will affect soybean production in the southern hemisphere. However, there will be many fund players that think they know.
The November 2024 soybean contract is currently priced 29.5 cents below the March 2025 contract which is considered a bearish for new crop beans. Seasonally, soybean prices tend to peak in early July and bottom out in early October. The November 2024 soybean contract is currently at the 19th percentile of the past five-year price distribution range.
Wheat
Wheat production is global but of course we always have to watch the market factors affecting our cash price. At this time what we see is dry weather in the South-Central United States where wheat planting is about commence. This has some of the funds in the market on the verge of going long after wrapping up their short positions. Wheat production in Russia, Ukraine, Argentina and the United Kingdom is down reflecting lower global production. With global ending stocks at 9-year lows, is it time for the wheat market to wake up? There definitely is some potential here.
In Ontario that potential has much to do with the current crop being planted in tremendous weather over the last three weeks has led to much Ontario wheat getting into the ground under optimal conditions. There is also still time for much wheat to be planted later in October especially in southwestern Ontario. Based on the global situation and the Canadian dollar at 72 cent level, new crop wheat prices need to be watched very closely over the next few weeks.
The Bottom Line (cont.)
The Canadian dollar fluttering in the 72 cent US range seems almost continual into perpetuity. However, we know that is not true and could change at any point having a direct effect on the price of grain in Ontario. At the present time the Bank of Canada has cut interest rates but there is still an interest rate differential between here and the United States. This will always have a dampening effect on the value of the Canadian dollar, which inadvertently always has a positive effect on the value of Ontario grain in our domestic currency.
Some might argue that this is a bit of an illusion as you should price and think about grain in U.S. dollars only because it’s the world’s default currency. That’s exactly how basis traders handle the economics of our grain when they traded on the open seas or into any export market. However, it is very common for farmers to simply look at Canadian basis which is consistently altered by the value of the Canadian dollar. Keeping track of both US basis near our borders as well as Canadian basis values for grain can be very informative. However, it can also be somewhat frustrating as buyers keep things close to their hip. That journey is continual.
It goes without saying that the next Market Trends report in November will be after the US presidential election. As all Canadian prime ministers have said in the past, they will work with whoever is elected and that will surely continue. All American governments look after themselves first. This time around is no different even though the Republican side has promised to put tariff walls up against Canadian goods. As grain farmers in Ontario, we cannot be unconcerned about that. When the dust settles, we will have to take account of where we are. Our grain prices might adjust accordingly.
Some of this is new and some of it isn’t. However, marketing your grain where you feel comfortable and profitable is always a good strategy. As we move into later fall corn harvest will be ramping up and we will be getting a clearer picture on where this market might be settling in. The challenge of course is to price our grain accordingly. Standing market orders sitting at the elevator or processor are always a good benchmark. Daily market intelligence will remain key. there will be many marketing opportunities ahead.
