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Market Trends Report for September and October

US and the World

It has been a changing time over the last month across the greater American corn belt.  On August 12th the USDA weighed in with their monthly WASDE report documenting huge crops in the United States.  However, circumstances took over in August, first with the Derecho winds on August 10th followed by devasting drought across much of Iowa and Nebraska.  In fact, in parts of the American corn belt it was dryer than it was in the drought year of 2012.  As September grew older, some rain did fall, but uneven events in the fields helped cause a surge in grain futures prices.  As we neared the next USDA report September 11th, many market observers were wondering if USDA would be changing the huge grain market narrative.

We got our answer on September 11th, when the USDA lowered corn production by 378 million bushels down to 14.9 billion bushels.  US national corn yield dropped 3.3 bushels per acres down to 178.5 bushels per acre.  The harvested corn acres were also reduced by 500,000 acres (83.5m) from the August report.  US corn exports were increased but at the same time US ethanol and feed and residual use decreased, pegging total corn usage for 2020/21 at 14.675 billion bushels.  Corn ending stocks for 2020/21 were lowered by 253 million bushels down to 2.503 billion bushels.

USDA pegged soybean production at 4.313 billion bushels, which was lower by 112 million bushels and 1.4 bushels per acre less than reported in the August 12th report.  US soybean yield was reduced to 51.9 bushels per acre.  Unlike corn, the USDA didn’t change harvested acreage in lieu of the August 10th Derecho.  This lower production figure reduced new crop ending stock to 460 million bushels, down from 610 million in the August estimate.  The USDA made very few changes to the demand picture but did update Brazil’s future crop by 2 MMT to 133 MMT, another record projection.   The USDA kept the status quo from the August report on US wheat production pegging it at 1.838 billion bushels.  At the end of the day September 11th, USDA had substantiated the smaller US crop, reflected in market action over the last month. 

On September 11th, wheat, soybeans and corn futures were higher than the last Market Trends report.  November 2020 corn futures were at $3.68 a bushel.  The November 2020 soybean futures were at $9.96 a bushel.  The September 2020 Chicago wheat futures closed at $5.42 a bushel. The Minneapolis September 2020 wheat futures closed at $5.38 a bushel with the September 2021 contract closing at $5.71 a bushel.

The nearby oil futures as of Sept 11th closed at $37.33/barrel down from the nearby futures of recorded in the last Market Trends report of $42.01/barrel. The average price for US ethanol on September 11th in the US was $1.59 a US gallon up from the $1.51 recorded in the last Market Trends report.

The Canadian dollar noon rate on September 11th was .7584 US, higher than the .7547 US reported here in the last Market Trends report. The Bank of Canadas lending rate remained at 0.25%.


Crops are advancing quickly across Ontario with early soybeans almost ready to harvest in several locations across the province.  We had our share of weather across the province this year.  Snow on the corn and soybeans on Mother’s Day weekend was followed by drought in some areas and too much rain in others.  However, good crops are expected to soon come off Ontario harvest fields.  Recently, the Great Lakes Grain group pegged Ontario corn yield at 186.9 bushel per acres and Ontario soybeans at 58.3 bushels per acre.  Of course, the truth will be told at harvest time, but it looks like very good crops this fall.

Ontario corn basis will respond accordingly based on crop size and where the demand may be.  In fact, there is quite a sizable premium for early harvested corn in the next few weeks across some parts of Ontario.  However, it’s not everywhere.  The Quebec market can be good for Ontario producers, but this year US corn booked earlier was met with lower Quebec livestock demand because of Covid 19.  In fact, some Quebec corn was being shipped into the far East of Ontario, a reversal of historical market direction.

At the same time, Quebec is set for big crops in both corn and soybeans, with few issues such as they had last year.  Ultimately this means, historic Ontario and Quebec corn demand should be more predictable.  There is domestic demand, but ultimately quite a bit of corn will have to be exported with Europe the market of choice.  Needless to say, basis will likely reflect this as we move forward.  The soybean basis as usual this time of year is the same for old and new crop It has not kept pace with the rise in soybean futures as the Canadian dollar has been somewhat more resilient and a big crop is in the offing. 

Old crop corn basis levels are $1.65 to $1.67 over the December 2020 corn futures on September 11th across the province.  The new crop corn basis varied from $1.00 to $1.10 over the December 2020 corn futures.  The old crop basis levels for soybeans range from $2.50 cents to $2.60 over the November 2020 futures.  New crop soybeans, those that are about to be harvested are the same.  On September 11th the US replacement price for corn was $5.72/bushel.  Cash wheat prices are in harvest flux and must be checked daily.   You can access all of these Ontario grain in the marketing section at

The Bottom Line

Are things good or just much better than they were in June or July?  Clearly grain prices have improved and this gain has come at a time of year which is counter to seasonal patterns.  It should serve as a lesson to us all.  Nobody knows what grain prices will do, we simply have to immerse ourselves in the market factors and keep a daily market intelligence regiment. 

China has been an important component of the recent rise in soybean prices along with droughty weather in Iowa.  However, we are not back to the levels of US exports to China we saw pre 2016.  In the 2016-17 marketing year the US exported a record 58.96 MMT of soybeans to China.  In 2017-18, that dropped to 58.07 MMT, in 2018-19, it had dropped to 47.68 MMT.  China’s soybean import requirement is approximately 98 MMT.   In 2020-21 Brazil will have more than double the soybean exports to China vs the US.  The US is solidly a secondary supplier for Chinese soybeans.

That’s not to put a damper on things.  Selling more soybean globally is always a good thing and an end to the US China trade war in soybeans helps.  November soybeans are crowding $10 and our Brazilian friends will begin planting in October.  Clearly, Chinese soybean demand is robust and an integral part of the current price.  As we look ahead, any calamity in Brazilian soybean production starting in October 2020 will impact futures prices substantially.

That might come in the form of a LaNina, which can often cause South American dryness cutting soybean yields.  Of course, we are a ways until that may or may not manifest itself moving forward.  However, La Nina and El Nino weather trends are real and must be considered.  La Nina climate pattern is a natural cycle which leads to cooler than average water in the central Pacific. In the past it has disrupted South American grain production and as the new crop year dawns, we are on the clock for that. 

Commodity Specific Comments


Fundamentally, the USDA report reduced the crop, but it’s still one of the biggest despite a reduction in acreage and yield.  One has to muse about if the September WASDE report was the last reduction or will USDA find more once combines roll or inch thru the Derecho areas.  Typically, though, harvest pressure always causes basis lows and this year should be no different. 

Brazil and Ukraine will remain competitors in corn especially in some markets.  In the September WASDE report, new crop Brazil stocks were increased by 3 MMT, and its old crop increased by 1 MMT.  Ukraine’s new crop corn estimate was reduced by 1 MMT.  Once corn gets on the high seas, it’s a race toward cheap.  China has been a surprising buyer of big corn exports out of the United States.

The December 2020 March 2021 corn futures spread is currently -.0975 cents which is considered bullish.  Seasonally, corn prices tend to peak in June and bottom out in October, which has been contrary to what we have seen in 2020.  The nearby spot corn contract is currently in the 38th percentile of the past five-year price distribution range. 


It’s been a big run up in soybean futures.  On August 10th, soybean futures were $8.73 only to close on September 11th at $9.96.  At this time of year, that’s pretty unprecedented.  Of course, we’re all wondering if these prices took the escalator up and may take the elevator shaft down. Nobody knows, but clearly demand has been strong, especially form China.

It has been a long way back for this China buying.  However, keep in mind this is coming after the Brazil supply has been drawn down and US soybeans are far cheaper than beans at Brazil ports.  Daily sales of soybeans to China have had the effect of slowly dripping adrenaline into soybean futures.  However, most of this is new crop sales, which have to be substantiated in shipments later.

The November 2020 January 2021 soybean spread as of September 11th is currently -.0325 per bushels, which is considered bullish.  Seasonally, tend to peak in early July and bottom in October, contrary to what has happened in 2020.  The nearby spot soybean contract is currently in the 49th percentile, a substantial increase vs the last several months.


The WASDE report didn’t say anything particular newsy about wheat other than there is still lots of it around the world.  With the run up in corn prices there is always the spectre of more wheat feeding.  On September 11th, the December SRW wheat contract was down 6 cents and closed at $5.42, which is still above the 100-day moving average of $5.26.

This translates into close to $7 cash prices for old crop SRW wheat in Ontario $7 plus for 2021.  Those are good flat prices mainly constructed by a Canadian dollar fluttering in the 75-cent level.  Farmers will be hoping that seed drills will be able to plant wheat in good conditions come this fall.  Ontario acreage will surely be in flux depending on weather conditions.

The Bottom Line (cont.)

The Canadian dollar continues to add stimulus to Ontario grain prices.  The direction is usually always in an inverse fashion to the American dollar which has been weak lately and responsible for the loonie’s strength since late March.  The loonie has gained 5 cents since April against the US dollar and this has put somewhat of a cap on cash price rallies over this time.  The road ahead in this Covid 19 environment remains volatile as the United States remains the most infected country on earth countering economic growth.  The big stimulus packages of almost every western government have helped, but mainly affected the stock markets here.  Recovery will come with a vaccine, with 2021 likely the start of that.

On September 30th, we’ll get the quarterly stocks report from USDA.  At the present time, the USDA cut soybean ending stocks to 460 million bushels, with calculated stocks to use at 10.4%.  On September 30th, this might be adjusted again, but the calculation whatever it is, will still likely be the third largest ending stocks on record.  It is what it is, a bearish reality within a fairly bullish soybean market environment.  We cannot ignore soybean futures have gained over $1.20 since August 12th.  As we move ahead, its only prudent to have those grain pricing marketing orders ready.  A $13-dollar soybean pricing order needs to be part of the conversation.

The elephant in the room as we head toward fall is November 3rd.  The current American administration is looking to get re-elected and we cannot ignore any surprise announcements that may affect grain markets.  On September 11th, President Trump announced on twitter that he had signed an order allowing the US ethanol industry to use 15% ethanol in 10% blended pumps.  This was seen as a win to the ethanol industry, but the same administration granted small refinery exemptions (SREs) a negative to ethanol demand.  There are currently 67 pending SREs awaiting approval.  Needless to say, there are a myriad of other issues that might jump off in the electoral heat as we head toward November 3rd

As crops turn in the late September sun, combines will begin to roll again and we’ll truly see the true breadth of the Ontario crop.  At the present time, there are no clouds hovering over that as our growing season was sufficient to set up good conditions.  Black layer in corn is not an issue, frost is not in the 15-day forecast.  Historical basis patterns will likely hold as long as quality issues are sustained.  The challenge for Ontario farmers is to engage in daily market intelligence and have those standing marketing orders ready.  Market prices have rallied.  Another test for Ontario farmers will be to capture these price rallies amid a changing grain pricing environment.