Market Trends Report – November & December 2024
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US and the World
It has been a beautiful harvest season across the greater North American corn belt. As of November, the 12th 95% of US corn had been harvested and 96% of American soybeans. In both of these cases it is ahead of last year and reflects some of the best harvest weather we’ve seen in sometime. As farmers, we will take this. Dry and sunny weather is always welcome, making things easier. However, 2024 has not necessarily been kind to prices and challenges remain. The USDA came out with their latest WASDE report on Nov 8th further shedding light on the big supply which has built up over the last year.
In somewhat of a mild surprise the USDA lowered US domestic production of both corn and soybeans. US corn production is set to come in at 15.143 billion bushels which is down 60 million bushels from last month with U.S. National yield being trimmed by .7 bushels per acre to 183.1 bushels per acre. Ending stocks for corn are set to come in at 1.938 billion bushels which is down 61 million bushels from last month. The USDA held Brazilian corn production to 122 MMT, while maintaining Argentinian corn production at 50 MMT.
On the soybean side of the ledger the USDA made a fairly big cut in production by 1.4 bushels per acre putting U.S. national yield down to 51.7 bushels per acre. This put US soybean production at 4.461 billion bushels which is down from last month’s 4.582 billion bushels. This puts the crop less than the record 2021 crop. USDA left alone the Brazilian and Argentinian soybean estimate for this year at 169 MMT and 51 MMT respectively. The USDA left the wheat side of the ledger relatively unchanged with US wheat production coming in the same as October at 1.973 billion bushels.
On November 15th soybeans and wheat futures were lower than the last Market Trends report. Corn futures were higher. December 2024 corn futures were at $4.24 a bushel. The January 2025 soybean futures stood at $9.98/bu The December 2024 wheat futures closed at $5.36 a bushel. The Minneapolis December 2024 wheat futures closed at $5.72 a bushel with the July 2025 contract closing at $6.22 a bushel.
The nearby oil futures as of Nov 15th closed at $67.02/barrel down vs the nearby futures recorded in the last Market Trends report of $75.56/barrel. The average price for US ethanol in the US was $2.01, below the $2.03 a US gallon recorded in the last Market Trends Report.
The Canadian dollar noon rate on November 15th, 2024, was .7103 US, down vs the .7267 US reported here in the last Market Trends report. The Bank of Canada‘s lending rate was reduced to 3.75%.
Ontario
Harvest weather has been some of the best ever this past fall. In fact, Ontario was in a wider North American corn belt drought. However, farmers never complain about drought at harvest time especially in the fall. This has led to most of the crop being off thru out Ontario. However, there are still selected cornfields throughout the province yet to be harvested. Good weather continues into later November.
Ontario basis levels have actually increased slightly for both corn soybeans entering November. This is a reflection of a lower Canadian dollar which briefly dipped under $0.71 US on November the 15th. It is also a reflection of slightly higher Chicago futures prices. However, prices are still lower in Ontario than we have seen over the last several years.
Yields have been good across the province but it’s too early to determine just where we are compared to a year ago. Tar spot certainly manifested itself on many corn acres in western Ontario and did impact yield. Soybean crops was also quite good across Ontario. However, there were spots where too much rain impacted the yield of both corn and soybeans. As it is, corn and soybeans will face tough price competition when part of the crop is exported on the high seas. The Canadian dollar fluttering in the 71-cent level will certainly help
Old crop corn basis levels are $0.80 to $1.34 over the December 2024 corn futures on Nov 15th across the province. New crop corn basis levels were $0.85 to $1.05 over Dec 2025 futures. The old crop basis levels for soybeans range from $2.40 cents to $2.94 over the November 2024 futures. New crop soybeans range from $2.55 to $2.95 over the November 2025 futures. Ontario SRW wheat prices are in the $6.21 bu range. For July 2025 new crop the bid is in the $6.81 bu range. On November 15th the US replacement price for corn was $6.03/bushel. You can access all these Ontario grain prices in the marketing section at http://gfo.ca/marketing/daily-commodity-report/
The Bottom Line
There has been a bit of bounce in grain prices since late August and early September but there have also been relapses. There is still a long way to go. In fact, we are experiencing the vestiges of not only big crops here in North America but also the big potential that is currently growing in the field in South America. As we head into December farmers certainly need to be looking for clues on what might be lying ahead.
With the new administration coming into office in the United States there is a thread within the market that has been nervous about potential geopolitical risks concerning tariffs. As always, at this early stage it is difficult to know what may happen, but we should expect volatility in both the futures and cash grain market. In many ways, the markets might be “chasing headlines” concerning perceived threats to both supply and demand.
Do we sell the rumour and buy the fact? That’s an old adage but it’s certainly still relevant. It will certainly be hard to figure out just like South American weather will be. They started out very dry and soybeans were planted in the late window which means that there will be pod set in late December and early January. “Hot and dry” weather at that time will severely impact yield potential. For producers here, it means that time period represents opportunity to price both old crop and new crop soybeans. Also keep in mind, the Safrinha corn crop will be planted in February in Brazil.
At the present time the US dollar is a big concern to agricultural futures prices as it has recently set a 2024 high on November the 15th. The high U.S. dollar always affects agricultural futures greatly and specifically wheat even more so. Simply put, it always costs overseas buyers more money when the US dollar is high, and it has a mitigating effect on any bounce in agricultural futures prices. Of course, as always, a higher U.S. dollar means a lower Canadian dollar impacting Canadian cash markets for grain.
Commodity Specific Comments
Corn
Compared to soybeans and wheat corn has been a stronger market. At the present time cash basis levels in the United States are surging as American farmers are reluctant sellers and demand is building. Unlike soybeans, there is not a weather market in corn like there is looking southward toward Brazilian soybean fields. That’s one reason that corn prices have held up a little better versus soybeans and wheat.
Keep in mind that the USDA did give us a bit of a bullish stance on corn in their November 8th report. We are now expecting ending stocks of 1.9 billion bushels versus conventional wisdom earlier that ending stocks would build to something like 2.3 billion bushels. So, we’re heading in the right direction even though corn stocks are still onerous.
The December 2024 corn contract is currently priced at 11.25 cents below the March 2025 contract which has contracted over the last month, but still 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 22nd percentile of the past five-year price distribution range.
Soybeans
Soybean prices have been affected by not only the big crop in the United States but also what is coming in Brazilian production fields. At the present time Brazil soybean production looks fabulous and that is being reflected in market prices. However, keep in mind that hot and dry weather is being predicted far out in the early January. Which is critical for their soybean production. It is still too early to count the beans yet even though the market has.
Soybean oil has lost ground recently and this is affected soybean prices falling over the last week. However, keep in mind that it also reflects the declining price of crude oil. Eventually this needs to go back up and when it does it should be a stimulus for soybean prices. The $10 mark will remain a bit about litmus test for futures prices to dance around as market fundamentals flex over the next several weeks.
The January 2025 soybean contract is currently priced 10.25 cents below the March 2025 contract which has contracted but still considered bearish for soybeans. Seasonally, soybean prices tend to peak in early July and bottom out in early October. The January 2025 soybean contract is currently at the 19th percentile of the past five-year price distribution range.
Wheat
Wheat prices are down and of course there’s always a lot of nonsensical reasons why that is happening. There is too much wheat but at the same time Russian ending stocks on wheat are declining. The Russian wheat crop that is in the ground now should be less than it was a year ago. Russian exports will likely be less next year. That should give us some bounce if not now in the future. However, wheat prices derived in Chicago have had the hammer of a rising U.S. dollar since the Trump election. This is always difficult for wheat prices, and it will likely continue as long as the US dollar is rising.
Testing the August lows in Chicago wheat is something that Ontario wheat producers are unlikely to appreciate especially at a time when we had a beautiful fall where lots of wheat was planted in Ontario. Simply put, one of the biggest determinants of Ontario wheat planted acres is the weather in the fall. That should lead to over a million acres of wheat planted as we go into the end of the year. Cash prices of $6.81 a bushel for July 2025 is what that wheat is worth as we head into the end of November. Producers need to judge whether that gets better going forward.
The Bottom Line (cont.)
The Canadian dollar has been dropping recently and in fact went as low as 70.98 cents US on November the 15th before rebounding later in the day. Yes, we know it is always the inverse of the US dollar but with the election over and a new administration coming in there might be a divergence in monetary policy. For instance, the United States federal reserve chairman hinted in December that an interest rate cuts may no longer be in the cards in the United States. This is divergent from what is being signaled by the Bank of Canada. Such a divergent interest rate scenario as it is now negative for the Canadian dollar. Ontario and Quebec cash soybean and wheat bids on the ground will certainly reflect that. Corn will be less so.
Keep in mind that we are in some rare geopolitical air. In other words, the new American administration coming in is calling for a big change in almost every policy we have become accustomed to. So far equity markets have reacted very positively to this reality, but grain markets are much more nervous about the situation. As it is, predicting what may happen based on the changing politics is folly. Just be prepared for some of your long-held assumptions to be challenged. That holds for grain marketing as well.
That being said keep an eye on basis levels in the United States. At the present time both corn and soybean basis levels have increased over the last several weeks. Commercial support is fairly strong in corn and soybeans as end users might recognize the bargain or they’re using it as a hedge against future political changes. In fact, you might make an argument that some facets of our agricultural markets (soybean oil) are reacting to whoever is appointed to run the EPA.
The challenge for Ontario grain farmers is to measure all of these risks at a time when so much is unseen. For instance, we know what real market fundamentals are like, there’s a lot of grain everywhere. However, it’s more difficult to see how the rules to the game might be changed politically out of the United States going forward. There is also the continuing hot war in Russia and Ukraine along with all of those many acres of soybeans growing under a Brazilian sun. As always, daily market intelligence will be key. There will be many marketing opportunities ahead.
