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Market Trends Report – October/ November

US and the World

Harvest is full on across the greater North American corn belt.  Although there are always exceptions to the rule, there are big crops in US fields.  As of October 5th, USDA estimated that 38% of American soybeans and 25% of American corn had been harvested.   On Canadian Thanksgiving weekend, combines were rolling, and these numbers were likely to jump into mid-October.  It is all happening in a changing grain market dynamic buffeted by Covid 19 and an explosive price movement in soybeans since August.

On October 9th, USDA weighed in with their latest WASDE report. (World Agricultural Supply and Demand Estimates).  The big news on report day was a cut in 2020-21 soybeans stocks, plunging 170 million bushels from the USDA September estimate to 290 million bushels.  In addition to that, USDA trimmed soybean production to 4.268 billion bushels, which is 45 million bushels less than there September estimate.  However, this is still based on a record soybean yield of 51.9 bushels per acre.  The actual reduction came about because of lower harvested acreage in Kansas, North Dakota and South Dakota.  Globally, new crop ending stocks decreased to 88.7 MMT based on the reduction in US soybean numbers.

The USDA’s corn numbers were less bullish than soybeans.  Old crop corn ending stocks 2019-2020 were reduced by 258 million bushels down to 1.995 billion bushels.  This also had the effect of reducing new crop stocks by 336 million bushels to 2.167 billion bushels.  US domestic production is pegged at 14.722 billion bushels which is down 178 million bushels from their September report.  Yield was adjusted down to 178.4 bushels per acre from 178.5 bushels per acre in the September report.  In addition to that harvested acreage was down 1 million acres from the September report.  Feed and residual use and ethanol demand dropped a total of 100 million bushels. Global wheat numbers were increased slightly.  

On October 9th, wheat, soybeans and corn futures were higher than the last Market Trends report.  December 2020 corn futures were at $3.95 a bushel.  The November 2020 soybean futures were at $10.65 a bushel.  The December 2020 Chicago wheat futures closed at $5.93 a bushel. The Minneapolis December 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 October 9th closed at $40.60/barrel up from the nearby futures of recorded in the last Market Trends report of $37.33/barrel. The average price for US ethanol on October 9th in the US was $1.59 a US gallon the same as the $1.59 recorded in the last Market Trends report.

The Canadian dollar noon rate on October 9th was .7613 US, higher than the .7584 US reported here in the last Market Trends report. The Bank of Canadas lending rate remained at 0.25%.


In Ontario harvest has been variable across the province.  Wet weather has impeded harvest in some areas, but not others.  No question, harvest is full bore as of October 9th with some excellent soybean yields.  Wheat is going into the ground across SW Ontario.  The September 19th frost, which caused much nervousness across the province is coming to fruition in many Ontario corn fields.  Some hybrids are affected, some are not.  Some corn is not drying down as much as producers would want.  Of course, it might be too early to tell, but as we move into late October and November the September 19th frost might come back to haunt parts of Ontario. 

$5 corn off the combine is the norm in southwestern Ontario as of October 9th and up to $5.45 in the far east of Ontario.  Basis levels have increased in Ontario from September, mainly reflected in the exchange for higher futures values.  However, with enough new crop corn coming in, initial early premiums for corn have evaporated.  Despite the September 19th frost, expect big crops in Ontario.

SRW wheat is busily being planted as of October 9th across Ontario.  With July 2021 cash prices at approximately $7.35, it has been said that wheat is the new corn.  However, that might be a stretch, as its more about the Canadian dollar value, which leads to high Ontario cash prices.  A million acres of Ontario wheat looks to be in the cross hairs as we head into 2021.

Old crop corn basis levels are $1.10 to $1.50 over the December 2020 corn futures on October 9th across the province.  The new crop (2021) corn basis varied from $0.85 to $1.30 over the December 2020 corn futures.  The old crop basis levels for soybeans range from $2.65 cents to $3.00 over the November 2020 futures.  New crop soybeans (2021) basis levels range from $2.30-$2.65.  On October 9th the US replacement price for corn was $5.85/bushel.  You can access all of these Ontario grain prices in the marketing section at

The Bottom Line

Maybe this is where we want to be.  2020 has been a tough year dominated by the world Covid19 pandemic, which sent agricultural markets into a downward tizzy last March.  The disruption was real, but over time, agricultural supply lines adjusted.  However, during this time, up was down, as even commodity markets were opposite of the seasonality we would expect.  We were at price lows in June when we usually see highs and October price lows are the opposite this year.  $13 soybeans and $5 corn don’t lie.

The road to these prices took a very unfamiliar route, especially when you consider Covid 19.  As of October 11th, the Covid19 pandemic has gotten worse, but it continues as background music in our agricultural markets.  As it is, demand from Asia did have resonance and that has led to declining stocks and in the case of soybeans, led the charge back starting in August 2020.  The rally has been meteoric.  Standing orders have hit along the way and it may continue.  Place those $14 soybeans price orders now. 

That is no indication that anybody knows what may happen to grain prices.  As I’ve said many times, nobody knows.  We need to simply immerse ourselves with the different market factors and make our best judgments.  As it stands now, the trajectory regarding inverted futures spreads still spell a bullish bent on soybeans.  The other grains have rubbed off on this.

USDA has chimed in too, reducing old crop ending stocks on September 30th and doubling down in the October 9th reducing stocks and harvested acres.  December futures at $3.95 and November futures at $10.65 are not unprecedented even at harvest time.  However, it’s been quite some time.  The question is what happens now?  Will South America produce with abandon in 2021 in order to not only satisfy this demand but also take advantage of high domestic prices?  The intent will certainly be yes, but reality might be a different matter.  Needless to say, any measurement of our grain price futures needs to be gauged against future South American production.

Commodity Specific Comments


Corn has been rallying somewhat in concert with soybeans and somewhat not.  We are at 8-month highs as of October 9th, a time of year when you would least expect it.  For instance, seasonality tells you this never happens, but here we are in October 9th looking at the highs of the year.  It would seem this rally is getting mature, but of course, nobody really knows.

Corn is never talked about regarding Chinese buying like it is with soybeans.  However, Chinese corn buying has been welcome.  On October 9th, the Dalian Exchange in China showed a price of $9.57 for corn, so clearly, there is a fairly big incentive to keep buying.  Looking longer term, May and September 2021 corn futures at $4.06 and $4.09 a bushel, showing renewed strength into next year.

The December 2020 March 2021 corn futures spread is currently -$.0725, which is considered bullish.  Seasonally corn prices tend to bottom out in October, which has been turned on its ear this year with 8-month highs.  The nearby spot contract is currently in the 55th percentile of the past five-year price distribution range. 


With soybeans you have China buying and the La Nina weather event looming over South America.  However, keep in mind, there is an inverted soybean futures market where the market is screaming for your soybeans now.  A 3 year high in soybeans doesn’t lie.  With Brazil priced out of the market, American soybeans will need to fill that Chinese void, at least now until February.

This has been heightened by a weaker American dollar, which has aided these exports.  Sure, as Canadians we get a little bit nervous when the US dollar weakens, because that usually means the Canadian Loonie goes up.  However, with the renewed Chinese demand and Brazil record shipment of beans last year, it’s put North American soybean supplies in a good place.

The November 2020 January 2021 soybean futures spread is currently $.0025 cents, which is considered very bullish.  Seasonally, soybean prices bottom out in October, but not in 2020, which so far has been the opposite.  The nearby spot contract is currently in the 66th percentile of the past five-year price distribution range.


Wheat has rallied over the last few weeks with $7 plus contracts available for July 2021 wheat in Ontario.  Much of this rally had to do with the dryness in places like Russia, the Ukraine and the US southern plains.   However, as we all know, wheat tends to have nine lives and each class has a supply and demand table of its own.  As we move ahead, this will need to be watched.  Along with the value of the Canadian dollar, regional dryness in wheat regions can impact price.

Genetically modified wheat has been approved for Argentina.  What will this mean?  It’s hard to say, because the market has never asked for it.  Brazil is the biggest buyer of Argentinian wheat and have so far not approved this.  Meanwhile back in Ontario, wheat planting is in full swing.  Getting over that 1-million-acre threshold for 2021 looks to be in reach. 

The Bottom Line (cont.)

In Ontario the Canadian Dollar continues to be the straw that helps stir the drink for domestic grain prices.  In fact, an argument could be made its bailed us out of a price bind over the last two years since tariffs were applied to American soybeans going into China.  It also helped shield us from the $32 billion of direct aid sent to American farmers.  As is, a Canadian dollar at 76 cents US is helpful.  Last March it bottomed out in the 68-cent range in a post Covid lockdown plunge causing the highest soybean basis of the year.  Nobody predicted that then, and looking ahead, it’s very hard to know.  Needless to say, its value will likely always move in a direct inverse to the American dollar. 

For Ontario farmers the hard decisions will have to be made about $13.30 soybeans.  Do you put them in the bin because it shines in the late Autumn sun and needs to be filled?  Or do you take the money and run perfectly satisfied with a profitable price?  Much of this was unexpected, but it is a consideration this fall.  Price rallies as well as price slumps are a natural part of our agricultural commodity world.  Marketing grain when its profitable is always better than when you need to.  Daily market intelligence will remain key especially in this market environment.

Looking ahead in the short term, it’s all about November 3rd and a possible October surprise that might sway it either way.  Would it be an announcement of a Covid19 Vaccine or would it be a double cross on China?  Clearly, nobody knows, but either way or something in between could have a real effect on grain futures markets.  2020 has been a mind-numbing difficult year to predict as the effect of the pandemic continue to press.  As November 3rd gets closer, expect the unexpected.  After November 3rd, let’s hope the way forward is a natural process. 

The challenge for Ontario grain farmers is to recalibrate those ever-changing marketing plans.  Sure, many market orders have hit, but that was yesterday.  Looking forward, it’s important to measure new price targets that might be apparent.  There is also room for the defensive.  The crop for the most part in Ontario, is still not in the bin.  As combines roll, be focused on the task at hand.  There will be many profitable grain marketing opportunities ahead.