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Market Trends Report – September & October 2022

US and the World

     It is that time of year again. Combines are rolling or starting to roll across the Great American corn belt.  It has been a good growing season, but with caveats almost everywhere.  Generally speaking, the western corn belt has been drier than the eastern corn belt but there have been variations in between almost everywhere. Despite the problems coming into September, we were still expecting some of the biggest crops ever in the United States. This surely is a credit to science as well as farmers management.  With warm dry weather continuing to inundate the American corn belt surely harvest will be increasing in the next few weeks.

      On September the 12th the USDA came out with their latest WASDE report. In this report the USDA actually surprised the market by cutting both corn and soybean yields. The corn yield had been expected but the soybean yield had not been. The USDA pegged US corn production at 13.94 billion bushels which is a cut of 415 million bushels from the last report. This was based on a corn yield which was lower 2.9 bushels per acre at 172.5 bushels per acre. On top of that the USDA also lowered planted acreage for this year by 1.2 million acres to 88.6 million acres and cut harvested acreage down to 80.8 million acres. The USDA pegged new crop corn ending stocks at 1.219 billion bushels which was down 169 million bushels from August. Much of this had been expected and the corn numbers were generally regarded as neutral for market action.

     It was not the same for soybeans. On September 12 the USDA shook the market a bit when they cut yield by 1.4 bushels per acre to 50.5 bu  per acre giving us a soybean production estimate of 4.38 billion bushels, which was 153 million bushels less than last month.  The USDA put new crop soybean ending stocks at 200 million bushels, which was 45 million bushels lower than last month and the lowest level in about 7 years. USDA lowered planted acreage to 87.5 million acres and harvested acreage down to 86.6 million acres. Soybeans responded by making an almost $1.00 appreciation in futures prices over the next two trading sessions before settling back later in the week.  US domestic wheat production was unchanged from last month. However, the USDA raised both Ukrainian and Russian wheat production. The Russian wheat production of 91 million metric tons would be a record if it’s realized.

      On Sept 16th, corn and wheat futures were higher than the last Market Trends report.  Soybeans were slightly lower.  December 2022 corn futures were at $6.77 a bushel.    The November 2022 soybean futures were at $14.48 a bushel.  The December 2022 Chicago wheat futures closed at $8.59 a bushel. The Minneapolis December 2022 wheat futures closed at $9.38 a bushel with the Sept 2023 contract closing at $9.20 a bushel.

     The nearby oil futures as of September 16th closed at $85.11/barrel down from the nearby futures recorded in the last Market Trends report of $92.09/barrel. The average price for US ethanol on September 16th in the US was $2.60 a US gallon, down from the $2.65 last month.

     The Canadian dollar noon rate on Sept 16, 2022 was .7527 US, versus the .7823 US reported here in the last Market Trends report. The Bank of Canadas lending rate increased to 3.25%.


      It has been warm and dry into September for much of southwestern Ontario.  On the other hand, there has been more rain in eastern Ontario continuing the pattern we’ve seen over the summer.  Private crop tours in Ontario vary on yields.   Generally speaking, crop yields will be down this year in Ontario based on the dryness in the West.   However, there will be many farmers especially in eastern Ontario who will enjoy above average or record crops depending on the weather going into October.

     As of September 17th, soybean harvest has started in Ontario mostly in areas of drought which have been widespread in some counties. Replanted soybeans in southwestern Ontario in many cases have done better than soybeans which were planted earlier.  What is needed going into October is a wide-open season without frost in order to reach maturity. 

     The Canadian dollar is currently fluttering in the $0.75 US level which is about the lowest we’ve seen in two years. This is helping sustain basis levels for corn soybeans and wheat.  This should continue into the fall, but with seasonal lows.  There was ample old crop corn available going into September.  As stated earlier, a late frost will go a long way to helping these Ontario crops reach their potential and sustain quality.

     Old crop corn basis levels are $1.45 to $1.60 over the December 2022 corn futures on September 16th across the province.  The new crop corn basis varied from $1.55 to $1.80 over the December 2022 corn futures.  The old crop basis levels for soybeans range from $4.30 cents to $4.51 over the November 2022 futures.  New crop soybeans basis levels range from $3.70-3.94 over the November 2022 futures.  Ontario SRW wheat prices are in the $9.70 range.   On September 16th the US replacement price for corn was $9.00 /bushel.  You can access all these Ontario grain prices in the marketing section at

  The Bottom Line

      USDA in its September 12th report put the brakes on a bigger crop which some analysts were expecting.  The question is will this crop get smaller as we go into harvest and will these numbers show up in the October WASDE report?  Looking ahead, how will all this mesh with an inflationary environment, geopolitical problems and a big crop set to come out of South America in the coming year?  These are only some of them factors which will affect our marketing as we go into 2023.

     Corn demand needs to be sustained but in this current environment there are problems.  At these price levels the USDA recorded lower demand in all the categories including exports. At the same time US corn is at a premium to corn out of Argentina and the Black Sea area. In fact, Brazilian corn is being offered at 60 to $0.90 per bushel below US offers.

     It makes you wonder under the current scenario whether this grain market is a supply driven market or is it a demand driven market.  Usually in a demand driven market grain prices continue skyward as demand grows. That is not happening now in fact it is the opposite unless that changes into October. There are also offshore supplies in South America that have huge potential. Despite bullish future spreads out into 2023, the bullishness is being tempered.

     Geopolitics can turn this on a dime like we saw last February 24th when Russia invaded Ukraine. That could still happen in a wartime environment.   At the present time the Ukrainians have had some success against their Russian counterparts and at the same time Russia is questioning the grain deal brokered by Turkey to open Ukrainian ports for export.  Any escalation by Russia in this regard will add price volatility into the equation.

Commodity Specific Comments


      The conventional wisdom on corn late this year was that the crop was getting smaller which was substantiated by USDA in their September 12 report. However, prices have not moved much higher after the report and it may be a reflection of lost demand. For instance, there’s been about 250 million bushels of loss demand considering feed, ethanol, exports and residual use. It makes one wonder if these corn prices are already rationing corn demand.

     Early yields in the United States are somewhat disappointing for corn, but keep in mind that it’s often the characteristics of early harvest especially in drier years. Also too, with the USDA reducing the corn yield in September, historically smaller crops generally get smaller.  The October numbers will be very telling from USDA on the direction of crop size going forward.

     The December corn futures contract is currently priced 5.75 cents below the March contract which is a neutral indication of commercial demand. Generally speaking, the corn basis at the present time is bullish.  Seasonally, corn prices tend to peak in early June and bottom in early October.  The December contract is currently priced in the 71st percentile of the past five-year distribution range.


     China continues to be the major player in world soybean demand and continues to shun away from American soybeans anytime they can.  For this upcoming year Brazil, Paraguay and Argentina will likely produce 1.35 billion more bushels of soybeans than they did last year.  Of course, most of this is headed for China.  Planting has started now with the first South American beans set for delivery in January.

      This big South American crop will increasingly loom over new crop soybean prices. There will even be a possibility of South American soybeans landing in the United States depending on how big world crop gets and the prices involved.  However, let’s not get ahead of ourselves, the USDA did cut US soybean production and that number might continue to fall in the October report. If that happens, there will be lots of price buoyancy.

     November soybean futures contract is currently priced 7 1/2 since below the March which is a neutral to bearish sign of commercial demand.  Seasonally, soybean prices tend to peak in early July and bottom out in early October.  The nearby November contract is currently in the 66th percentile of the past five-year distribution range.


      The wheat market has been dominated this past year from the issues in the Ukraine and Russia.  It is still like that in a subtle way. If the Ukraine corridor is allowed to flow in the world has enough wheat. However, if it’s constantly under threat and stops or slows down then there is not enough to go around at these price levels.  Russia also has a huge crop of wheat this year which they are exporting at cheaper than US prices. 

     The US dollar has been on a tear of late especially as the US Federal Reserve raises interest rates and this has been very bullish for the US dollar.  This always is negative for US wheat demand and agricultural commodities in general.  With soybeans being harvested in Ontario at the present time there will be a push to get Ontario wheat acres back over 1,000,000 after a difficult fall planting period last year.

The Bottom Line (cont.)

     The American dollar has been charging up into mid-September from its lows in August. This has had a detrimental effect on wheat futures prices, but as always has beneficial effects (for cash prices) on the value of the Canadian dollar.  The Canadian dollar is now at a two year low in the $0.75 range US. Both the Bank of Canada and the US Federal Reserve are increasing interest rates aggressively in an attempt to tame inflation for the moment this has had a very positive effect on the American dollar and the opposite to the Canadian dollar values. At a certain point this will change, but it is not expected to be any different this coming month. As is, a lower Canadian dollar will continue to sustain Ontario cash grain prices.

     It is a bit of a mixed bag. Yes, USDA constrained their supply crop numbers but also put a negative light on demand. At the same time there is drought in Argentina which is severely impacting their corn planting season.  At the same time the Argentinian government has made a more favorable foreign exchange policy for Argentinian farmers which has resulted in increased soybean sales.  Meanwhile, the EU is predicting a sharp decrease in their corn production because of drought this past year.  That mixed bag should continue into 2023 until South America production is truly realized.

     As we head into October harvest weather will continue to be a factor in the size of these crops. In Ontario, as well as much of the northern corn belt a lack of frost will increase crop potential. At the same time, if frost comes in September, it’s the opposite. Needless to say, weather is always a factor, and it will continue to be into our harvest season.

     We all know that the last 18 months have been unusual in the grain market especially during wartime. We also know that October usually gives us our seasonal lows in futures prices.  Mixing those together and we have a potpourri of market factors, which should help us with our marketing. At the end of the day, risk management never grows old. As harvest approaches, there will be many grain marketing opportunities ahead