Corn futures finished the week with more losses as the economic concerns indicate that demand has been overstated on the U.S. Department of Agriculture reports. Farmers remain reluctant sellers since prices continue to fall lower than they expected.
Unless prices see some good reprieve during December, I don't expect farmers to be willing to release any cash grain into the cash markets. I suspect they will tend to review their marketing options after the first of the year. Our timing for the lows and views of the coming year can be heard by audio on www.futurescashinfo.com .
USDA pegged that 78 percent of the crop was harvested Nov. 10. While still too wet in some places, most areas were fit enough for combining to start again and I suspect that much of the crop came out this week with field work getting done. Very little fertilizer is going to be applied this fall, and that should call for a longer window to make spring planting decisions. This year's corn harvest pace is well behind the five-year average and rivals the year of 1992 to '93.
Demand decline
Because of the decline in demand caused by the struggling economies around the world and domestically, traders are not too concerned about any crop losses. If the crop can't get out of the field, then it can't get into the export market, and the first quarter of the marketing year is some of the best demand.
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With corn values a heartbeat away from last year's lows, unleaded gas seems to be more doable. As time passes, research is helping production of ethanol to be more efficient. The yield of corn ethanol gallons is increasing per bushel of corn and that is expected with time to reach as high as 3.2 to 3.4 gallons to a bushel of corn.
Monsanto and Cargill have teamed up to find ways to make the kernel of corn more efficient so it will take less corn in time to make ethanol. Yields are expected to increase in corn with this technology just around the corner.
Some areas have seen excellent yields on corn considering the type of year we experienced. However, there are other areas even in central Iowa that found corn on corn production a disappointment and corn rotation disappointing as well. I still look for lower lows this coming week.
As for the soybeans, while lower lows were made this past week and most likely will see new ones again this coming week, demand seems to be better.
Economic woes still are pressing this market as well. Brazilian farmers are cutting back on the amount of inputs for their crops, and it is expected that production this year will not exceed that of last year by much if at all.
Rumors are that China's government may cut banking rates and interest rates again to stimulate their economy. We must keep in mind that China, other parts of Asia and India can boast of a positive gross domestic product. Demand isn't going away for food, it is just on hold back for now. China's government is expected to buy 5 million metric tons of corn for its state reserves and soybeans by 1.5 million metric tons starting sometime in early December. Soybeans are enjoying good export demand. The U.S. is the only game in town, and the Chinese government is bidding for soybeans domestically 20 percent higher in value than the U.S. soybean. Argentina is where acres for soybeans are expected to be up 11 percent this year. Thus far, the weather hasn't been kind to early plantings, but after a brief dry spell during the next few days, the weather is anticipated to turn wetter. A blessing.
