By Karl Setzer
Market Analysis 

Trade remains concerned with interior logistic issues and how much they may be impacting trade. Many terminals across the upper Corn Belt are already concerned they will sit full following harvest this year, the same as last.

Economists claim this cost billions of dollars of lost revenue, both from prolonged harvest and missed marketing opportunities. There are also concerns that if these logistic issues continue they may start to impact exports, as some buyers may be worried over timely shipments.

The Farm Service Agency (FSA) updated its U.S. corn and soybean acre estimates this week. It increased U.S. corn and soybean acres from its previous estimate to 84.8 million on corn and 80.8 million on soybeans.

These are both still below what the USDA is using in balance sheets, which is not surprising. This is from the fact the FSA numbers only include acres enrolled in federal programs, while the USDA counts all planted acres.

These lower numbers had little impact on trade, though, as it is believed elevated yields will compensate for reduced plantings.

Not only are corn yields being reported as records in the South, but so are test weights. This is expected to carry over into the North, when harvest advances into those areas as well. While this is likely, weather will still be key in what we see for actual test weights, especially in the far north. An early frost tends to lower test weights, and some forecasters believe we will see this situation this growing season.

Debate continues over how much of the U.S. corn crop may be impacted by an early killing frost. If 15 percent of the crop in the Northern Plains would be affected by a killing frost it would cut corn production by 100 million bushels, according to some analysts.

Even the worst-case scenario has corn production being reduced by 280 million bushels. While this seems like a large amount, it is relatively small given total crop size estimates.

The same scenario is being predicted in soybean production, but yield is harder to determine. Some field scouts claim an early freeze would reduce total crop size by 40 million-75 million bushels. As with corn, this would have little impact on stocks given the large crop size being predicted.

The uncertainty over soybeans comes from the fact in some years with a killing frost, yield has actually increased following the event.

We are already hearing concerns over the quality of this year’s corn. Some farmers do not believe the crop will fully mature prior to harvest and will need to be dried from a high moisture level.

It is not uncommon to have a larger amount of fines in corn when this happens, as well as a tendency to take on moisture while being stored. This will make it critical to check bins and monitor stored grain the same as it was this year.

There is a general belief in the market that lower values will encourage commodity demand. While this may be an accurate assumption, how much of a benefit they will be is questionable.

Soybean crush is already at full capacity, with little room for additional consumption. We could see a slight increase in ethanol manufacturing, but until the cattle herd builds, feed demand on corn has likely peaked.

The commodity demand that may need to increase the most is exports, and to do that the United States needs to remain competitive in the global market.

Trade is starting to look forward to the quarterly stocks data to be released Sept. 30. In effect these will be the old-crop ending stocks on both corn and soybeans. It would not be surprising to see slightly higher numbers than what has been projected, mainly from slow export loadings. Trade will also view these numbers as how strong actual new-crop demand may be.

Karl Setzer is a commodity trading advisor/market analyst at Maxyield Cooperative. His commentary and market analysis is available daily on radio, in newsprint and on the Internet at www.maxyieldcooperative.com

The opinions and views in this commentary are solely those of Karl Setzer. Data used for this commentary obtained from various sources are believed to be accurate.