By KARL SETZER
Market Analysis 

The October balance sheets gave us few surprises in the corn market. Yield was increased a half-bushel per acre to a national average of 168. This is forecast to give us a crop of 13.55 billion bushels and a carryout of 1.56 billion, given current demand estimates.

The USDA did reduce harvested acres on corn by 400,000, but this was little noticed given the unchanged demand numbers.

Soy complex numbers were a little more interesting for trade. Soybean yield increased a minimal amount to a fully expected 47.2 bushels per acre national average. Crop size is now estimated at 3.88 billion bushels and ending stocks at 425 million.

The USDA reduced the harvested acres of soybeans a large 1.1 million acres, but much of this was absorbed by a 50 million-bushel decrease to forecasted exports.

Minimal changes were also made in the wheat balance sheets. Wheat production was lowered in the United States, but so was demand, which left the country with a still large 861 million bushels.

Even though harvest is just getting underway in the United States, country movement of new-crop inventory is being closely monitored. Before long farmers across the United States will be faced with the decision to either sell or store any excess inventory they have.

Many are holding a larger amount of old crop than normal, as well, making country storage tight in many areas, especially those with higher yields. Not only will movement be monitored on a whole, but also whether farmers move soybeans or corn.

Some analysts are using country movement and basis values as an indicator of yields, but this is highly questionable. Producers have indicated they will hold as much inventory as possible this year rather than move it at today’s bids.

This is especially the case in the Eastern Corn Belt, where not only are yields down from a year ago, but the country pipeline was mostly empty to start with. This has allowed basis values to firm much sooner than anticipated this harvest season.

It is still early in the harvest season, but we are already hearing reports on this year’s soybean quality. So far most reports indicate protein content in this year’s soybeans are lower than a year ago.

Sources also claim this year’s soybeans are larger than those of a year ago. This is quite possibly the reason behind the high yield reports, as it takes fewer soybeans to make a bushel.

We are seeing signs that indicate this year’s crops could be just as difficult, if not worse to store, as those in recent history. There is a high variability in corn and soybean moisture levels this year, sometimes in the same load. There are also reports of higher foreign material in soybeans, mainly pods. As a result, this year’s crops will need extra attention while in storage.

More attention is being placed on fall weather outlooks, and not just how they will impact harvest. In many years fall weather can directly impact the following year’s acreage.

In years with favorable fall weather farmers tend to get more fieldwork done, and this in turn can lead to increased corn acres. While this is in fact a trend, elevated input costs may hinder a large acreage shift in today’s market environment.

Cash rent levels across the United States have started to decrease in sympathy with lower commodity values, but not nearly enough, according to economists. This is not uncommon, as land values are usually the last to decrease in times of depressed agricultural markets.

Inputs have failed to recede much, either, which is keeping returns for many farmers across the United States in negative territory. As a result, some producers may choose to raise the crop with the least expense this coming year – not the greatest return.

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.