The corn numbers in the November supply and demand report held little support for the complex. The average corn yield increased 1.3 bushels per acre to raise total crop size by 99 million bushels – to a large 13.65 billion. At the same time, the USDA cut corn demand by 100 million bushels, which was enough to elevate ending stocks to 1.76 billion, a larger figure than the previous marketing year’s carryout.

The soybean figures were just as negative as the corn data in the monthly release. The U.S. soybean yield increased 1.1 bushels per acre to elevate crop size to a record 3.98 billion bushels. Even with demand increased by 53 million bushels, this was enough to give the United States 40 million more ending stocks, at 465 million bushels.

The USDA also increased global corn carryout to 211.9 million metric tons (mmts), a large 24.1 mmts more than projected in October. Much of this increase was credited to a huge adjustment to Chinese corn demand over the past three years, of 28 mmts. This was all deducted from feed.

The global soybean stocks data was actually friendly at 82.9 mmts, 2.2 million than a month ago.

Only wheat carryout was adjusted this month and this was also increased by 50 million bushels. This put domestic wheat stocks at a large 911 million bushels. Global wheat data was more neutral at 227 mmts, 1.5 million fewer than the October prediction.

Despite large, if not record-sized, yields, country movement of corn and soybeans remains lighter than expected in the Western Corn Belt. One reason for this is that farmers are hoping for a post-harvest market rally, and recent insurance payments have allowed them this opportunity.

Another reason is a large amount of corn and soybeans moved during harvest and additional sales are not needed. Movement in the Eastern Corn Belt is also limited, but this is from lower production totals and adequate storage.

In a year such as this it is critical that U.S. farmers look at revenue per acre rather than price per bushel. Even at today’s depressed futures some producers are making just as much revenue per acre as they were a year ago. This is from the high yields in regions of the Corn Belt – in some cases, producers are actually receiving more income this year than last.

Planting is still taking place in South America, but we are already seeing interest in the upcoming harvest season. Recent upgrades have been made to Brazilian export facilities that should greatly improve efficiencies.

The main port to receive upgrades was Paranagua, where loading capacity has increased 33 percent. Not only could this bring buyers to Brazil for soybeans sooner than usual, but more efficient loading could lower export costs.

There is a difference in opinion forming in the U.S. cattle industry, which is also affecting feed grain outlooks. In the latest cattle on feed report, there were 102 percent of the animals in feed lots of a year ago. Not only is this a higher number, but cattle are being held to higher weights, generating elevated feed grain demand.

We also need to realize that heifers being held back for breeding are still consuming feed grain.

There are theories in the market that demand for U.S. corn is simply slow to build. There are also those who believe global corn production will fall short of demand, causing a draw-down in reserves.

While these are both possible, it is also a possibility that production is currently being underestimated, mainly in Brazil. Recent improvements to both weather and economics are favoring an increase to double-cropping with corn in the country.

Chinese officials have announced a change in ag policy that could end up greatly benefiting the United States. Rather than make subsidy payments on produced bushels, China is going to pay farmers to idle land for five years. Hopes are this will not only support domestic commodity values, but also prevent burdensome stocks from building.

This could easily increase China’s import business, including purchases from the United States.

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.