By KARL SETZER
Market Analysis 

Trade is already starting to look at possible new-crop ending stocks scenarios. It is not out of the question we could see a new-crop corn stocks-to-use ratio of 18 percent this year. This would be the largest stocks-to-use since 2005, when corn futures dipped to $1.95 per bushel.

While this is possible, the reality of corn trading to that level and staying there is doubtful. If corn futures would decline to this price, it would likely cause a considerable shift in acres to soybean production.

This is especially true with the elevated cost we are seeing on corn inputs. Some economists believe the concern of this will push new-crop corn values closer to $5 per bushel regardless of production and stocks.

The same stocks-to-use scenario is being projected in soybeans. It is possible, with current supply and demand estimates, we could see a new-crop soybean stocks-to-use of 14 percent. This would be the highest stocks number since 2006, when it reached 18.3 percent and futures dipped to $6.50 per bushel.

As with corn this low of futures seems unrealistic, as global demand is much higher than eight years ago.

While much of the weather talk in the market has focused on the U.S. harvest, developments in South America will have more of an impact on futures for the next several months. It has been drier than normal in parts of that continent this year, which has kept a floor under values.

Realistically, it may take a considerable weather threat to cause soybean values to rally, though, given the projected size of soybean output in those countries.

A weaker financial market has increased buying interest in commodities as we see the proverbial "flight to quality" take place. When financial markets become unstable, investors tend to place their money in something they can physically own. Historically this has been gold, silver and products such as that.

We are now seeing more of this take place in the grains and oilseeds. While this does give the commodity market support, it can weigh on values just as fast.

Soybeans actually have more fundamental negativity right now than corn, but are showing the most strength. This is simply from the fact the funds have more room to buy in that pit.

This could be a short-lived source of support for soybeans, though, as in another five months the global market will see another 20 million metric tons of inventory from South America. Just six months after that we will have another U.S. crop. Basically, the world market is going to see soybean reserves fill faster than demand can grow.

Yields are becoming more variable as corn and soybean harvest advances north. This is more the case with soybeans; even though soybean yields have slipped, they are still respectable, and average at worst.When combined with the high yields from the South, this could still give us a larger crop in future supply and demand reports.

There are concerns being voiced over the quality of this year’s corn crop, the main one being test weight and how corn in the Northern Corn Belt appears to be lighter than that in the South. This is a possible side effect of the September frost, which is not uncommon. This could easily make the corn fragile and allow kernels to split, making damage more likely.

We are starting to see a recession in land values across the United States. In recent weeks there have been numerous land sales that have been called off, as bids did not reach reserve levels. At present economists claim land seems to be overvalued by roughly $3,000 per acre in most cases.

If we see these values start to drop, we will likely see rent values decline, as well.