Ontario’s corn and soybean harvests are complete and prices appear to be percolating higher.
Quick look:
Soybeans: Ontario soybeans are experiencing stronger export demand.
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Corn: Ending stocks from major exporting countries are significantly tighter than last year.
Wheat: The downside pressure on wheat futures markets will be short term.
On the November World Agriculture Supply and Demand Estimates (WASDE) report, the USDA trimmed the average U.S. corn and soybean yield, which was a surprise to traders. Export demand for North American corn and soybeans is exceeding year-ago levels.
Soybeans
Ontario soybean fundamentals are tighter than anticipated due to stronger export demand. We are comfortable with Statistics Canada’s crop size of 4.2 million tonnes, up from last year’s output of four million tonnes.
From Sept. 1 through Dec. 31, Ontario farmers will deliver 3.2 million tonnes into the commercial system. We continue to project a domestic crush of 630,000 for September through December. However, we’ve increased our Ontario soybean export projection from 2.3 million tonnes to 2.6 million tonnes.
The Ontario soybean market will function to enhance farmer selling during December. The Ontario soybean market needs to pull in an additional 300,000 tonnes from farmers in late November and December to keep the pipeline fluid. Ontario soybean basis levels are expected to increase. Canadian crop year-to-date soybean exports for the week ending Nov. 3 were one million tonnes, up from only 561,400 tonnes last year.
On the November WASDE report, the USDA trimmed the soybean yield from 53.1 bu./acre to 51.7 bu./acre. U.S. soybean production is now estimated at 121.4 million tonnes, up from the 2023 crop of 113 million tonnes and up from the five-year average of 112.3 million tonnes.
U.S. soybean export sales commitments are up 17 per cent from last year, while the domestic crush pace is also exceeding year-ago levels. U.S. soybean demand makes seasonal highs in December. We’re expecting the futures market to percolate higher now that farmer selling has eased.
In South America, the Brazilian soybean crop was 70 per cent planted as of Nov. 11, while the Argentinean crop was 10 per cent planted. Early estimates have the Brazilian output at 169 million tonnes, up from this past year’s harvest of 153 million tonnes. Argentine production is estimated at 51 tonnes, up from the 2023/24 crop of 48.2 million tonnes.
Over the next two months, we’re expecting the soybean market to incorporate a risk premium due to uncertainty in South America. Once harvest begins in Brazil, soybeans will start to trend lower.
What to do: We’ve advised farmers to be 30 per cent sold on their 2024 soybean production. This week, we’re advising farmers to sell an additional 20 per cent, bringing total sales to 50 per cent. U.S. and Canadian farmer selling has slowed, while total demand (export and domestic) is at seasonal highs. We still have a large portion of the crop to sell if adverse weather develops in South America.
Corn
Elevator bids in Ontario appear to be percolating higher now that harvest is complete. We feel comfortable with Statistics Canada’s crop estimate of 9.6 million tonnes, down from the 2023 crop of 10 million tonnes but up from the five-year average of 9.3 million tonnes. We’re expecting Ontario farmers to sell or deliver six million tonnes of corn into the commercial pipeline from Sept. 1 through Dec. 31. Total domestic demand is estimated at three million tonnes and exports are expected to reach one million tonnes.
On Dec. 31, we’re expecting on-farm stocks to total four million tonnes and commercial stocks to come in at three million tonnes. From January through March, the market will function to attract farmer selling as stocks in the commercial pipeline decrease. For the week ending Nov. 3, crop year-to-date corn exports were 293,800 tonnes, up from last year’s pace of 86,800 tonnes.
The world fundamentals are significantly tighter among the major exporters compared to last year. For the 2024/25 crop year, ending stocks from the major exporters (Argentina, Brazil, Russia, South Africa, Ukraine, excluding the U.S.) are expected to drop to seven million tonnes, down from the 2023/24 carryout of 9.75 million tonnes and down from the 2023/23 figure of 17.47 million tonnes. The five-year average is around 14 million tonnes.
Lower stocks from other major exporters makes the world more reliant on the U.S. in the latter half of the crop year. Total Ontario corn exports for the 2024/25 crop year are expected to finish near two million tonnes, up from the 2023/24 exports of 1.6 million tonnes. Stronger export demand will cause Ontario corn ending stocks to drop to 10-year lows.
The USDA trimmed the U.S. corn yield from 183.8 bu./acre to 183.1 bu./acre. This caused production to come in at 384.6 million tonnes, down from the October estimate of 386.2 tonnes. The 2023 crop was 390 million tonnes.
U.S. export sales are running 48 per cent ahead of last year, while ethanol use is marginally higher than year-ago levels. Feed demand will also be higher as cattle are fed to heavier weights. U.S. farmer selling will slow, while export and domestic demand makes seasonal highs in December and January.
As of Nov. 11, Brazilian farmers had finished planting the first corn crop. The bulk of Brazil’s exportable surplus comes from the second crop, which will be harvested in June 2025. Argentinean producers had planted 40 per cent of the corn and the main harvest occurs in April and May.
What to do: We’ve advised Ontario farmers to sell 30 per cent of their 2024 corn crop. We’re planning to make our next sale in December. We have a fairly bullish outlook for corn prices. The market cannot afford a crop problem in South America. The Ontario corn basis is expected to be quite strong in the latter half of the crop year.
Wheat
World wheat values have been percolating higher as Russian offers increase. Egypt is the world’s largest wheat importer and the Egyptian tenders basically set the price structure.
During the week ending Nov. 9, Egypt tendered for wheat at the lowest offer on a f.o.b. basis, which was Ukrainian origin at US$252.50 f.o.b. the Black Sea. The Russian offer for this tender was US$265/tonne f.o.b. the Black Sea.
Remember that Russian wheat was trading as low as US$220/tonne f.o.b. in September. U.S. hard red winter wheat was quoted at US$264/tonne f.o.b. the Gulf. It appears that Russian offers are in line with U.S. values. U.S. soft red winter wheat was quoted at US$258/tonne f.o.b. the Gulf, while French wheat was US$250/tonne f.o.b. Rouen.
December is a slow period for the wheat market due to the Australian and Argentinean harvests. On Nov. 8, Argentine wheat was quoted at US$245/tonne f.o.b. ocean port, while Australian wheat was valued at US$248/tonne f.o.b. Port Adelaide, South Australia.
Australian wheat is capturing southeast Asian markets, while Argentinean origin is weighing on South and Central American markets. There is some downside pressure on all three wheat futures markets. We believe this will be short term.
We’re expecting a major rally in the wheat market when the Northern Hemisphere winter wheat comes out of dormancy. To reiterate from our previous issue, for the 2024/25 crop year, total ending stocks for the major exporters excluding the U.S., (Canada, Europe, Russia, Ukraine, Australia, Argentina) are expected to come in at 29 million tonnes, down from 39 million tonnes last year and down from the five-year average of 38 million tonnes.
Russia and the U.S. are on the drier side heading into dormancy, while Europe continues to struggle with excessive precipitation. We’re expecting a year-over-year decline in French acreage.
President-elect Donald Trump has stated that he has a plan to end the Russian and Ukraine conflict. This has also contributed to the weaker tone in the futures market in the short term. We don’t believe it will have much of an influence on the world market given the break-neck speed of exports from Russia and Ukraine over the past year.
What to do: We’ve advised producers with feed quality wheat to be 50 per cent sold on their 2024 production. Farmers with milling quality should be 30 per cent sold. We’re expecting Chicago wheat futures to rally $2/bu. during April 2025.
Be patient on sales for the time being. Don’t’ sell during peak harvest pressure from the Southern Hemisphere. The market cannot afford a crop problem from one of the major exporters in spring 2025.
