Early October frosts across the western and northern Corn Belt failed to halt the downtrend in corn and soybean futures prices.
According to Iowa State University Extension Economist, Robert Wisner, damage to the U.S. soybean crop from frost appears to have been minor, mainly affecting small pockets of low areas in Iowa and Illinois, and slightly larger areas in Minnesota, Wisconsin and Michigan. Wisner says the yield loss for corn likely was more significant than for soybeans, but probably represents only a small fraction of the huge crop being harvested this fall.
The economist adds that despite the frost damage, fall-delivery soybean prices have at least modest downside risk from early October into the final stages of harvest. With cash corn prices already below local CCC loan rates, downside risk on corn futures prices is slightly less than for soybeans.
However, Wisner says the large crops will likely stress transportation and storage facilities when corn harvesting gets into full swing. That combination is likely to depress the basis, especially for corn, further pressuring cash prices.
Wisner says key marketing decisions for farmers include (1) when to take Loan Deficiency Payments, (2) whether to store and (3) whether to forward price for later delivery.
Crops must be harvested and farmers must still have title to the grain in order to receive the LDP. The economist says market conditions indicate corn LDPs are likely to remain large through harvest and that soybean LDPs may increase from early October levels as harvest nears completion. But one unpredictable variable is whether USDA differentials used to calculate the LDPs will be changed. The differentials have been adjusted occasionally in the past. This year, if adjustments were going to be made, one would have expected them to be done earlier, before LDPs became positive.
Wisner says winter and spring corn price trends will depend heavily on export sales from now through late February. Cumulative export sales in late September lagged well behind other years when U.S. corn exports were expected to approach or exceed two billion bushels. The economist says if attained, the projected exports will be over half a billion bushels larger than two years earlier and will help support moderately higher late winter and spring corn prices.
But uncertainties in U.S. corn export prospects include the large amount of feed wheat available in Canada and former Soviet republics, South American crop prospects and satellite imagery suggesting China's corn crop could be better than previously indicated. Late winter and spring soybean prices will depend heavily on prospects for the South American crop, which was sharply reduced season by adverse weather.
Wisner points out that for those with farm storage who want to protect storage profits, the market is offering prices for spring delivery 28 to 30 cents per bushel above harvest-time prices.