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Review of Agricultural Commodity Prices
Corn
Corn prices fell in November 3% from October but are up 8% from year ago levels.  For the past several months, corn prices have not moved significantly higher or lower with very few catalysts to move the market outside of trade and yield expectations.    
 
The key corn issues are as follows;
 
  • The USDA left it yield estimates unchanged in December at 167 bushels per acre.[1]  As of mid-December, there is still approximately 8% of the corn crop left in the field, however given there are large global corn supplies and current limited demand, it is unlikely even this substantial amount of corn left to be harvested can move the market higher.[2]
  • U.S - China trade deal may give a slight lift to corn prices, however, it still remains to be seen what the longer-term relationship will be between the US and China.
  • Large South American corn crop might limit any increase in the price of corn in the United States.
  • Tight propane supplies and wet corn has led to drying corn being more difficult and costly which is limiting farmer selling.[3]
  • US Corn exports are falling behind as US exports are uncompetitive reflecting the strong dollar, limited farmer selling and large crops around the World.
 
Result: Corn has a stable outlook given the challenging US planting and harvest season offset by large global supplies.
 
 
Soybeans
November soybeans prices decreased 2% from October and 3% from year ago levels.  This is principally due to lower Chinese buying and a large US crop.   
 
The soybean complex continues to be driven by 1) US /China trade tensions 2) South American crop and weather conditions 3) Chinese demand for South American soybeans and 4) the final US soybean crop.
 
It is unclear when we will get a resolution to the US/China trade tension.  It is also unclear how much longer term demand has been destroyed by the trade war as China seeks out alternative supplies in the future. 
 
The South American crop has been impacted by dryness.  As of November 25th, the Brazilian corp has reached 77.3% of the expected area to be planted.  This is behind the 89.6% which were planted by this date in 2018 and behind the 5 year average of 80.5%[4]
 
Result:  The outlook for soybean prices is strong based off of slower South American planting and the prospects of a trade deal.
 
Wheat
Wheat prices increased 2% in November from October and 2% from last year.  Wheat prices have been assisted by lower supply estimates, drought conditions in Australia and poor planting weather in Europe.[5]  In addition to difficult weather in Australia and Europe, winter in North American can been characterized by rainfall and freezing conditions which is poor for wheat development.    
 
Result:  Wheat may be the best story out of the three commodities reviewed here.
 
[2] Commodity Catch Up – December 13, 2019- BMO Capital Markets
[3] Ibid
[4] Inside Agriculture – Refinitiv.com – November 25, 2019
[5] Commodity Catch up – December 13, 2019 – BMO Capital Markets.