Harvest progress released Monday afternoon for the week ending November 2nd, showed corn harvest at 76 percent completed. This was 1 percent behind the 5-year average and up 13 percent on the week.

Soybean harvest was reported at 83 percent complete, 6 percent behind the average and up from 72 percent last week.

The only state lagging last year was North Dakota, still 7 percent behind last year for corn harvest. There are several states lagging about 5 percent behind the 5-year average, including Iowa, Nebraska and Kansas. South and North Dakota both lag more than 10 percent behind the 5-year average.

Ethanol margins have made no significant progress lately. Both small and large plants are losing money when you include taxes and depreciation. Conestoga Energy Holdings, LLC is temporarily halting production at its Diamond Ethanol location located in Levelland, Texas.

The company’s CEO commented, “The domestic ethanol market is currently out of balance, with more supply than demand. While year to date exports have been robust, they are struggling to keep up with current increased production.” This is a re-occurring theme heard throughout the industry. Moving forward, without any material changes, we could potentially see more ethanol plants lowering production rates, or possibly sitting idle.

The USDA released some of their baseline projections for the upcoming years recently. For this coming year, they are projecting corn acres at 92 million, which is up 2.9 million from this past year. Soybean acres were estimated at 82.5 million, which is a large 6.6 million acre reduction from last year. All wheat acres are estimated at 51 million, up 3.2 million. These figures are far from concrete and many unknown factors will ultimately influence what producers decide to plant. On March 31st, the USDA will release producer surveyed planting intentions.

The USDA released the November supply and demand report on Thursday, November 8th. There were little if any surprises as it came in at or below trade guess with the exception of soybean ending stocks, which were higher than expected. UDSA released lower than expected production outlooks for both corn and soybeans. Corn came in at 14.626 billion bushels, down 1 percent from October, with an average yield of 178.9 bushels/acre. This was 1.8 bushels/acre less than the previous month, while harvested area remained steady at 81.767 million acres. Corn yield dropped almost double, what the trade expected. Many key corn states saw sizeable decreases such as 6 bushel/acre in Iowa and South Dakota, and 7 bushel/acre in Minnesota.

Soybeans were pegged around 4.6 billion bushels, two percent lower than the previous month, with the average yield at 52.1 bushels/acre. This was down a bushel from last month, while harvested area was slightly lower than in the October report at 88.3 million acres.

As for soybean yields, Iowa and Kentucky both dropped three bushels, Illinois two bushels, while Michigan, Nebraska, Missouri, Ohio, South Dakota and Wisconsin all down one bushel/acre.

Traders are now scratching their heads as to what yield numbers the final report in January will tell us. History tells us that in most cases, if there is an increase or decrease in yield from October to November, the November to January change will be in the same direction. More so the case for soybeans.

The big adjustment came in the form of world stocks numbers. Earlier this week Chinese officials revised their stocks numbers for the previous ten years, revealing a larger world grain stocks. Each of those ten years, production was underestimated.

Private trading companies talked about higher Chinese stocks from the Chinese government reserve program, but the USDA has not recognized those bushels in the past on their world balance sheets. This reserve program quietly grew to as much as 250 million metric tons. Many did not expect the USDA to act as quickly as it did to revise those numbers.

With those revisions, the world corn carryout numbers nearly doubled from 159.4 million metric tons to 307.5 million metric tons for the 18/19 marketing year. The news hit the corn market relatively softly as corn futures closed up slightly for the day Thursday after the report.

With the mid-term congressional elections behind us, there is hope Congress will take some action on the pending farm bill during the “lame duck” period before the end of the year. With two opposing parties, one controlling the House and the other the Senate, it is possible little to any change will be made to 80 percent of the farm bill comprising of the welfare program. Welfare reform and financial responsibly was an issue holding up Democrat support of the bill. Democrats in the past have favored more spending, conservation and not restricting welfare programs.

For more information, you may contact Adam Suntken at (712)-454-1061, or e-mail at asuntken@maxyieldcooperative.com. The opinions and views expressed in this commentary are solely those of Adam Suntken. Data used in writing this commentary obtained from various sources believed to be accurate. This commentary is intended for informational purposes only and is not intended for developing specific commodity trading strategies. Any and all risk involved with commodity trading should be determined before establishing a futures position. Please visit our Risk Disclosure Page for more information on commodity trading.