Corn prices will be a follower of soybeans, Hoops noted. “USDA lowered corn yields by 1.5 bushels, which is what the trade was already factoring in. The production forecast is12.54 billion bushels and ending stocks have shrunk to 827 million bushels. That’s significant. Anytime you get corn ending stocks under 900 million bushels, the trade will recognize that stocks will have to be rationed.”

Hoops said this is one reason why USDA lowered corn exports by 50 million bushels. “They’ve noticed that since the last report, exports have slowed down considerably. We have not been able to maintain our export strength at these higher prices.”

Hoops said that corn production is likely to get even smaller. “If we look back at history, USDA’s November corn production forecast has fallen short of trade expectations 6 out of the last 8 years. There’ll be no exception this year. The trade will assume that going into the final report in January, we’re going to see another yield reduction in corn, maybe as much as 2 bushels to 3 bushels.”

Basis in corn should start to tighten in the winter months, according to Hoops. “Producers will be hesitant to sell until we get past this final production report. I don’t think we’ll see much selling between now and the January report, other than a trickle of sales for cash purposes.”

Corn prices, “could make a run at the $6.25 mark,” Hoops said. “That’s a major resistance point we’ve saw when we tried to rally in the spring of 2008. We could move higher if we get a weather problem. But demand is starting to slow for corn. If we get into the $6.25 to $6.50 area, farmers are going to want to sell, especially when we get the calendar turned to January.”

Wheat ending stocks, at 848 million bushels is down only 5 million bushels from last month, noted Hoops. “Wheat has been following the crop condition ratings and should continue to do that through November. If we remain dry, I would look for deterioration in the crop. When we exit dormancy, if this crop is in poor condition, farmers are going to consider destroying the wheat and planting the ground to corn and soybeans.”

Hoops says the corn and soybean markets “need to attract at least 9 million acres through the winter months. It’s very likely that some of that is going to come out of winter wheat, which means wheat prices are going to have to rally to provide some incentive for farmers not tearing up their wheat crops.”

erobinson@farmpress.com