Basis levels were generally firmer this week, although variability in basis movement has picked up on a fast-moving futures market. For the week, US average corn basis was up 1.5 cents while soybean basis bounced up 2 cents.
Bean basis showed the most volatility this week as there was a distinct difference on basis movement by end user. Soy plants as a group moved basis higher by 4 cents a bushel as crush margins improved although soymeal cash offerings are still running weak. At river terminals, however, basis levels were off 4 cents a bushel with losses of 5 to 10 cents fairly typical in some regions. Gulf basis has been weakening suggesting a potential slowdown in export movement.
For corn, basis levels were generally firmer this week. Ethanol plants as a group were up 2.3 cents a bushel as farmer selling is non-existent on recent price weakness and busy planting activities. At river terminals, basis was up 1.5 cents although the Gulf was slightly weaker on the week.
Grains were mixed this week with corn and wheat losing 14 cents a bushel, while soybeans held a 6-cent advance but seemed poised to move lower in coming weeks.
US early season growing conditions continue to be nearly ideal. Planting progress for both corn and soybeans sped along last week with US corn planting reaching 45% complete as compared to 30% in the previous week, while soybeans are at 8% planted versus only 3% last week.
Winter wheat crop ratings also continued their uptrend hitting 61% good-to-excellent versus 59% previously. This week the Kansas crop tour found a bumper Kansas crop in spite of lower acres there. They pegged the state’s crop at 382.4 MB, up from 321.9 MB. Export business for wheat has been non-existent as US wheat continues to find few buyers with cheap French and Australian wheat continuing to gain the market share.
In soybeans, Argentina’s crop losses from flooding continue to be a topic keeping the market on edge. Analysts have projected losses ranging from 4 MMT to 9 MMT with most of the consensus at this stage pointing to a 5 MMT loss. Weekly export sales for soybeans were robust with old-crop of 800,000 MT and new-crop of 443,000 MT, but prices quickly turned lower on Thursday as rumors of the Chinese government releasing 5 MMT of soybeans from reserves to auction into the domestic market. If confirmed, the 5 MMT figure is ironically about the magnitude of the crop loss in Argentina that is currently being projected by most analysts. Also, export bids from the Gulf were off sharply this week at +15N versus +38N normal for this time of year.
In corn April’s dry weather for Brazil has likely cut into yields for their 2nd season corn crop there. Brazilian analyst AgRural cut its forecast for Brazil’s winter corn crop by 10 percent on Thursday to 48.9 MMT due to damages from hot, dry weather in the center-west. But, US export demand has turned a bit light. Weekly old-crop sales were at the low end of analyst expectations coming in at just over 700K MT versus expectations of 700-1,100K MT, but new-crop sales were dismal at only 60K MT booked.