Soy basis continued to plunge lower this week as old-crop premium levels eroded closer to new-crop delivery levels. For the week, US average soybean basis fell 17 cents a bushel, while corn managed a positive 2-cent gain.
In corn, basis levels firmed mostly thanks to strength out of the ethanol sector which posted a 3-cent gain on the week. Western Cornbelt plants saw more improvement than the East this week as double digit gains were noted at plants from Iowa, Minnesota and North Dakota. At river terminals, basis levels were off sharply giving up 6 cents this week. Barge rates were up sharply this week helping push basis levels down along the river system. For spot versus new-crop, there is little premium difference for spot delivery as old-crop supplies are abundant. This week, basis levels for spot delivery are fetching only a 3-cent premium over new crop delivery.
For soybeans, spot premium levels plunged this week reaching a 30-cent premium over new-crop delivery after being at 48-cents last week. Soy crushing plants had the biggest loss this week giving up 23 cents on average, while river terminals dropped basis by 11 cents a bushel.
The grains could continue to move lower this week as optimal weather helps finish off the grain. Wheat led the fall declining 27 3/4 cents, while Soybeans dropped 6 1/2 cents and corn fell 16 cents this week. Planalytics, a business weather intelligence company that forecasts yield based on satellite imagery utilizing the NDVI index, lowered its corn yield forecast by .4 bushels per acre to 166.8 bushels per acre on Friday. This is below the USDA estimate of 168.8 bushels per acre, but a couple bushels per acre higher than the Pro Farmer forecast a couple weeks ago which settled at 164.3 BPA.
The USDA will release their latest Crop Production and Supply and Demand report next Friday which will add some volatility back into the grains. We believe that the USDA is more likely to move corn yield lower in the September report than higher, and the warm temperatures triggering rapid maturation of the crop will only rob yield potential in the eastern parts of the grain belt. Planalytics soybean yield was increased last week up to 46.2 bushels per acre, just shy of the 46.9 bushels per acre forecast by the USDA in the August report.
Crop conditions this week showed that corn good-to-excellent ratings declined 1 percent to 68 percent this week which was in line with analyst expectations. As of Monday 92 percent of corn was at Dough stage and 60 percent of the crop was Dented. Soybean conditions remained unchanged at 63 percent rated good-to-excellent this week which was better than expected.
Export inspections were strong this week with corn recording 1,000,175 metric tons beating the average guess which ranged between 775,000-900,000 metric tons. Soybeans was on the high side of expectations with 184,285 metric tons inspected for export, and Wheat beat expectations with 601,639 metric tons inspected at ports compared to the average guess of between 275,000-400,000 metric tons.
Export sales were positive for new crop with corn, soybeans and wheat all meeting expectations late in the marketing year. Old crop corn booked 112,700 metric tons which was within the range of analyst estimates and much better than last week’s cancelations. Soybeans reported cancelations 60,500 metric tons which was within analyst expectations. Wheat was on the low end of trade expectations which ranged from 250,000-500,000 metric tons by booking 277,500 metric tons, less than half of what was booked last week.
New crop sales were very strong for soybeans but disappointing for corn. New crop soybean sales totaled to 1,532,800 metric tons which was better than expectations which ranged from 700,000-900,000. There was also an additional 110,000 metric tons of U.S. soybeans to China and another 773,400 metric tons of U.S. soybeans to unknown destinations announced worth of reportable sales on Thursday morning. New crop corn sales only totaled to 328,300 metric tons below expectations which ranged from 500,000-700,000 metric tons.
Ethanol production fell 4,000 barrels per day last week to 948,000 barrels per day. Ethanol production has been in a seasonal decline since early June but continues to be well ahead of the four year moving average and last year’s production levels. This week’s production was 27,000 barrels per day over last year’s production and 87,000 barrels per day over the four year moving average. Ethanol stocks also increased last week by 374,000 barrels to 19 million barrels of ethanol this week.