Cash grain markets continued to post gains this week with corn basis advancing 4 cents on the week while soybeans added 3 cents on average to US basis levels.
River terminals found the greatest strength this week thanks to a continued slide in barge rates. At the Illinois River, barge rates at the start of November were around $1.20 a bushel but have now fallen below 80 cents a bushel for the first time since late summer. River terminals as a group were up 7 cents a bushel. For ethanol plants, basis levels were up 3 cents a bushel as a group but there was noticeable weakness this week with about a third of the ethanol plants posting unchanged to lower basis levels. Production at ethanol plants continued to be strong, posting above last week’s marketing year high coming in at 982,000 barrels per day and sets the year-to-date total at 4.5% above last year.
For soybeans, basis levels mostly improved and the falling barge rates helped push basis levels higher there by 7 cents a bushel. For bean plants, basis levels were modestly higher advancing 3 cents a bushel. Eastern CornBelt soy plants found greater strength than those in the West.
This week wheat seemed to finally gain some traction with supply concerns out of Russia and Ukraine, closing up 10 ¼ cents on the week ending Wednesday the 26th. Soybeans jumped 26 ½ cents and corn improved 5 ¼ cents on the week. First notice day was on Friday November 28th for the December grain contracts causing traders to have to roll out of those positions by the close of trade on Wednesday the 26th.
This was another positive week for soybeans which has been able to hold onto its gains that it has achieved since the first of October. Export inspections and sales have both maintained a strong pace. On Monday, soybean inspections showed 2,784,913 metric tons inspected at all ports which was on the high side of estimates. Later in the week export sales showed 1,485,400 metric tons were booked which was well above analyst expectations and nearly 1 million metric tons over last week’s sales.
Corn also had a positive week although export inspections were a slight disappointment Monday. Friday’s export sales showed 944,900 metric tons were sold which was up 4% from last week and above the analyst forecasts between 600,000-800,000 metric tons. This week’s ethanol production also showed improving demand with production improving 12,000 barrels per day to 982,000 BPD. This was the strongest weekly ethanol production figure this year.
The wheat market has been supported recently by cold weather which has threatened next year’s crop in the U.S, Russia and Ukraine. In the U.S., winter wheat conditions dropped 2% on Monday in the crop progress report bringing good-to-excellent ratings on the crop to 58% percent. The Russian wheat crop has also been suffering from a lack of precipitation which started to affect the area as far back as August. Recently, the situation has intensified with precipitation 60% below normal over the last month. Weather models show no relief in sight for the Russian crop with the next 1-2 weeks continuing to point to dryer weather. SovEcon estimated Russia’s grain crop may fall to 86 million metric tons in 2015 compared to 104 MT produced this year.