National basis levels moved lower after a taking a break last week. Historically basis levels are pegged to keep moving lower until mid to late October.
On average, corn lost half a cent per bushel. Ethanol plants were down 1 cent per bushel this week. Corn basis along the river was off the most losing almost 3 cents. Basis along the river and at the gulf typically gets hit the hardest this time of year.
Soybean basis was hit especially hard this week off almost 4 cents nationally. Crush facilities took the lightest blow losing 2 3/4 cents. NOPA reported that soy processors crushed 2.6 percent fewer beans in August than a year ago and the pace fell below market expectations due to declines at plants in the Southwest. Soybeans along the river were the biggest loser, off 7 1/4 cents.
Grains lost most of last week’s gains. Corn was off 8 1/2 cents, soybeans down 26 1/4 cents and wheat lost 6 1/2 cents.
USDA’s crop report on Monday did little to change the bearish sentiment gripping the market. Soybean production came in well above expectations, eclipsing a 4.21 billion bushel crop on a +50 bushel per acre yield. For corn, USDA was lower than their August estimate but not as low as the average analyst expectation.
Wheat continues to face pressure from abundant global supplies and uncertainty over demand from Egypt, whose strict terms relating to grain fungus have put off traders. Quarrels have persisted between the state’s agricultural quarantine office, which has maintained a zero tolerance policy since late last year, and ministries that support the international norm, sowing confusion among suppliers and frustrating GASC’s attempts to make purchases.
The long-term forecast for 16-30 days shows a wet trend, potentially slowing the US harvest. The first report by USDA on corn harvest pegged the US crop at 5%, behind the 5-yr. avg. of 7%, which was also the average of trade expectations. Both corn and soybean condition ratings held firm on the week.
On the international front, Australia raised its forecast for wheat production for the 2016/17 season by 14.6% to 28.08 MMT, up from a forecast in June for 25.51 MMT. The raised forecast is in line with a Reuters survey of 10 analysts and traders who said they were expecting an Australian wheat harvest of 28 million tonnes.
On Wednesday, EIA crude oil stocks were off for the week coming in 50,000 barrels below last week. Traders had expected a 3.8 million barrel build. However, gasoline stocks ballooned on the week helping push oil prices lower.