Morning Comments – March 03

Grains posted modest gains overnight while S&P futures and crude oil were mostly unchanged. The US dollar was off after posting its highest level in over a month on Wednesday.

On Wednesday, Egypt’s GASC bought 180,000 MT of wheat from Romania and Ukraine, but overnight Canada announced they had a load of wheat rejected by Egypt because of ergot. The world’s largest wheat buyer continues to impose barriers in its wheat deals which further limits participation by many countries.

Also on Wednesday, private analyst Informa increased their projections for the Brazil soybean crop to 101.3 MT from a previous estimate of 100.5 MMT, while they pegged the Argentina corn crop at 27 MMT versus a previous forecast of 26. FC Stone also came out with projections, showing Brazil beans at 98.6 MMT versus a previous estimate of 98, while they put the Brazil corn crop at 84.2 MMT as compared to their past forecast of 81.0 MMT

A delay in the onset of the La Nina weather pattern this year is likely to buoy crops across key growing regions in the United States, Australia and India, a leading weather forecaster said on Thursday. Another year of bumper production of crops such as corn, wheat and soybeans would boost global inventories that have risen near record levels following successive large harvests. Some models were showing La Nina developing by July but they have delayed that by a month or two now said Kyle Tapley, senior agricultural meteorologist at U.S.-based MDA Weather Services.

Actual Expected
Corn 1,097.6 700-1,100
Soybeans 442.2 200-600
Wheat 410.6 200-450

 

Crude oil got more bearish news on Wednesday as inventories jumped 10 million barrels on the week versus trade expectations of only a 2 million barrel increase. Nonetheless, the oil market shrugged off the news to close higher on Wednesday focusing on the low US rig count that traders expect to eventually curtail production.

Morning Comments- November 27

Grains were closed overnight due to the Thanksgiving Holiday and will open at 8:30 AM CDT for trading. S&P futures were modestly higher while crude oil was down in early trade.

Friday morning, USDA’s export sales report proved to be a mixed bag of news. For once, corn came in as the shining star with over 2 MMT of sales on the week. Wheat was below expectations and soybeans were within expectations.

WEEKLY EXPORT SALES

  Actual Expected
Corn 303.7 400-600
Soybeans 1,173.6 1,000-1,500
Wheat 2,036.3 900-1,300

 

In South America, rains fell in Mato Grasso over the past 2 days but are expected to diminish going into the weekend. Argentina got less rain than expected but dry spots are limited for now.

China’s stock market plunged 5.5% overnight on probes of the country’s two largest brokerages, but US and European markets were mostly unfazed. Oil prices were trending down Friday, pressured by a stronger dollar and the global oversupply of crude still clouding the outlook for the industry. Earlier this week, the U.S. Energy Department said crude stockpiles ticked up by 1 million barrels last week, bringing the total tally to 488.2 million barrels, around a level not seen in the last eight decades. U.S. oil output has also held stable, around 9.2 million barrels a day, but down from a peak of 9.6 million barrels a day in April.

November 14th, Basis Report

Corn and bean futures prices found strength this week and the cash market added on to the gains with a 2 cent basis increase on average across the US this week.

In corn, ethanol plants were a dominant driver adding 4 cents a bushel as a group as ethanol production continues to accelerate. Weekly ethanol output was at 946,000 barrels per day, a marketing year high, and puts year-to-date output 6.1% ahead of last year’s pace. USDA has only a 0.3% increase expected for annual corn use for ethanol.  Export markets were also up with the Gulf port basis advancing 3 cents a bushel.  Weekly export inspections were at 517,000 MT on par with expectations but a bit slim for this time of year.

By comparison, soybean export inspections continue to set a blistering pace with 2,481,000 MT for the week and cumulative exports at 13.5 MMT compared to 11.8 MMT for the same period last year.  This is 14.4% higher than 2013 while USDA is only factoring in a 4.4% increase year on year. However, basis levels at the Gulf this week were flat with some river terminals in the Upper Midwest seeing lower basis as barge rates there moved higher.  Soy plants were up as a group gaining 3.4 cents a bushel, but some areas of Minnesota and Iowa were weaker with 5 to 10 cent declines being fairly common by plants in this region.

June 27 – Cash Grain Basis Comments

Corn basis was unchanged on average this week but we again observed weakness along the upper Mississippi river system. Flooding remains a major problem for barge traffic and as a result grain buyers have been moving spot corn basis lower for the last two weeks. This week saw spot corn basis along the river down 2 cents, with many facilities backing off basis 5-10 cents. Corn has been most impacted by recent flooding, as corn shipments are making up the majority of grain shipments down river. Lock 27, north of St. Louis, reported that corn accounted for 93% of grain shipments down river for the week ending June 21st. With flood waters expected to crest late this week and into the weekend, river basis will have an opportunity to rebound as delays along the river clear up.

Soybean basis was off 2 ½ cents on average across the country, with the river system and crush plants showing relative strength. Old crop export sales worked to strengthen basis at the gulf and major river systems, with soy buyers along the river averaging a half cent increase over the last week. Thursday’s export sales report showed a resurgence of demand for old crop U.S. soybeans in response to the slide in prices seen early on in June. Export inspections have remained strong throughout June giving us reason to believe the USDA may have to revise their export sales forecast in the coming WASDE report.

Monday will be an important day for spot basis traders as the USDA releases June 1st quarterly grain stock estimates. Traders expect the USDA to report June 1st stocks at just 378 million bushels. If expectations are realized, that would be the lowest June 1st soybean stock figure since 1977. Convergence of old and new crop cash prices will be a major issue in the coming weeks, as buyers roll from July to August or September futures. At the moment the spread between July and August is 54 cents and the spread between July and September at $1.66 per bushel.

Kansas City wheat basis increased 2 ½ cents this week across the country as harvest picks up in the southern states. This year should be a particularly difficult year for merchandisers in the winter wheat regions as the heat and drought slashed yield into a fraction of what is considered normal production in that region. On the 23rd, Texas reported its winter wheat was 69% harvested, Oklahoma was 74% harvested, Kansas was 24% harvested and Nebraska had not yet begun harvest. We expect futures prices to continue to be pressured by large global wheat stocks, but domestic basis is to increase in compensation for the tight domestic stocks.

June 2 – Cash Comments

This weekend we saw corn basis move higher by 2 ½ cents while soybeans remained mostly unchanged. The sustained decline in corn prices has left some producers unenthusiastic about selling old crop corn in the cash market. Just this week we saw corn decline another 7 ¼ cents, down nearly 57 cents from May 9th when the WASDE report was released. Grain buyers have been forced to increase their corn basis this week in order to attract old crop sales.

The strongest basis gains this week were seen at river terminals for corn. On average the river markets increased their corn basis by 4 ¾ cents while soybean basis was unchanged at the same markets. This week we saw strong inspections reported with 1.16 million metric tons of corn inspected for export which well above trade expectation. Of the grain inspected at the Gulf, 80% of it was corn and only 3.5% of it was soybeans.

We did see basis move higher here for soybeans across North Dakota and South Dakota which outperforming the U.S average. However, the gains were limited to only about ¾ of a cent. Ethanol plants performed well this week improving 3 cents on average and Soy-plants declined ½ a penny.

Weekly Basis Commentary – 3/24

Corn basis fell ¾ of a cent across the U.S this week while soybeans rebounded nearly 2 cents.  Basis along the river showed relative strength and helped lead soybeans higher, while North Dakota, South Dakota and Eastern Minnesota basis continues to show significant weakness.

Corn basis settled ¾ of a cent lower this week with ethanol declining 1 ¼ cents and river basis backing off 2 cents during the same time period. Both North Dakota and South Dakota continued to show exceptional weakness, sliding over 3 cents this week.  Rail availability continues to back up grain at facilities in North and South Dakota causing basis to plunge this month. In North Dakota, basis has plummeted 23 cents in March alone, with South Dakota showing similar losses. One ND grain merchandiser reported delays of 8-10 weeks for shuttle freight and 12 weeks for single car. There is no single reason to blame for these delays; instead it seems to be a combination of issues. Some of the major contributors to rail delays have been the increased rail demand for transporting petroleum products out of ND, a shortage of rail crews and the abnormally harsh winter across the north which has caused logistics and maintenance problems along the line.

North Dakota soybean basis has also been impacted negatively by the rail delays dropping 17 ¾ cents in the last week. However, despite the basis woes in ND, SD and western MN, the U.S average soybean basis was actually able to improve 2 cents. River basis rebounded sharply this week posting a gain of 10 ¾ cents, mostly due to the basis strength at river facilities along the Mississippi in IL and IA. Soy plants improved 5 cents this week.

For producers in ND, SD and Western MN looking to make grain sales in the coming weeks, look for end users to show relative basis strength in the weakened marketing environment. For more local grain insight and marketing tips please contact Grain Hedge at 877-472-4607.

Cash Commentary – March 7th, 2014

This week we saw the national corn and soybean basis average slide lower as a result of the continued rally in the futures market. Spot corn reported the largest loss sliding 4 ¾ cents after accounting for the futures spread between the March to May contract. Soybeans also slid lower by 2 ¼ cents on the week.

The continued strength in the futures market has again spurred on farmer selling across the country. Since Friday, the May corn contract has rallied nearly 5% putting negative pressure on corn basis across the country. The average US ethanol basis fell nearly 7 cents across the US, posting the steepest weekly basis decline for average US ethanol basis this year. Basis along the river provided the only show of strength increasing 3 ¾ cents this week, propped up by strong export demand.

Soybean was also impacted by the sustained rally in futures prices slipping 2 ¼ cents this week. Soy plants were mostly unchanged and basis along the river increased by 1 ¼ cents.

Cash Grain Report – 2/21/14

Grain basis was weaker again across much of the US as rising futures prices give farmers the incentive to sell. For the week, both US average corn and bean basis lost one cent a bushel.

In the corn market, the only signs of real strength this week were at the Gulf were export basis levels jumped 8 cents a bushel. This helped lift some river terminal bids as well but logistics issues continue to hamper movement. Ice along the Illinois River has forced width restrictions on two locks and slowing traffic on the waterway, according to the Army Corps of Engineers, Rock Island (Illinois) district. Barge rate bids were flat at 600 percent of tariff on the Illinois while costs increased by 15 to 25 percentage points to 460 on 500 on the Mississippi River at St. Louis. For ethanol plants, losses of 5 to 10 cents were quite common in the Western Cornbelt and Northern Plains as heavy farmer deliveries have givenethanol plants plenty of supplies. Basis bids out through late spring also gave way a bit this week forethanol plants.

For soybeans, a similar story emerged this week to that of corn. Strong Gulf export basis levels gave a minor lift along river terminals with Ohio River markets and Lower Mississippi markets being the biggest benefactors of the increase. In the Northern Plains and Upper Midwest, spot bean basis levels were down by 5 cents or more.

Cash Grain Commentary – Jan 31

Basis levels continued to be steady to slightly weaker. On average, US corn basis was unchanged for the week, while US average soybean basis slipped one cent a bushel.

For corn, Gulf basis levels firmed this week by 5 cents a bushel as tight supplies for export and expanding export demand underpin the market. However, upstream river markets saw a lesser increase as ice poses problem for barge navigation and rates have climbed steadily over the past week.  For ethanol, it was generally a week of lower basis with one-cent losses on average. But losses of 3 to 5 cents were fairly common among some key plants. Weather continues to limit pipeline supplies which should underpin basis levels. Snow fall of about 6 inches is expected to blanket the Midwest over this weekend.

corn

In soybeans, basis levels were generally weaker especially at export sensitive areas. Although the Gulf was down only 2 cents a bushel, but average river terminal basis levels are were off 5 cents a bushel. Double digit losses were fairly common especially along the Illinois river where ice has limited grain flows. For crushing plants, basis levels actually bucked the trend by improving 1-cent a bushel.  Western Cornbelt plants were up a nickel in some cases. In the East, bad news came for North Carolina with the announcement that Cargill would be idling its Raleigh plant this spring as a result of weak soymeal demand.

beans

Weekly Cash Grain Comments – 1/24/2013

It was a week of mostly steady to weaker cash grain basis around the country. Corn held mostly steady with the US average unchanged from last week, while beans slipped 2 cents on the week on average across the US.

In corn, this week’s lack of upside follow through in the futures market combined with snow and cold temps through much of the Midwest kept farmer movement relatively subdued.  At the Gulf, there was modest strength with spot basis premiums there increasing by 4 cents a bushel. River markets along the Ohio and Illinois river saw the modest immediate benefit of that improvement with gains of 3 to 7 cents fairly common.  On average across river terminals, basis levels added 1.3 cents a bushel over last week. At corn ethanol plants, basis levels were mostly unchanged with only a handful of plants in the Western Cornbelt showing 5 cent improvements on the week.

price platform service box

corn

For soybeans, it’s been a painful week for farmers holding unpriced beans with futures and basis levels eroding to the point where most spot soy prices are below $13. At the Gulf, basis levels plunged 16 cents a bushel on the week as thoughts of China switching bean sales to South America kept the market on the defense.  Not surprising, river terminals were hard hit with losses compounded to the tune of 20 to 25 cents along the Illinois River.  At soy crushing facilities, there was moderate weakness at some plants but overall as a group they were mostly unchanged.

beans