Weekly Cash Comments

Cash Commentary-

Grain basis was unchanged this week for both corn and soybeans as flat futures prices and slow farmer selling during harvest keep the markets mostly in check.

Futures saw little action this week as early week gains were erased by the end of the week as a tug of war continues between bulls and bears. Production is expected to be cut at the end of the week in USDA’s monthly supply and demand report, but at the same time export business especially for corn continues to be somewhat limited.

For spot basis, there were no significant moves this week as basis stayed mostly flat. For both corn and soybeans, processor or end-user bids fell a bit on the week, but at river terminals basis level found a bit of strength. However, at the Gulf export terminal both corn and beans came under pressure losing 6 and 8 cents a bushel on the week.

Futures Commentary-

Corn and bean prices continued to trade in a narrow range this week as harvest progresses and keeps a lid on any prolonged rally.

Early in the week, crop progress showed that corn harvest was behind analyst expectations with only 27 percent complete which was below the four-year average of 32 percent complete. Analysts were expecting to see corn harvest advance to at least 30 percent complete this week. Soybean harvest progressed strongly last week with 42 percent of the crop rated good to excellent, beating analyst expectations of 41 percent and ahead of the 4 year average of 32 percent harvested. Soybean harvest jumped 21 percent this week. Crop conditions remained steady for corn with 68 percent of the crop rated good-to-excellent. Soybeans on the other hand jumped 2 percentage points in the good-to-excellent category to 64 percent.

Friday’s report was expected to show only modest revisions to the supply figures previously reported by USDA in September with analysts looking for modest cuts in both corn and soybean production. Anecdotal reports from harvest have been largely positive especially in the case of soybeans where reports from IL, IN, & OH have been better than expected.

For ending stocks, analysts are expecting only modest declines in carryout based on lower production forecasts. However, USDA may be poised to begin making changes to the export side of the usage numbers with both corn and soybeans showing a sluggish early season pace. For corn, YTD export sales are 28% lower than the same period last year, while soybeans are 26% below last year’s business. USDA’s export figures from September show only a 1% drop for corn and a 6% drop in soybean business for this marketing year as opposed to the last year.

On Friday, USDA’s supply and demand forecast did little to sway the overall bearish sentiment. It was mildly supportive to beans as production came in slightly lower than expected at 3.888 BB vs trade expectations of 3.908, but overall ending stocks are still above the 400-MB mark at 425 MB. Also, traders mostly shrugged off these numbers, expecting future reports to show big supply-side estimates as yields are expected to grow

 

2015/16 U.S. Crop Production 

 

USDA Oct

Oct Expectation

USDA Sept

Corn

13.555

 13.504

 13.585

Soybeans

3.888

3.908

3.935

*Billion Bushels

 

2015/16 U.S. Ending Stocks

USDA Oct

Oct Expectation

USDA Sept

Corn

1,561

1,534

1,592

Soybeans

425

414

450

Wheat

861

819

875

*Million Bushels