Grain basis moved higher this week with soybeans advancing 1.5 cents a bushel on average across the US while corn basis was up a modest 0.8 cents a bushel.
The steep slide in soybean prices at the end of last week helped fuel some minor basis improvements with soy crush facilities seeing gains of 2.8 cents a bushel on average. River terminals, however, saw some minor weakness on the week as average soy basis dipped 0.5 cents a bushel. Of note this past week there was a fairly noticeable response to USDA’s big soy acreage jump as 20% of the grain buyers in GeoGrain’s system of over 4,300 buyers lowered their new-crop soybean bids over the past week.
For corn, spot basis did improve on average by 1.3 cents at ethanol plants but continues to run well below average for this time of year. Like soybeans, river terminals were mostly flat over the last week.
With First Notice Day on May futures 3 weeks away, it seems that soybean basis along key delivery points has a long way to go to push convergence to futures. Average basis along delivery points is about -25K suggesting quite a move will be needed to get the spot basis to par in the next few weeks. For corn, the delivery locations are running at about -8K with upside to par expected in the next 3 weeks.
Trading over the past week in grains has seen consolidation around the lows as near ideal spring weather and mounting global supplies continue to keep prices depressed. For the week, corn and wheat managed modest 3 cent gains while soybeans were off 21 cents, mostly following the boost in US acreage reported by USDA last Friday.
Winter wheat crop conditions were improved over the last week thanks to showers passing through the Plains. On Monday, USDA reported the Kansas wheat crop at 43% good-to-excellent vs 38% last week, Oklahoma at 41% vs 37% and TX improved from 34% last week to 39% this week. On average across all states, crop conditions are running below last year’s reading with 51% of the winter wheat crop rated good-to-excellent vs 59% last year.
In South America, crop estimates for Brazil’s soy crop continue to balloon with more private analysts coming out with higher estimates ranging from 111 MMT to 113 MMT. USDA sits at 108 MMT from their March crop report, but the next crop report is to be released next week. The average of analyst estimates suggest a 109.9 MMT for the report. Likewise, analysts expect the corn crop in Brazil to grow to 92.4 MMT vs 91.5 MMT from USDA’s March forecast. For Argentina, only modest gains are expected in USDA’s corn/soy crop estimate there.
In the US, early spring weather continues to be leaning to the wet side albeit with little excess moisture at this juncture. The Midwest and Delta is expected to see limited rains between Monday and Thursday but rains are expected to intensify by next weekend. Overall, weather should be good for corn seeding pace given warmth & limited showers through mid-month. In the Plains, rains return to winter wheat in the 6-10 & mid/late 11-15 day to support crop growth with no seeming threats of cold.
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