Cash grain basis levels were mostly flat this week on average with the US soybean basis unchanged, while corn posted a modest 1-cent advance.
The recovery in soybean futures prices took their toll on some basis levels this week as soybean plants were down 2 cents a bushel on increased farmer deliveries. River terminals as a group were unchanged for the week, while Gulf basis bids were off 3 cents a bushel.
For corn, the strength here was fairly muted. While ethanol production was up sharply on the week, there seems to be little incentive for plants to push basis levels higher with plant-average basis levels mostly steady on the week. At river terminals, basis levels were off by 2 cents a bushel.
Soybeans found support this week gaining 15 cents a bushel, while wheat was off 12 cents. Corn eked out a modest 2-cent advance on the week.
In soybeans, the week got off to a bad start as Argentina’s newly elected President Macri was expected to eliminate stifling export taxes on ag commodities. This was especially bad news for soybean prices as farmers there have been hoarding inventories in anticipation of a new presidential regime that would liberalize export policies. But, by mid-week Marci changed his tune, suggesting that soybean export taxes would be reduced 5% a year into the future, making it likely that no immediate impact was likely. In weather, soybean growing conditions in South America are generally favorable. There are some dry areas in Northern Brazil were rainfall has been running at 30% below normal, but overall there is little to suggest anything but normal yield potential for South America as a whole.
For wheat, USDA reported another uptick in US winter wheat conditions on Monday. Winter wheat is rated at 53% good-to-excellent versus 52% last week, but still off from last year’s reading of 58%. Also pressuring wheat prices is the ever mounting strength in the US dollar. Since mid-October the US dollar index is up 6.5%, which is especially harmful to US wheat prices, which rely heavily on export competitiveness to garner support.
In corn, export sales this week were a surprisingly high 2 MMT, well above trade expectations of around 1 MMT. Also this week, ethanol production was up sharply, hitting its highest weekly output since last summer.