CASH MARKET COMMENTARY
Grain basis held steady after this week after a sharp turn lower last week.
Overall corn gained 1 cent per bushel canceling out last week’s move lower. Ethanol remained steady this week averaging no changes. Corn along the river moved slightly lower this week off ¼ cent per bushel. Even with strong exports that exceeded expectations, corn seemed to be in limbo waiting on the supply and demand report for further direction.
Soybean basis continued lower following the very weak beginning to September. Basis levels are continuing to have trouble finding support and were off and average of 2 cents per bushel. Crush facilities managed to gain ½ cents per bushel and expected world demand for soyoil remains high. Soybeans along the river continued to move lower losing 7 cents this week.
Futures finally gained some support after weeks of moving lower. Corn was up 14 ¾ cents, soybeans jumped 33 cents, and wheat moved 11 ¼ cents higher.
Private analysts continue to weigh in on the US crop size ahead of Monday’s USDA crop production report. Wednesday, Linn Group pegged the US corn yield at 171.5, well below USDA’s August forecast of 175.1. For soybeans, they expect a yield of 49.6 bushels per acre versus USDA’s previous forecast of 48.9. Planalytics final forecast for the season was also announced as 171.1 and 49.6.
In world news, China’s 2016 corn harvest is expected to 2.3% to 201.5 million tonnes. Farmers have been planting less of the grain following a change in government support.
On Wednesday, Stats Canada released stocks forecasts for wheat and canola. Canada’s wheat stocks were pegged at 5.17 MMT on July 31, down from 7.05 MMT a year ago. Traders had expected 4.29 MMT of stocks. Meanwhile, canola stocks were at 2.02 MMT, moving lower from last year’s inventory of 2.54 MMT but much higher than expectations of 1.27 MMT.
Oil prices rose 60 cents a barrel on Thursday after U.S. industry data showed a large draw-down in crude stocks, reflecting the temporary impact of an Atlantic storm. U.S. crude stocks fell by 12.1 million barrels last week, data from API showed after the market settled on Wednesday, compared with expectations for an increase of about 200,000 barrels.
Saudi Arabia and Russia agreed on Monday to cooperate in world oil markets, saying they will not act immediately but could limit output in the future, sending prices higher on hopes the two top oil producers would work together to tackle a global glut. Even if the Monday statement was short on action, it marks a significant development in the Russia-Saudi relationship. The two countries have been effectively on opposing sides of the war in Syria, while Moscow is an ally of Iran, an important rival to Saudi Arabia.