Divergence was the game this week, as corn and soybean prices continued to move in opposing directions. Corn managed a 7 cent advance in futures while cash basis levels were firmer by 1 cent a bushel, but beans couldn’t shake their negative fundamentals giving up 9 cents on the board and 4 cents on spot basis.
In corn, basis levels were bolstered by modest gains in ethanol plants and a more robust move by river terminals. Ethanol plants showed the most strength in the Western Cornbelt with a handful of plants posting gains of 5 to 10 cents a bushel. But in the Eastern Cornbelt gains by ethanol plants were mostly non-existent with a few plants bidding lower. At the Gulf, bids were up 6 cents a bushel, but increasing barge rates on the week, muted the Gulf’s impact on upstream river terminals with bids up only 2 cents a bushel.
For soybeans, basis levels were off 4 cents a bushels as late-season cash premiums paid by buyers have eroded quickly since the USDA report last week. Soybean plants in particular were hard hit this week, giving up 7 cents a bushel on average and many plants posting losses of 10 to 20 cents on basis for the week. At the Gulf, export basis was 8 cents higher but it had little impact on upstream river terminals which lowered basis by 3 cents on average for the week.
This week the grains were mixed with corn showing some strength and climbing back 7 1/4 cents, wheat gaining 3 cents and soybeans falling 14 3/4 cents for the week ending August 21st. The Pro Farmer crop tour was the main focus this week as traders watched scouting reports from the fields to help confirm or refute the August USDA crop production estimates released on August 12th.
Pro Farmer’s crop tour involved two groups split up between seven states. The western leg started in South Dakota and traveled through, Nebraska, Iowa and finally Minnesota, while the eastern leg started in Ohio and moved through Indiana, Illinois, Iowa and finishing the tour in Rochester, MN. Each day the tour would release a summary of their findings and yield estimates for the states they scouted.
On Day 1, the crop tour estimated Ohio corn yield at 148.37 bushels per acre which was significantly lower than the August USDA forecast of 168 bpa. However, Pro Farmer’s South Dakota yield estimate was higher than the latest USDA forecast, estimating yields of 165.94 bpa for the state compared to 160 bpa by the USDA. On Day 2, Pro Farmer’s Illinois yield forecast was in line with the USDA at 171.6 bushels per acre. Nebraska yield was lower than the USDA’s forecast by a significant margin with Pro Farmer’s yield estimate at 165.16 bushels per acre compared to 187 bpa by the USDA. On Thursday, Pro Farmer released Minnesota and Iowa yield forecasts which shows Minnesota’s corn production appears to be extremely good this year. Pro Farmer estimate for Minnesota yield is 190.87 bpa compared to 184 bpa estimated by the USDA and a 2014 final yield of 156 bpa. Iowa production was 2 3/4 bpa lower than the USDA with Pro Farmer’s Iowa yield estimate of 180.25 bpa. Pro Farmer will release the national yield estimates after the close of trade on Friday.
On Monday, the NOPA crush numbers were released which showed slightly stronger crush than expected with 145.227 million bushels crushed for July. Traders expected to see crush around 141.5 million bushels which provided some bullish news for soybeans. Soy oil stocks were above expectations with 1.624 billion pounds in July.
Corn conditions rated good-to-excellent fell 1 percentage point this week to 69 percent which was in line with analyst expectations. Corn development is still in line with the 4 year moving average with 71 percent of the crop in the Dough stage this week. Soybean conditions were better than expected with 63 percent rated good-to-excellent, unchanged on the week. Traders were looking for at least a percentage point decline in corn and soybeans. Pod setting is 79 percent complete throughout the majority of the crop.
Export sales were positive this week falling within analyst expectations for all the grains. Old crop corn booked 282,700 metric tons which beat analyst expectations and soybeans booked a positive 46,400 metric tons which was above the 0-200,000 metric tons expected by analysts. Wheat sales were on the low end the expected range at 314,400 metric tons. New Crop corn and soybeans were on the high end of expectations, with corn booking 576,400 metric tons and soybeans with 784,400 metric tons this week.
Ethanol production was unchanged this week at 965,000 barrels per day. Ethanol production this week was around 90,000 barrels per day over the 4 year average and significantly 28,000 barrels per day over last year during the same time period. Ethanol stocks increased 32,000 barrels to 18.56 million barrels this week.