Soybean basis was off sharply this week giving up 5 cents a bushel, while corn basis was relatively quiet and unchanged for the week.
Harvest has gotten into full swing with USDA reporting at the start of the week that 10 percent of the corn crop has been harvested and 7 percent of the soybean crop. Heavy rains around Nebraska and Iowa late in the week stalled harvest progress, but the 10-day outlook shows clear and dry weather which should accelerate the harvest progress. Yield reports so far have done little to sway the expectation of bumper crops for both corn and beans that the market has factored in. Historically, big crop years lead to lower basis levels at harvest, but it starts to improve rapidly after harvest. This year seems to be no exception, with both corn and soybean basis generally less than 5-year average levels. We would expect basis levels to start improving around mid-November into the next calendar year.
For soybeans, spot basis was off 5 cents this week but was significantly weaker at river terminals where losses averaged 10 cents a bushel. Barge rates continued to climb this week as grain movement starts to pickup. At soybean plants, losses of 20 cents a bushel were fairly common this week as the market adjusts fully to new-crop supplies hitting the market.
Grains were mixed this week with wheat increasing 15 3/4 cents, corn increasing only 1 3/4 cents and soybeans falling 16 1/2 cents. Soybeans continue to struggle with near ideal weather, improving crop conditions and harvest beginning in many states.
On Monday, USDA’s crop progress report showed another uptick in soybean ratings from 61 percent good-to-excellent last week to 63 percent this week. Corn conditions remained unchanged at 68 percent of the crop rated good-to-excellent. Harvest pace for beans was pegged at 7 percent while corn improved to 10 percent cut. With the brunt of harvest still ahead, it would seem that any rallies in the next 2 weeks would be short-lived.
Wheat prices moved higher this week on increasing concerns about the dry weather in Australia and the Black Sea region. There are some minor concerns in southern Ukraine where it has been too dry to consider sowing winter grain. The pace of sowing winter wheat in Ukraine is running slightly behind schedule but it is early with typically around 20 percent of the crop planted at this point in the year. In Australia, dryness is starting to push crop estimates lower, with the crop expected to be 24-26 MMT versus 26 MMT by USDA. The wheat rally early in the week was capped on Thursday after the Russian deputy prime minister proposed to change the wheat export duty to 50 percent of the customs price minus 6,500 Roubles per ton on October 1st. They also announced that the Russia could export as much as 30 million metric tons of grain this marketing year if total production increases to 100 million metric tons.
On Wednesday, the EIA announced that ethanol production decreased 23,000 barrels per day to 938,000 barrels per day. Ethanol production is above last year’s levels at this time of the marketing year by only seven thousand barrels, but above the 4 year moving average by 67 thousand barrels per day. Ethanol stocks are up 609,000 barrels per day to 18.9 million barrels of inventory.
Export sales were on the low side of expectations this week for wheat with 282,800 metric tons for delivery in 15/16. Wheat sales were down 25 percent from the previous week but still within the range of analyst estimates between 250,000 and 400,000 metric tons. Corn sales were disappointing, booking only 426,300 metric tons in 15/16 which was a 20 percent decline in sales from last week. Corn expectations ranged between 550,000-750,000 metric tons. Soybean sales beat analyst expectations by booking 1,316,000 metric tons which was a 44 percent increase from last week. Analyst’s expectations ranged from between 1,000,000-1,200,000. There were also a number of reportable sales this week which included a 313,000 metric ton sale of soybeans to unknown destinations, and a 260,000 metric ton sale to China for 15/16 delivery as well.