It was another week lower in the grain futures markets as the prospects of another bumper crop this fall keep prices on the defensive. In the cash market, basis levels only showed modest improvement for soybeans, which gained 1-cent a bushel while corn basis was unchanged for the week.
For corn, basis levels were mostly flat with ethanol plants showing no real movement as a group. However, in Iowa there was some noticeable weakness in spot basis with numerous plants in the region posting 2 to 5 cent losses on the week. For river terminals, basis was higher by nearly 3 cents a bushel this week. In Saint Louis, spot basis moved up to +23N this week cents and is up 18 cents in the last two months.
For soybeans, there was a bit more strength overall this week as compared to corn thanks to sharp gains at crushing facilities. Soybean plants as a group were up 3 cents a bushel, but gains of 5 cents a bushel were fairly typical especially at Western Cornbelt facilities. At the Gulf, export basis was up 2 cents a bushel on the week, but river terminals as a group were only up 1 cent. With ample pipeline supplies and slowing export demand it will be difficult for basis levels to post any significant gains at this time of year.
This week the grains traded sharply lower with corn down 11 1/2 cents, soybeans down 12 1/2 cents and wheat falling 33 1/4 cents this week. Wheat consolidated around its 100 day moving average all of last week before breaking through its short term trading range and falling 23 cents Monday. Wheat remains stuck in a clear downtrend and continues to feel pressure from large global ending stocks as a strong U.S. dollar pressuring export sales.
The International Grains Council raised its forecast for global 2015/16 corn and wheat output on Thursday. The council raised wheat production to 715 million metric tons up from a previous projection of 705 million metric tons. Although this is a substantial jump from previous forecasts, it is still below last year’s production levels of 721 million metric tons. The world corn crop was revised higher by 10 million metric tons to 961, below last year’s production levels of 997 million metric tons.
Heavy rains which ranged from 1-4 inches fell across Texas, Oklahoma and parts of Kansas on Tuesday causing localized flooding and adding to the concern of winter wheat crop quality. This is the 5th week in a row that significant rains have fallen throughout the southern plains. More rain is expected later this week before the outlook turns drier for the first half of June.
Crop progress was released after the close of trade on Tuesday and showed that 92 percent of corn was planted as of May 24th which is ahead of the four year average of 88 percent. Soybeans are also ahead of pace with 61 percent of soybeans planted compared to the four year average of 55 percent. Spring wheat is now 96 percent planted. The USDA released their first crop condition ratings for corn in yesterday’s report which showed 74 percent of the crop was rated good to excellent just two percentage points behind the first crop conditions report of 2014 on June 1st. Winter wheat conditions throughout the U.S. were left unchanged.
Export sales were mostly in line with expectations for old crop, but new crop sales for corn and soybean were disappointing. Old crop soybean sales beat analyst expectations at 322,400 metric tons which was up sharply from last week’s sales of 98,909 metric tons. The buyers this week included China, the Netherlands, Germany, Japan and others. Soybean sales continue to show above average export demand late in the marketing year. However, this morning the Argentine soy crushers union stated that he expects a salary agreement which would end the strike that has negatively affected the local market and slowed exports form the Rosario Region.
Old crop corn and wheat sales met expectations with corn showing sales of 654,600 metric tons of old crop and wheat recording 42,500 metric tons. Sales were down 19 percent and 43 percent respectively but managed to fall within the range of expectations.
On Thursday, the weekly ethanol production numbers showed an increase in production by 11,000 barrels per day to 969,000 barrels per day. Stocks declined this week by 337,000 barrels to 20.1 million barrels. Ethanol production has picked up sharply in the late part of May which is typical going into the driving season. Ethanol production is up 4.8 percent over last year compared to the USDA’s corn used for ethanol balance sheet item which suggests only a 1.3 percent increase.