Grain basis got a big boost this week as harvest nears completion and barge rates continue to sink lower. On the week, US average corn basis was up 3 cents a bushel while soybeans advanced 4 cents a bushel.
River terminals were big gainers this week as barge freight costs continued to come down. On the week, barge rates along the IL River slipped 8 cents a bushel and are off nearly 40 cents a bushel from their seasonal high set back at the end of September. As a result, corn basis along the river terminals climbed 8 cents a bushel, while soybeans was up nearly 7 cents a bushel.
Harvest for corn and beans is reaching the final stages, with corn in the Upper Midwest still left to cut. Areas of MN & WI saw little strength this week as harvest pressure still exerts some localized pressure in these areas. Likewise, bean cutting is causing some pressure in the Upper Midwest and the Mid-Atlantic as double crop beans get cut there.
For end users, corn plants were up a robust 4 cents a bushel on average as a group. In Ohio, 4 of the 7 corn plants there had better than 10 cent basis advances on the week. For soy plants, basis levels were solidly higher as end users bid up from the harvest lows. Gains on average were 6 cents a bushel for soy crush plants on the week.
Look for basis levels to continue to improve rapidly over the next 6 weeks as harvest wains and flat to lower futures prices keep farmers on the cash market sideline.
Grains were mixed this week as wheat advanced nearly 25 cents a bushel while soybeans fell 20 cents a bushel. Corn continued to struggle to find direction, posting only a modest 2 cent gain on the week.
Wheat continued to climb higher, taking out the 100-day moving average this week on concerns about weather issues in the US Plains and globally. Argentina’s wheat crop was pegged at 9.5 MMT by the exchange there, putting it below USDA’s latest forecast of 10.5 MMT and last year’s production of 11.75 MMT. In Australia, the wheat crop could face quality downgrades as parts of the country’s eastern grain belt are forecast to receive heavy rains in the days ahead, potentially damaging the crop which is ready for harvest. Dry weather in September and above average temperatures this month have already curbed yields of high-protein Australian prime hard wheat in the world’s fourth largest exporter of the grain. In Ukraine, the winter wheat crop has seen 40% below normal precipitation and little rainfall is expected in the next two weeks as temperatures remain at or below freezing.
For corn, crop harvest continues to sail along without any major hiccups as the US reached 75% done. Export sales this week were a welcome surprise at over 700,000 MT surpassing expectations for this first time in over a month. However, corn continues to significantly lag behind the pace needed to reach USDA’s annual forecast of 250 MB. Export business for US corn is expected to pick up as competition from South America wains in the coming months, but given the extent of the deficit, it seems likely USDA will need to lower their forecast for corn exports.
In soybeans, crop harvest is nearly completed at 87% as of last Sunday. Yield reports continue to point to a surprisingly good crop which has analysts likely looking for a higher production estimate in upcoming USDA crop reports. In Brazil, planting there continues to be benefited by rains that are aiding in crop development. Estimates so far put the Brazil crop at over 100 MT up from last year’s crop at 96 MMT. On the export front, China continues to be an aggressive buyer of US soybeans, with weekly export sales again topping the 2 MMT mark and surpassing analyst expectations.