Grain basis levels were stagnant yet again this week with the average corn basis across the country unchanged, while soybeans slipped 1-cent a bushel.
Basis levels since harvest have remained incredibly flat. For corn, the overall change in US average basis in the past 3.5 months has been only about 2-cents a bushel. Generally speaking we get at least some modest left-to-right movement in basis during the post-harvest season. In the last 5 years, only 2013 saw a drop in basis levels from December into early spring.
This week the Gulf saw mixed movement in basis levels with corn slipping 2 cents a bushel, while soybeans advanced 3 cents a bushel. Ethanol plants were mostly steady this week although Western Cornbelt plants did see some uptick in basis, with a few plants boosting basis by 3 to 5 cents a bushel. Soy plants on the other hand were off 1-cent a bushel on average and Western Plants were more susceptible to weakness than the East.
Grains were stronger to start the week but began to falter by the end of the week as wheat slid lower. By the end wheat was off 13, while corn and soybeans managed a 3 and 2-cent advance respectively.
The week started with CFTC showing a record large short position in the corn market, which helped push prices higher as some short-covering got the week off to a positive start. Weekly EIA ethanol production came in on the high side, reaching its highest point since January, while weekly export sales of corn topped analyst expectations coming in at 1.2 MMT versus trade expectations ranging from 0.7-1.1 MMT.
For soybeans, the slide in the US dollar is starting to have a noticeable impact on FOB grain price comparisons around the globe. Thursday, the US soybean FOB price dropped below Brazil’s price for the first time since the US harvest in October. For most of the US post-harvest season, the strong dollar has put US soybeans at a $0.40 a bushel premium to Brazil, but that quickly reversed in the last week thanks to the falling US dollar and strengthening Brazilian Real. The Brazilian Real has strengthened 8 percent in the last two weeks thanks to political upheaval that has the country calling for a new leadership.
For wheat, prices had rebounded sharply to start the week but sold off quickly on Thursday giving up half of the gains accumulated in the last two weeks. Dry weather in the Plains, and threats of a potential cold snap this coming weekend had helped lift wheat prices off of the lows established on March 2nd. But, this weekend’s weather seems to be bringing some moisture potential to Oklahoma and Kansas and the latest temperature outlook is not as cold as previously feared. Even so, the longer-term forecast seems to point to below normal moisture in April and May for the Southern Plains, which could spell problems during the key growing season.
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