Grain basis was mostly lower to unchanged to close the week.
On average, corn was down one cent this week. Ethanol plants followed closely losing one and a half cents. With recent decreases in demand for gasoline and large production expectations it seems ethanol buyers are hesitant to pay a premium for corn. Corn along the river and in the gulf saw a drop in basis of one and a quarter cents.
Nationally soybean basis was down slightly, losing half a cent per bushel. Soybean basis along the river was the biggest loser this week losing almost four cents per bushel. Although strong world demand has added support to the futures market that support has yet to be seen in the cash market along the river. Crush facilities have seen signs of support gaining nearly one cent this week. Continued global demand for for soyoil is expected throughout the year.
The grains saw positive gains to close the week with corn and wheat up 11 cents. Soybeans led the movement higher and finally regained some losses, up 30 cents.
Wheat continues to struggle with ample domestic and world stockpiles. The US carry-out projections are giving us nearly half of a year’s crop (47.4%). While international players like France and Germany are having severe crop issues, the rest of the world remains replete in wheat stockpiles. However, the declining strength of the US Dollar should help competitiveness.
Data from farm office FranceAgriMer showed the condition of French corn declined sharply last week. Sixty-three percent of corn crops were rated good-to-excellent on August 15, down from 68 percent a week earlier and 70 percent two weeks prior.
On Monday, USDA’s crop progress report showed corn and soybean condition unchanged from last week, with corn pegged at 74% good-to-excellent and soybeans at 72%. Also on Monday, NOPA’s monthly soybean crush report was disappointing showing 143.7 MB of soybeans crushed in July while traders had been looking for 146.7 MB.
Despite bearish signals in the soybean market there are still many bullish signs. Global soybean demand is strong and is still on the rise. Soybean use is already outpacing long-term expectations, making the ceiling difficult to identify. U.S. soybean exports are far outpacing these long term projections. Exports and crush are well ahead of USDA’s latest 10-year forecasts period, which is released each February. Currently crush for 2015/16 is 10 million bushels ahead of the February projections and 2016/17 is 30 million ahead.
Short-term soybean demand is holding its own as well. So far in August, daily soybean sales announcements to China and unknown destinations have been made on 11 separate days. There were only 6 such days in all of August 2015.
Crude oil fell on Friday after hitting an eight-week high, as weak fundamentals countered a lift in sentiment over talks next month on a possible output freeze, however futures remain on track to rise for a third consecutive week.