Grain basis found some upside this week with corn advancing 2.2 cents on average for the week while soybeans garnered a 2.5 cent move higher.
Corn found strength as farmers stay tied to their planters which limited pipeline supplies. Areas of Western Kansas continued to show some buoyancy as for the 2nd week in a row the region showed strong basis gains. Also, river terminals along the MS/IL river system were also generally higher with gains of 3 to 5 cents on the week being fairly typical, and on average river buyers were up 3.5 cents. Ethanol plants as a group managed only a 1.5 cent advance on the week although some facilities did record 5 to 8 cent gains.
For soybeans, basis levels were also generally higher albeit with soy crushing plants doing most of the higher bidding this week with a collective 3.2-cent gain for the week. There were a fair number of Western Cornbelt plants raising their basis by a dime. River terminals, on the other hand were bucking the overall trend as finished the week about 1-cent lower. The late week selloff in bean futures seemed to trigger a risk-off attitude as river buyers became wary of slowing exports in the face of Brazil’s sharp currency devaluation on Tuesday.
The corn competition landscape saw only modest changes this week as ADM Cedar Rapids won back its territory by bidding up basis a nickel on the week to -10N. ADM Columbus used a basis improvement on Thursday to -16N to improve its drawing area after slipping in size early in the week.
Soybean competition was mostly stable in IA/IL this week as plants here mostly kept basis unchanged. However, ADM Deerfield, MO bumped its basis by a dime to -10N, helping expand the plant’s drawing region into Eastern KS.
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Grains were lower on the week led by a 21 cent slide in soybean prices while corn and wheat suffered a 3-cent and 8-cent setback.
On Thursday, news broke that Brazil’s president Temer gave his blessing to pay a potential witness to remain silent in the country’s biggest-ever graft probe. If accurate, this could pull Temer into a corruption scandal that has already entangled several of his closest allies and advisors. Leading lawmakers and a third of Temer’s cabinet have already been caught up in an investigation of systematic bribery in return for political favors and contracts with state-run enterprises. Investors dumped Brazilian assets in foreign markets after the news broke late in Brazil. The Brazilian Real plunged 7%, which immediately sent US soybean prices down nearly 3%. Brazilian farmers have been holding tight to their mammoth soy crop as the Real has climbed nearly 10% since the first of the year. The plunge led to a mass selling wave from Brazilian farmers. On Thursday, Brazil farmers were reported to have sold anywhere from 2 to 5 MMT of their crop. Even so, Brazilian soy farmers have sold only half of their record 2016/17 crop by Friday, compared to 67 percent sold at this time last year and a 5-year average of 65 percent of sales, independent consultancy Safras & Mercado said.
In the US, weather continues to be mostly favorable as corn planting raced forward in the past week hitting 71% planted vs 70% for the 5-year average. US weather through the end of May in the Cornbelt should be cooler than normal with daily averages coming in 10 to 15 degrees below normal. Rainfall is expected to be on the topside of normal with KS/MO expected to see totals of up to 4 inches through this weekend. While it is not yet a threat to yield potential, the cool and wet growing degrees will likely slow corn development and push the pollination window later in the season, making it more prone to summer heat stress. Early predictions on the summer weather forecast are pointing to a potential drought in the Eastern part of the grain belt. Private forecaster Lanworth put the odds of this season’s weather to be near normal to hot/dry. They suggest a strong ridge with a “ring of fire” setting up in the middle of the country. This would potentially set the stage for hot/dry to the East while areas to the upper West like IA/MN would see more moisture. The timing of the event is still unclear but the odds seem to favor June rains giving way to July heat and dry conditions which could potentially have a more pronounced impact on beans versus corn, or late-developing corn.
Monday saw weak soy crush data released by NOPA. According to NOPA, soy plants crushed 139 MB of soybeans in April, off from 147 for the same month last year and well below trade expectations of 145. Year-to-date crush data is up 0.8% from the same 8-month period last year, but USDA expects crush for the entire year to grow by 2.1%.