Weekly Cash Comments

Cash Commentary-

Basis levels firmed by 1.9 cents a bushel on beans across the US this week while corn was up marginally on a 0.3 cent improvement.

High water along the rivers continues to escalate barge rates. This week saw barge rates take another step higher, with rates trading at 40 cents a bushel more than normal at this time of year and near the harvest-time peaks we normally see in the fall. Both corn and soy basis was off about 5 cents a bushel at river terminals this week, in spite of strong Gulf gains of 10 and 20 cents a bushel for corn and beans, respectively.

For soybeans, they got some relief as crush facilities were higher on the week, bolstering their basis by 3.2 cents a bushel on average. 40% of the plants had a nickel to dime improvement on the week. Strong crush margins should be the norm for the next 6 months which should keep soy plants bidding aggressively for beans. As for corn plants, they improved by 0.8 cents a bushel. Gains by NE ethanol plants were 2 cents a bushel but ECB states of IN/OH saw more limited gains of only 1-cent a bushel.

The risk of trading futures, hedging, and speculating can be substantial. Grain Hedge is a Branch of Foremost Trading LLC (NFA ID: 0307930)

Futures Commentary-

Grains finished mixed on the week as soybeans and wheat shot higher by 30 cents and 16 cents while corn was fractionally lower.

USDA in their monthly S&D update on Tuesday showed a smaller than expected Argentina soy crop at 40 MMT while the trade had expected a 42.6 MMT harvest. This is a far cry from last year’s nearly 58 MMT. Indeed, the world’s largest soymeal exporter is facing such a crippling crop shortfall that it purchased 4 cargos or 240,000 MT of new-crop US beans to help feed its pipelines. USDA also bumped up old-crop corn carry-out thanks to lower feed usage numbers. However, the US export tally was left unchanged even though current exports are about 6% ahead of the normal seasonal pace to reach the annual projection.

On Monday, USDA released their first national corn planting estimate, which was pegged at 2% vs normal of 3% for this time of the year. Looking ahead, farmers will likely face a lot of obstacles in the month of April with cold and wet weather to dominate. Over the next 5 days, snows are expected to hit Upper Midwest (Dakotas & Minnesota), while rounds of rain and thunderstorms are targeted for the Midwest/Delta. Planting progress is unlikely to proceed through next week as a result.

Weekly US export sales were strong for soybeans coming in at 1.5 MMT. While China was a noted buyer, other countries are also lining up to buy US soybeans thanks to the price hike at Brazil. With the threat of China’s tariff on US beans, Brazil’s prices have popped as farmers there will benefit from being the premier supplier to the world’s number one customer of soybeans. In the last two weeks Brazil’s prices have surged to a $0.60 per bushel premium over the US. Normally at this time of year when Brazil’s crop is harvested, Brazil’s prices generally trade at a $0.25 to $0.75 cent a bushel discount.

Corn sales on the week were light at 840,000 MT compared to recent weeks. But, business since the start of 2018 has helped fuel prices and push inventories down. With fewer planted acres in 2018 expected, new-crop 2018 US corn carry-out should be penciled in at less than 2 billion bushels in USDA’s first report in May.  If so, it would be the first time in 3 years that we will see carryout below the psychological 2-billion-bushel mark.

The risk of trading futures, hedging, and speculating can be substantial. Grain Hedge is a Branch of Foremost Trading LLC (NFA ID: 0307930)