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Weekly Cash Comments

Cash Commentary-

Cash grain basis was mixed this week with corn basis up 2 cents a bushel, while soybean basis was off 2 cents a bushel.

In corn, basis levels were mostly firmer in Iowa and Nebraska as ethanol plants have bid higher in an interest to get more farmer grain after the recent sell off. In addition, buyers in Indiana and Ohio posted higher basis as futures prices declined and poor new-crop prospects limited farmer movement of old crop supplies.

For beans, a bidding war was brewing in Indiana as major soy crushing plants moved up sharply to attract spot supplies. River terminals also found strength this week as late season export business continues to be unusually brisk for this time of year.

Futures Commentary-

The grains continued their descent this week with September corn falling 30 cents, September wheat falling 25 cents and September soybeans falling 21 ¾ cents. Most of the selling occurred on Monday as markets were ignited from an 8.5 percent decline in China's stock exchange which seemed to have a ripple effect throughout commodities including the grains.

Crop conditions on Monday showed that corn conditions increased 1 percent, to 70 percent rated good-to-excellent. The market was expecting to see corn conditions mostly unchanged on the week. Soybean conditions were left unchanged at 62 percent good-to-excellent which missed expectations of a 1 percent increase this week. Spring wheat conditions also improved a percentage point this week to 71 percent rated good-to-excellent.

On Thursday, the Spring Wheat tour wrapped up three days of crop scouting throughout North Dakota. Final yield estimates were released on Thursday and estimated a spring wheat yield of 49.9 bushels per acre which is well above the 48.6 bushels per acre last year.

The latest Planalytics corn and soybean yield forecast was released on Friday, which is based on satellite imagery and uses the NDVI index which measures the greenness of the crop. In the latest report, Planalytics revised their corn yield higher by 1.3 bushels per acre to 166.7 BPA. Soybean yield held steady from the previous forecast of 45.6 bushels per acre on July 15th. This forecast is updated every two weeks.

Export sales were strong on Thursday with soybeans and wheat beating analyst expectations. Old crop corn sales booked 364,900 metric tons which was within the analyst expectations and up sharply from last week's marketing year low. Wheat sales topped expectations by 100,000 metric tons with 699,400 metric tons booked, and Soybeans booked 416,700 metric tons which was well above the 100-200,000 metric tons expected. New crop corn and soybean sales also outperformed with corn booking 443,300 metric tons and soybeans booking 899,100 metric tons. This week's new crop sales were up substantially from last week.

Ethanol production declined 8,000 barrels per day this week to 965,000 barrels per day. This is the third weekly decline, but production levels are still well above last year and 101,000 barrels per day above the 4 year average. Ethanol stocks increased 89,000 barrels per day to 19.65 million barrels this week.

Throughout this week we have seen some grain buyers in the eastern grain belt lift soybean basis sharply to help draw in any unpriced grain still stored on the farm. Farmer grain sales have slowed in recent weeks as November soybean prices have slid nearly a dollar from their highs. As prices declined, producers have become less willing to price their soybeans at these levels which has triggered processors and elevators to increase soybean basis. Since July 1st we have observed spot soybean basis in Claypool Indiana increase 60 cents to +90X, providing an opportunity for producers in the area who still have unsold grain in the bins. Another grain buyer in Morristown, IN increased spot soybean basis by 15 cents on Wednesday evening to +120X. To see what basis opportunities may be in your area click here and take a 14 day free trial at Grain Hedge.

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