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GeoGrain Comments - November 21st

Cash grain markets found strength as futures prices were down on the week. Both spot and corn bean basis levels posted impressive gains, advancing 5 and 3 cents a bushel, respectively, on the week.

Corn found strength from slow farmer sales as harvest wrapped up as well as underlying demand.  Ethanol plants as a group were up 7 cents a bushel with 10 cent gains fairly typical as plants push well above harvest lows. Production at ethanol plants for the week were above last week's marketing year high coming in at 970,000 barrels per day and sets the year-to-date total at 4% above last year. At river terminals, barge rates fell sharply on the week helping improve basis levels at river markets.

For soybeans, basis levels mostly improved and the falling barge rates helped push basis levels higher there. However, soybean sales were on the light side of expectations with only 483,000 MT of new business as compared to expectations of 700,000 to 1,000,000 MT. For bean plants, basis levels were mostly flat but overall slightly improved with a 2-cent gain. Monthly NOPA crush for October was the strongest on record for soybean crushing, 7 million bushels above estimates.

Wheat showed relative strength closing 4 ½ cents higher for the week ending Thursday, November 20th. Corn declined 4 ½ cents and soybeans fell 27 ¼ cents during the same time period. Technically, corn and soybeans are below the trend line that supported the rally which started in the beginning of October. Those trend lines, which once were support, could now serve as resistance to prices if they push higher from here. Technically speaking, wheat looks the strongest the 100 day moving average and previous high set on October 30th acted as strong support during Thursday's day session. Harvest pace is 89% complete for corn and 95% complete for soybeans.

This week's grain inspections set a record with all major export regions reaching 3.69 million metric tons, nearly 34 percent above the three year average for this week.  Soybeans made up most of the inspections showing 3,113,311 metric tons well above the analyst guesses of 2-2.3 million metric tons. Wheat and corn inspections both fell short of expectations reporting only 139,351 and 401,116 metric tons respectively.

NOPA crush numbers also showed strong demand reporting that October crush increased 58% month over month bringing crush to the largest on record for October. Despite these strong demand numbers out early this week soybeans suffered following Monday's trade session. Traders seemed to look at these demand numbers as an explanation for prices rising over $10.80 last week than for a reason to push prices into new highs. As harvest wraps up and the short term tightness in the soybean and soybean meal pipeline begins to soften attention will start to shift toward south America which has not shown any significant reason for crop concerns. Export sales later in the week also didn't support the story of strong demand with bookings only reaching 483,000 metric tons, well below the analyst expectations for nearly 700,000-1,000,000 metric tons.

Corn demand continues show signs of life this week despite the weak export inspections on Monday. Ethanol production, which was released on Wednesday, increased 24,000 barrels per day over last week bringing production to a marketing year high for ethanol. Export sales on Thursday also supported the demand story for corn with 908,000 metric tons booked which was up 80% from last week.  Wheat export sales also were relatively positive booking 361,700 metric tons which was within analyst expectations.

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