Market Matters Blog

Corn

The DTN national average corn basis for this week, at $1.05 over September futures, is down 1 cent from last week and is $1.09 higher than the DTN 5-year average at this time. Basis has been mixed, but levels at some Midwestern ethanol plants remain firm. The EIA reported that ethanol production during the week ending on August 23rd dropped to a seven week low as production slowed and imports have been low. Spot ethanol prices have been trading higher with the holiday weekend adding to the strength in prices. Buyers continue to be nervous about nearby supplies as some plants are getting ready to slowdown production in September for scheduled maintenance. A tight supply of corn and firm demand is causing some end users, especially along the Illinois River, to continue buying southern corn, which is keeping the corn basis firm. Feeders in Hereford, Texas, have raised rail corn bids by 61 cents in the past few weeks due to the high demand for newly harvest corn in the south. The cash price of corn has fluctuated in the past week on changing weather forecasts, but recent hot, dry weather may have caused test weight and yield losses in parts of the Corn Belt. The USDA reported that corn conditions through the week of August 24th decreased 2% in the good to excellent category from the prior week and that 23% of the corn was dented versus the five year average of 45%. States behind development are Iowa with 9% of the corn dented versus the 5 year average of 46%, Minnesota at 5% versus 32% and Illinois at 29% versus 56%.

Soybeans

The national average soybean basis for this week, at 69 cents over November futures, is down 4 cents from last week and is 93 cents higher than the DTN 5-year average at this time. The soybean basis continues to move lower as the cash price rises on forecasts for hot, dry weather that will continue through the weekend, further stressing beans in areas where they are still setting pods. The USDA weekly crop progress report for the week ending August 24th said states behind in setting pods were Wisconsin at 75% versus the 5-year average of 91%, Iowa at 83% versus 95% and Minnesota at 85% versus 95%. The report also showed a drop in soy conditions from 62% good to excellent the prior week, to 58%, with some of the poorest condition rating in Iowa, Missouri and North Dakota. The CIF barge basis has been weak as freight values are beginning to widen between bids and offers as demand in the south is beginning to pick up. Barge line sources reported that traffic was stalled early in the week due to low water on the Illinois River, with dredging operations closing the lock at mile marker 266.9 on August 26th and scheduled to reopen on August 29th. The lock at mile marker 77 on the Illinois River had been closed for dredging and reopened Tuesday, but the narrow channel is causing traffic to move slowly. In the Upper Mississippi River, mile market 516 has been closed since August 26th due to low water and dredging operations are expected to be complete by the afternoon of August 28th. The Mississippi River at St. Louis on August 28th midday is at 2.3 feet and without significant rainfall in the next two to three weeks, levels will continue to drop, which would cause barge lines to lighten their loads along with the Coast Guard imposing draft restrictions.

Hard Red Winter Wheat

The national average HRW basis for this week, at 18 cents under September futures, is fractionally lower from last week and is 33 cents higher than the DTN 5-year average at this time. The basis has been under pressure this week from farmer selling after flat prices rose over $7.00 in some areas. Farmers need cash ahead of fall planting, and while soil moisture was reported to be good earlier this month in many of the key growing states, recent dry weather is causing some concern. The U.S Wheat Associates reported on August 23rd that HRW harvest was 83% complete in Montana with North Dakota behind at 36% complete. Warmer and drier weather predicted for most of the Northern Plains should help harvest wrap up by the end of the month. There are reports out of southern Canada that the winter wheat harvest is producing higher than expected yields and wheat is being piled on the ground.

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