Grains started the week posting positive advances but by-midweek the buying enthusiasm stalled and by the end of the week we saw a return to the lows. On the week soybeans fell 15 cents while corn was up 1 and wheat was off 1.
For corn, harvest continues to stall with only 38% of the crop harvested, a full 21-points behind normal for this time of year. Even more dramatic, the state of Iowa at 23% harvested is a whopping 32% behind normal. Soybeans were 70% harvested, above analyst expectations of 64% cut. Soybean harvest is now only 3% away from the five-year average harvest pace for this time of year. Friday is expected to see heavy rains/snow are expected in MN with 2 to 4 inches of snow expected. The Upper Plains will be cold & dry for the weekend into early next week but turns wet again for Wed in ND/MN/WI which could further hamper corn harvest.
Ethanol production rose 5 million gallons this week and was the strongest production numbers in six weeks. Despite the sharp rise in production we did see ethanol stocks slip by .446 million barrels last week to 21.034 million barrels. Ethanol stocks typically experience a seasonal drawdown starting in the beginning of September, but this year they have held steady. Ethanol stocks are 5.6% above last year's levels and are a record for this time of the year.
Export sales were strong for both corn and soybeans last week. Soybean sales were up 67 percent from the previous week and significantly outpaced expectations with an increase in sales to China. Corn sales were on the high side of expectations, but were up by a marginal three percent from last week. Wheat sales softened from last week to 360,600 metric tons, down 41 percent from last week and on the lower end of expectations.
National Cash Market:
Cash markets this week were mostly steady with spot basis levels on average showing little directional bias. On the week corn managed a 1-cent advance while soybeans dipped a penny on average across the US.
For corn a sluggish harvest has certainly helped mute the brunt of grain supplies hitting the market and provided stability to basis in recent weeks. Export bids at the Gulf were modestly lower by a penny on the week. River terminals as a whole pushed higher by 2 cents with most of the lift provided by OH River and S MS River terminals which are on the back-end of harvest.
On the soybean front, basis continued to have a weaker tone. First Notice Day of the November contract starts on Tuesday. River terminals which stand for delivery against the contract are running about 20 cents less than this same week last year, which could spell problems for front-month Nov futures as convergence needs to take place. Soy crush plants showed no real upside this week as most held steady but a few did drop 5 to 10 cents.
Looking forward the slow-bleed that is corn harvest should help mitigate downside risk on basis. On the other hand, it also likely limits significant upside on basis through the end of November except in areas in the Southern US.
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