The see-saw grind continued this week with grains making a feeble attempt to stage a rally but by the end of the week some of the momentum gave way to selling pressure. In the week corn was unchanged while soybeans recovered 16-cents from last week’s lows. Wheat continued to break-down into fresh lows, moving 6 cents weaker.
US harvest progress continues to grind along with soybeans reaching the tail end while corn still has about half the crop to cut. U.S. corn harvest advanced to 54 percent complete, up from 38 percent complete a week ago. Soybean harvest is now 83 percent complete, up from 70 percent last week. The trade will be looking to next week’s USDA report on yield guidance. This week Informa pegged corn yields at 173.4 vs their previous forecast of 170.5, while they dropped their bean yield to 49.7 vs 50.
Domestic demand continues to be rock solid with ethanol and soy crush running strong. US ethanol production this week rose to 1.056 million barrels/day (310 million gallons/week) from 1.039 mbpd (305 mil gal/week) a week prior and reflected the highest production in eight weeks and the 4th highest-ever weekly production since EIA began reporting weekly production data in June 2010. Moreover, production was 3.3% above last year's same-week production of 1.022 mbpd, with 2017/18 corn marketing year-to-date ethanol production averaging a 3.0% year-over-year increase. Based on the USDA's current annual corn for ethanol usage estimate of 5.475 billion bushels, ethanol production would need to average roughly 1% above year ago levels through the end of next August. Accordingly, there does not appear to be reason for the USDA to revise their corn for ethanol usage estimate in the upcoming November 9 WASDE report. USDA reported U.S. soybean crush for the month of September was 145.4 million bushels, exactly in line with pre-report average market expectations of 145.4 million bushels (144.2-147.0 million range of ideas) and 5.1% above last year's September crush of 138.3 million bushels, but down from 151.6 million in August.
On the export front, soybeans beat expectations with China totaling to 1,531,400 metric tons this week. Corn on the other hand recorded sales on the low end of expectations, down 37 percent from the previous week and down 33 percent from the four week average. Wheat sales were mostly steady, down only 4 percent from last week and in the middle of trade expectations.
National Cash Market:
Basis levels continued to inch higher this week as soy harvest starts to wind down and rains helped slow some of the corn cutting. For the week soy basis climbed 3 cents while corn inched higher with a 1-cent advance.
The central driver this week was lower barge freight. River terminals were buying beans at 10 to 15 cent premiums over last week while corn terminals bid up basis by about 5 to 10 cents on the week. Since October’s meteoric rise in barge freight, rates have returned to more normal levels helping to give river basis some stability and strength. The southern part of the River seems to be fully past the harvest pressure and exhibiting more upside strength than northern parts of the rivers.
Processing facilities for soybeans also were in a buying mood as basis levels are starting to improve after bottoming out last week. As a group soy crushers were up 5 cents but gains of 5 to 15 cents on the week were noted as some facilities. For corn facilities, there were less eager to move higher. In SD/IA some plants are seeing storage space limits hit and are starting to shut down corn truck deliveries to manage the constraint. But in the Southern Cornbelt some facilities are starting to bring basis up. As a group, ethanol plants gained 1-cent on the week.
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