GeoGrain: US Cash Grain and Futures Report

ANALYSIS – Grain futures dropped again this week with corn and soybean futures shedding 20 ½ cents and 38 ½ cents respectively for the week ending Thursday the 5th, reports GeoGrain analysts.

GeoGrainThe average spot corn basis throughout the U.S. jumped 2 ¾ cents to compensate for the sustained selling seen in the market. However, despite the significant decline in soybean futures prices, basis for the oilseed slipped 6 cents on average throughout the country.

The largest losses were recorded for soybeans in Missouri, Iowa and Kansas where some facilities adjusted their spot bid to be based off the August contract instead of July. On Thursday, the market closed with July soybeans showing a 56 cent premium to the August contract.

As merchandisers move to using the August futures contract, many merchandisers are not raising their cash basis to make up for the entire discount which has caused average basis to slip for soybeans throughout the country. Corn is not experiencing this kind of basis swing because the roll from July to September is only a discount of 2 ¾ cents, an inverse easily made up for in the basis.

Basis at Ethanol plants outpaced the river markets this week recording a 3 ¾ cent jump in basis compared to basis at river terminals which actually declined this week by 1 ¾ cents. Soybean plants basis declined 5 ¾ cents while soybean basis along the river was the largest decliner, falling 8 ¾ cents this week.

Grain Hedge: Grain Liquidation Continues as Yield Outlooks Improve

Corn futures lead the grain complex lower this week, off 3% on the front-month July contract. Strong export sales did little to support futures as much of the focus is now on weather and the new-crop December contract.

Corn planting was reported at 95% complete and the trade received the first good-to-excellent rating of the year at 76%. Both planting progress and crop conditions worked to pressure prices early in the week, while long-range weather predictions helped move prices lower into the weekend.

On Thursday, the Climate Prediction Center released their updated long-range forecast. In this report, they projected a 70% chance of El Nino developing this summer and an 80% of El Nino developing by mid-winter. El Nino growing seasons typically produce mild temperatures and above average precipitation for much of the US grain belt, although can be negative for world crop production. This long-range outlook, combined with current crop conditions, have corn bulls on the defensive.

Soybean planting was reported 78% complete, with 50% of the crop now emerged. Both of these figures are ahead of the 5 year average and represent a strong start to the growing season. Final acreage estimates will be a hot topic as we approach the June 30th many analysts looking for a planted acreage of 82 million acres or higher.

November soybean futures tested $12.00 per bushel on Thursday before finding buying interest. This is an important psychological level for new crop soybeans and will be an important price level to watch as we move into next week.

Heavy bear-spreading in the soybean market has been a continual theme as traders sell July against the November contract. The spread between July and November futures now sits at $2.38 per bushel, well off the high of $2.77 earlier in the week.

Significant weakness in spot soybean basis has helped July futures sell off as key export facilities back off basis levels – with some rolling from July to August soybean futures. A roll this early in June indicates that facilities may be content with old crop supplies and is a generally negative indication for old crop prices.

Wheat futures once again marched lower, now printing a lower close 3 of the last 19 trade sessions. Wheat export sales disappointed this week, with just 2,000 metric tons reported sold. We expect to see improving sales in the weeks to come as U.S. export prices have moved into alignment with prices currently seen in the Black Sea region. As harvest begins in the southern plains, yield numbers from Texas, Oklahoma, and Kansas will be important for wheat traders as we move through June.

TheCropSite News Desk

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