Grain Markets Update Week Ending 1-5-2018

Grain Marketing

Market Overview:

Grains range in the New Year with some very modest gains as wheat led the complex higher on a 7 cent advance with soybeans adding 6 cents. Corn finished the week unchanged on front month March futures.

Wheat got a lift thanks to cold and dry weather in the southern Plains. The continuing La Nina-induced drought in key hard wheat growing areas is starting to be of note to the trade. Drought areas have expanded as the last two months have seen little moisture from Texas to Kansas. This week a short of artic temps below zero helped fuel concerns about crop damage. Some meteorologists are suggesting the La Nina weather cycle could persist into April which would stack the odds against good moisture in the spring as wheat comes out of dormancy.

Soybean futures continue to be supported by the ongoing weather concerns in Argentina, which is a mild drought at this early stage of the growing season. Some experts there expect double-crop bean acres to be reduced thanks to slow planting caused by the dry weather. Meanwhile in Brazil the bulk of the growing region is near ideal, although some of their southern areas are on the drier side.

Ethanol production dropped sharply in the latest EIA report to 1.032 million barrels per day from the previous week of 1.090 million barrels per day. This drop was greater than expected and is the first time since this summer that weekly production fell below last year’s levels for the same weekly period. Ethanol processing margins are in the red as spot ethanol prices are off about $0.10 a gallon in the past month.

Weekly export sales were disappointing across the board with all grains missing analyst expectations and recording marketing year lows for the period between December 22nd and December 28th. Corn sales were especially disappointing, falling 92 percent from the previous week with just 101,200 metric tons sold. Soybean export sales were down 43 percent week over week with only 554,000 metric tons sold this week.


National Cash Market:

Grain basis got a lift early in the week as cold weather helped stymie grain flows. On the week corn basis was up 2 cents a bushel while soybeans basis climbed 5 cents.



The first trade day of the New Year saw several key facilities in Iowa give producers a dime for quick ship deliveries. But that bump fizzled as dump lines quickly expanded and by mid-week the opportunity had moved back to normal. In beans, a few plants bid it up a bit as the roll happened from Jan to March but those plants also found little reason to keep basis elevated.

On the river markets it was mostly a strong week especially along the OH River and lower MS River system which saw nearly double-digit gains for corn and bean basis. But by the end of the week, the Saint Louis, MO area was seeing ice and low water conditions which took a hit to spot basis delivery bids.

Soy crush facilities were especially strong on the Eastern Cornbelt and down into the Southeast poultry/hog markets. Gains of 10 to 15 cents a bushel were fairly common in these areas.



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