Grain Markets Update Week Ending 12-15-2017

FBN Network

Dec 16, 2017

Market Overview:

Another week of grains drifting lower. Soybeans were the leader to the downside giving up 23 cents while corn gave up 5. Chicago wheat and KC wheat were fractionally lower but Minneapolis spring wheat bucked the grain backdraft by rallying 9 cents.

Wheat had some positive news this week which helped stabilized the market from its recent run to fresh lows. Several export deals were announced by USDA from their daily reporting system. On Tuesday, USDA reported 120,000 MT of HRW wheat sold to Algeria while later in the week there was a 130,000 MT SRW deal to unknown destinations. Weekly export sales reached a high-water mark of USDA weekly export sales this morning came in at the high end of expectations at 589,000 MT with an additional 9,000 of new-crop. On the production side, India is said to be lowering their wheat plantings and conditions there are dry. In the US southern Plains a similar narrative is taking shape as the last few months have seen limited rainfall and as La Nina is expected to persist for another few months, sets the stage for a dry start to 2018.

In soybeans, the market took a bearish view of the Argentina weather situation as rains there have helped at least temporarily provided some modest relief. Meanwhile Brazil weather continues be nearly ideal and production estimates from consultants and government forecasters continue to inch higher.

On the export front for corn were 867,000 MT. Sales were on pace with business announced the past several weeks, but was notable for including 65,800 MT officially booked to China. This takes sales and shipped to 23.8 MMT vs 33.1 MMT on the books this time last year, off 28% where USDA looks for only a 16% drop. Bean sales were 1.453 MMT, with an additional 113 TMT of new crop for combined sales. Outstanding soybean sales on the books trail last year's pace by 139 mil bu, while shipments to date trail last year's pace by 126 mil bu - the USDA is currently projecting a 56 mil bu increase over last year's exports.

National Cash Market:

In the cash market, grain buyers provided only limited relief to the downside bias in futures. This week saw modest gains of 2 cents for corn basis and an anemic 1 cent improvement for beans.

Ethanol buyers were a mixed bag with double-digit gains at some plants in MN/SD but plants in IL/IN were weaker to lower. For soy processing plants the basis was muted on the week across the 50 plants reporting to FBN’s profit center. There were three plants that posted a 10-cent or better improvement in Emporia, KS, Owensboro, KY and Claypool, IN.

At river terminals basis levels were influenced heavily by action at the Gulf. Gulf basis on beans managed a 5-cent advance which filtered upstream to river terminals while corn basis at the Gulf gave up 5 cents, leading to a similar decline at river terminals.

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FBN Network

Dec 16, 2017