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A good week turns sour

What started out as a positive week for the equity and commodity markets, turned negative in a hurry.  The Dow lost over 400 points Thursday leading to losses of 256.75 for the week settling at 10,990.81 today.  Oil followed the Dow lower, losing $3.89 a barrel to end trade at $81.48, as demand concerns remain in the market.  The dollar index rose sharply as did gold.  The precious metal set new all-time highs on its way to gains of $81.40 finishing trade at $1,827.50.  The late week sell-off affected commodities too.

Corn has set several new all-time highs and settlements this week, but is down 1 ½ cents as of Thursday ending trade at $7.13 on the December contract.  Production concerns remain in the market providing underlying support for the time being.  Some new yield information will hit the market next week as the ProFarmer crop tour gets underway on Monday.  Exports were reported as 902,500 MT, which is down 5 percent from the previous week and down 1 percent from the prior 4-week average.

Soybeans were the leader amongst the agricultural commodities this week, adding 26 ¼ cents to settle at $13.61 on the November contract.  The oilseed continues to be range bound between $13 and $14 as it has for the last six months.  Pods are being filled for a majority of the crop, but moisture concerns are adding support.  Exports saw a slight up-tick at 190,700 MT, which is up 32 percent from the previous week and up 12 percent from the prior 4-week average.

Wheat is down 1 ½ cents on the week to end trade at $7.39 ¼, on the December CBOT contract.  Support is being lent to the market from production concerns stemming from low yields and fewer planted acres than anticipated for spring wheat.  U.S. wheat continues to struggle against world suppliers as it is believed to be overpriced.  A weaker dollar will help in this regard.  Exports were pegged at 646,200 MT, which is up 2 percent from the previous week and up 20 percent from the prior 4-week average.

A mostly positive week turned sour Thursday, as global economic concerns were the catalyst for another sell-off.  Production concerns are supportive for corn and wheat, but weakening demand will keep a lid on prices for the near future.  Several record highs were established for corn and gold.  Estimated yields will be reported from the ProFarmer crop tour next week, which could spark the market higher.

Spot corn basis continued to slide this week, down eight cents on average, across the country. Basis for spot delivery has now fallen 17 cents on average since August 1, with stretches of the Mississippi River North of St. Louis and the Eastern Corn Belt continuing to be areas of weakness. In both of these regions ethanol plants continue to put downward pressure on the cash market, with some ethanol facilities lowering basis by 15 cents or more just in the past week. A weak export market has given little support to basis out of the Gulf, but basis declines in this area were less than the national average – down just five cents.

While spot basis has been on the decline, new crop basis has continued its steady march higher since July 1. The largest basis improvements have been observed in Kansas and Oklahoma where they have increased basis levels by 24 and 14 cents respectively. These two states are expected to see lower yields this year as harsh weather has put a damper on the crop. In the Western Corn Belt states like Minnesota and North Dakota have experienced better growing and conditions which has actually pushed basis levels down one to four cents in each state since the first of August.   

Throughout the month of August spot soybean basis managed to slide down five cents on average across the country. Like corn, export sales did little for soybean basis with the Louisiana Gulf reporting a six cent drop since the beginning of the month. States in the Eastern Corn Belt have had large drops in basis, especially in Ohio where the average decline across the state was 14 cents. Monday’s USDA Crop Progress Report showed 61 percent of the Ohio soybean crop rated good to excellent. Parts of southern Kansas actually saw basis strengthen as some elevators increased basis by 16 cents since August 1. The condition of soybeans in Kansas may show support for these increases as 41 percent of the crop was rated poor to very poor in Monday’s report.

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