USDA delivered a blow to grain markets this week with significantly higher production and yields than expected. Not only did futures markets plummet on the key news, but basis levels were moving lower following the report. US soybean basis was off 2 cents while corn basis was 1 cent lower.
In corn, weakness was most apparent along the river terminals with the Gulf basis down by 7 cents a bushel. On average, river terminals were off 2 cents a bushel. For ethanol plants, basis levels were unchanged on average although some plants were clearly still trying to vie for pipeline supplies with double-digit gains by a few plants in MN, MO & MI.
For soybeans, crushing plants were down 6 cents a bushel on average as the premium being offered in the past few weeks quickly eroded following the USDA report. At the Gulf, basis levels were unchanged but the ripple effects from last week’s pummeling. River terminals on average were unchanged but noticeably weaker for the week along the middle Mississippi river and Illinois River regions.
