by Barchart - Thu Oct 29, 4:22PM CDT

Corn ended the Thursday session down 3/4 to 3 cents. This morning, USDA announced a 1.432 MMT corn sale to Mexico, split with 891k for 2020/21 delivery, and 541k for 21/22. Private exporters also sold 140,000 MT of corn to unknown. USDA’s weekly Export Sales report showed 2.244 MMT of corn sold on the week ending 10/22. That was 22% higher wk/wk, well above analyst estimates and up 308% from the same week last year. The top buyers were, in order, unknown, Mexico, and Japan. Shipments were 18% lighter on the week, but with 29 mbu shipped were still 49% larger than the same week last year. Sorghum bookings were 60,838 MT for the week. That was down from 281k LW but above the 56k from last year. China and unknown were the only buyers listed. Mexico, Saudi Arabia, and Canada also purchased a combined 68k MT of 21/22 sorghum. USDA’s Ag Attaché sees Argentina’s 2020/21 corn output at 48 MMT and exports at 33 million. That is 2 MMT and 1 MMT below USDA’s October WASDE estimates. IGC lowere... Read more

by Barchart - Thu Oct 29, 9:52AM CDT
I was visiting with a friend Wednesday afternoon, a broker in central Nebraska, and the topic of a potential bubble in the corn market came up. While acknowledging the corn market has seen a sudden breakdown, with the December futures contract falling from a high this past Tuesday of $4.2225 to a low early Thursday morning of $3.93, down almost 30 cents in the blink of an eye, I don’t see it as a bubble bursting. Rather, this looks to me to be a round of noncommercial long-liquidation after this group built a net-long futures position of roughly 330,000 contracts as of Tuesday, October 20. And though open interest readings don’t seem to agree with that analysis, I’m sticking with it for now. But why no bursting bubble? The cmdty National Corn Basis Index (NCBI, weighted national average) continues to strengthen, calculated Wednesday afternoon at 22.7 cents under December futures as compared to the previous day’s calculation of 23.1 cents under. As long as national average basis continues to firm, no bubble exists. I call this the Bubble Hallmark, making the NCBI a critical piece of data when looking for potential bubbles. While there is often an inverse relationship between futures and basis, if the futures market were screaming higher as it did recently and the NCBI collapsing, I would indeed be concerned a market bubble was popping. Why? Because a clear signal of a bubble is a disconnect between a market and its intrinsic value, in this case the underlying cash price, and in grains that differential is national average basis. Darin Newsom President Darin Newsom Analysis Inc.

by Barchart - Fri Oct 23, 9:08AM CDT
No matter where one looks, this has been a wild week for basis markets. The cmdty National Soybean Basis Index has jumped almost 3 cents since last Friday’s calculation, the corn’s index is up 2 cents, hard red spring (HRS) wheat basis has gained 1.5 cents, and hard red winter (HRW) basis has firmed 0.5 cent. What am I missing in this list? Oh, that’s right, soft red winter (SRW) basis. A look at the daily chart for the cmdty National SRW Wheat Basis Index (SRBI, weighted national average) shows it has actually weakened this week. The SRBI was calculated Thursday at 31.4 cents under December Chicago futures as compared to last Friday’s calculation of 28.7 cents under. If we look at the five major basis indexes as fingers on a hang, the SRBI sticks out like a sore thumb. Why, though, has SRW basis struggled while the other markets have flourished? Futures across the board have rallied this week, though Dec Chicago is flirting with erasing its early gains and closing below last Friday’s settlement of $6.2525. Meanwhile, the US dollar has not gained much bullish momentum. The key seems to be, despite all the talk of possibility to the contrary, demand has not picked up for US SRW wheat. Recent weeks have shown dismal export shipments, and the SRW cash price is running more than $2.00 over cash corn quieting any conversation of possibly working into the domestic feed ration. My thought is price distribution is acting as it should, with last week’s calculation of the cmdty National SRW Wheat Price Index putting it in the upper 1% of its distribution range, indicating it is overvalued and primed for a selloff. When that happens, a natural reaction is for basis to start to falter. Darin Newsom President Darin Newsom Analysis Inc.

by Barchart - Thu Oct 22, 8:48AM CDT
Grain and oilseed market volatility continues to ramp up, a factor we are watching play out in basis markets as well as futures. If you’ve been tracking daily changes in the various cmdty National Basis Indexes over the last few weeks, you’ll recall we’ve seen some extraordinary moves. For example, Wednesday afternoon saw the cmdty National Soybean Basis Index calculated at 53.1 cents under November futures, a full 1.1 cents stronger than Tuesday’s number of 54.2 cents under and last Friday’s final 55.0 cents under. Similarly, the cmdty National Corn Basis Index (NCBI) was calculated Wednesday at 26.3 cents under December futures versus the previous day’s 27.1. cents under and the previous Friday’s 27.4 cents under. Keep in mind we are talking about national averages here, with normal changes mere fractions and a week’s worth of activity usually amounting to a 0.25 cent to 0.50 cent. Of all the index charts, the NCBI’s daily is one of the more interesting as it shows an almost unbroken string of slow, steady climbs since rolling from the September 2020 futures to the December contract on September 1. That day saw the NCBI calculated at 35.0 cents under meaning basis has appreciated almost 9 cents in short December hedges. Why the continued basis strength in corn? For the most part US producers are tucking newly harvested bushels away in on-farm storage while demand remains firm, mostly from domestic feeders. Recently, weather has turned winter-like across parts of the US Plains and Midwest putting a damper on harvest. Darin Newsom President Darin Newsom Analysis Inc.