Cash basis along the Mississippi continues to climb as barge delays are expected to last for at least another week. Corn was offered for sale from the producer at US$168 ex farm Nebraska. This signals a basis of around 28c/bu under nearby. Corn futures at Chicago closed out a stellar week after setting a five year high. Technically corn is now significantly over bought. There’s a gap in the Dec corn chart at about 421c. If the punters feel things have been over cooked or they can make better money somewhere else don’t be surprised if this gap is filled in the short to midterm (-US$17.00). Keep an eye on the weekly USDA crop condition report and corn yield estimates as the potential trigger for profit taking.
The wheat chart looks a little better, no gaps there, but the chart is showing a very over bought December soft wheat contract at Chicago. A fall in corn futures would undoubtedly drag wheat back with it. The recent rally in values has the US product now priced well above Black Sea values, in some locations by as much as US$60 higher. It may take a month or two to see a realist S&D sheet for the US this would indicate just how much wheat substitution may take place as corn availability and price switches consumer demand. This is very hard to predict and will be regional and price specific.
The Volga Valley and the spring wheat regions to the east of the Valley remain very dry and are expected to remain that way. It’s starting to surprise me just how slow the market is to react to these conditions. Hopefully the Black Sea wheat market will climb as the US wheat market corrects. The Canadian Prairies may see 10mm – 20mm this week.