Basis declines | Forecasters see cool temperatures in the Midwest
CHICAGO, Ill. (Reuters) — U.S. corn prices dipped to the lowest level since October 2010 July 29 as forecasters predicted the crop in the U.S. Midwest would go through a key development phase in near-perfect weather conditions, traders said.
The price of all crops fell last week as favourable weather in the Midwest, the Canadian Prairies and Europe raised the prospect of large harvests this fall. Basis levels for corn and soybeans in the United States also fell sharply as farmers cleaned out bins in advance of harvest. Exceptionally tight old crop stocks had previously been keeping basis bids strong.
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There was also no threatening weather in the Canadian Prairies Environment Canada forecast, which predicted cooler than normal temperatures in the last week of July, followed by seasonal temperatures in the first week of August.
Canola last week fell below $500 per tonne for the first time since December 2011, and on July 29 the November contract was trading below $490, a level also not seen since October 2010.
Cool temperatures and rain in some dry areas were expected around the U.S. Midwest this week, making for good conditions for corn pollination.
Temperatures in the Midwest were expected to remain cooler than usual for the next 15 days. MDA meteorologist Don Keeney said the weather was near ideal for corn, which was pollinating later than usual because of planting delays this spring.
As much as 7.5 to 10 centimetres of rain was expected in central Kansas this week, with smaller amounts forecast for the southwestern Midwest.
Southeastern Iowa and central Illinois were expected to receive the least amount of rain. Iowa, the largest corn state in the U.S., has been drier than normal for several weeks.
Wheat prices also declined last week. Dealers said that was driven mainly by the weakness of the corn market, and the market was oversold.
“In view of the much tighter market situation (in wheat compared with corn), we regard the wheat price slump as exaggerated,” Commerzbank said in a market note July 29.
However, weather remained the focus, and the benign conditions would likely weigh on corn and soybeans as the crop developed, said analysts.
“U.S. weather remains cool, and the presence of showers continues to support mostly favourable yield prospects,” said Luke Mathews, commodities strategist at the Commonwealth Bank of Australia.
