BASIS WILL REVEAL THE 'TRUE' GRAIN SUPPLY... Leading up to the September Quarterly Grain Stocks Report, we'll be watching corn and soybean basis for clues to the "true" supply coming to market. Corn harvest is at a record pace with 15% of the U.S. crop in the cart by Sept. 9. Since then, harvest activity ramped up and we expect harvest to be about one-third complete by Sunday. Early harvest activity in the Midwest is moving corn to market as farmers fulfill fall-delivery forward contracts. Once that's done (with harvest at about 50% complete), corn will start getting locked up in the bin. At that point, look for basis to strengthen. The story is similar on soybeans, but the market is still not providing any incentive to put beans in the bin. That should move more of the bean crop to market, limiting basis gains.
EARLY MATURING SOYBEAN VARIETIES SOLD OUT IN BRAZIL... South American crop consultant Dr. Michael Cordonnier says even though producers can't start planting soybean in Brazil until tomorrow and most won't begin until soil moisture conditions improve, demand for early maturing soybeans has been strong and many popular varieties have already sold out.
"As a result of a much smaller U.S. corn crop, international corn prices are extremely good and farmers want to maximize their safrinha (second-crop) corn production to take advantage of the good prices," says Dr. Cordonnier. "The safrinha corn is planted after the soybeans are harvested and the earlier the corn is planted, the higher the yield potential for the corn crop... If an early maturing soybean variety is planted in central Mato Grosso during the second half of September, the crop would be ready to harvest in early January, which would then allow enough time to plant the second crop of corn."
NEW RULES DRIVE UP FREIGHT RATES IN BRAZIL... Dr. Cordonnier also reports the new law in Brazil that reduces the number of hours a truck driver may work in a 24-hour period is having a "profound impact" on freight rates. According to the Mato Grosso Institute of Agricultural Economics (Imea) and the Cargo Transport Association of Mato Grosso (ATC), the current freight rate from Sorriso in central Mato Grosso to the Port of Paranagua in southern Brazil is 245 reals ($122) per ton compared to 205 reals ($102) at the end of July when the law took effect. Dr. Cordonnier says the worry is that during peak trucking season, there may not be enough trucks available to keep combines running efficiently.
EPA RAISES BIODIESEL MANDATE FOR 2013... The U.S. Environmental Protection Agency (EPA) today took action to establish the amount of biodiesel products refiners are required to use in diesel fuel in 2013. EPA's mandate increases the 2013 volume to 1.28 billion gallons from 1 billion gallons this year. Click here for more.
ASIAN SOYBEAN RUST ACTIVE ACROSS SOUTHEAST U.S... Several additional Asian soybean rust cases (SBR) have been reported recently. USDA says the number of reports indicates "widespread occurrence of rust in the South that will likely result in more or less complete coverage of soybean rust throughout the South.... over the next few weeks." Click here for more.