All commodities traded opposite the dollar yesterday; the dollar index was down 0.4 early and resulted in much higher commodity prices. The dollar reversed and tested Monday’s 20 year high and every commodity lost much or all of the day’s earlier gains.
Friday’s Quarterly Stocks Report will provide grain and oilseeds some independence from the dollar’s exchange rate for a short while, maybe even several days. That report will be released at 10 AM Mountain Time. Preparation for this report includes USDA’s first look back at the 2021 crop production numbers, the second look back at 2020 production numbers and the third and final look back at the 2019 production numbers. Any or all of those production numbers could be changed to match the known use the past three years with the current inventory as of September 1st. While we are not predicting any USDA induced earthquakes, the people in the trade with common sense have long held that the 2019 corn and bean crops were way over-stated by USDA, which is the reason the basis has been firmer than ever before the past two years despite exceptionally high futures prices.
Barge freight rates have exploded to the upside as the lack of water in lower Mississippi increased the cost of river freight. That means the basis will weaken to compensate for the higher barge freight rates. Rainfall across the Midwest is predicted to be less than normal for the next two weeks, so shallow water will get shallower as we roll into peak harvest.