Soybeans benefited from a perfect recipe for stronger basis last week: Good export demand, decent crush margins, tightening supplies and a below average harvest pace all combined to boost bids in the cash market.
China’s return to the market helped strengthen basis at both the Gulf and Pacific Northwest. That gave the cash market a lift at rail terminals headed west while bids strengthened up most of the river system. Processors had to match those gains to attract supplies as well. Average basis strengthened more than four cents a bushel, with the only areas of weakness showing up on parts of the western Plains where dry conditions helped speed combines and decent crops mean grain supplies will exceed storage capacity.
Most other areas should have plenty of room, helping soybean basis recover from the disastrous levels of the trade war. Bids are still below average but continue to narrow that gap.
Corn harvest is also slow, but rains were fairly light last week, adding hedge pressure from elevators. Basis actually strengthened in many areas but weakened in some of the states with big production, like Iowa. So, on a weighted calculation, average bids weakened around three cents a bushel, with a soft tone also noted on the western Corn Belt.
A big drop in barge freight rates also helped give shippers more leeway. Bids at ethanol plants improved too, pressuring average operating margins after four weeks of improvement.
Wheat export business isn’t lighting the world on fire. But it’s been good enough to keep bids steady to a little stronger for winter wheat at Gulf Ports with the crop locked up tight in the strong hands of commercials. The cash market for spring wheat continues to strengthen with up to 50 million bushels affected by the October blizzard on the northern Plains that stretched into parts of the Canadian Prairies as well.
Sorghum export demand from China has yet to show up. But rail bids down to the Texas Gulf strengthened anyway, helping keep average bids firm.
The interactive maps below show how basis fared around the country. Click the box in the upper left-hand corner of the map to bring up the legend, and to turn features show on or off.
Download a complete version of the outlook with extensive charts and analysis using the Download button at the end of this report.
Bryce Knorr first joined Farm Futures Magazine in 1987. In addition to analyzing and writing about the commodity markets, he is a former futures introducing broker and is a registered Commodity Trading Advisor. He conducts Farm Futures exclusive surveys on acreage, production and management issues and is one of the analysts regularly contracted by business wire services before major USDA crop reports. Besides the Morning Call on www.FarmFutures.com he writes weekly reviews for corn, soybeans, and wheat that include selling price targets, charts and seasonal trends. His other weekly reviews on basis, energy, fertilizer and financial markets and feature price forecasts for key crop inputs. A journalist with 38 years of experience, he received the Master Writers Award from the American Agricultural Editors Association.
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