Basis Outlook - Soybean buyers get ready

Record inventories and the trade war with China combined to send the cash market for 2018 crop soybeans off the rails. Still, there are finally some glimmers of hope on the horizon. Don’t expect bids to get back anywhere close to normal. But the cash market showed signs of a pulse this week.

Most of the locks north of St. Louis on the Mississippi River remain closed by high water, with no listed reopening dates yet after the latest “bomb cycle” to drench the upper Midwest. Buyers at river terminals were looking for soybeans nonetheless, taking advantage of cheaper barge freight costs to boost basis.

Average bids firmed four to five cents this week thanks to that help. More empties are making it up river despite the floodwaters. Water levels are slowly falling in the Twin Cities but those on the Mid-Mississippi may continue to see major flooding for the rest of the coming week.

A large book of unshipped sales, many to China, will needed to be filled during the spring and summer. Corn has been in less demand lately, but should also see a steady stream of exports. That helped firm corn bids too at some terminals.

Corn basis is actually above average in some areas and is generally trending stronger than year ago values too. Parts of Iowa saw a spike this week as buyers got ready for the big storm, with reopening rail lines attracting corn as well. Processors were also pushing bids this week. Soybean crush margins remain good and there was even a little more optimism in the ethanol market. Plants raised bids as ethanol prices firmed thanks to the rally in crude oil that included a big spike in gasoline futures.

The wheat market was all about destination this week. Basis for winter wheat at the Louisiana and Texas Gulf weakened. Terminals and country elevators feeding those areas were generally weaker as a result. Romania and Ukraine won the latest tender from Egypt Friday, with the cost of soft red winter wheat from the Gulf not competitive.

Hard wheat moving to the Pacific Northwest was another story, strengthening basis from the western to the northern Plains as demand from Asian buyers remains good.

Sorghum basis was steady. While exports remain limited due to lack of Chinese buying, some end users may be getting nervous about new crop after USDA reported lower prospective plantings a the end of March.

Wheat basis also firmed a penny or two, with better bids seen mostly on the Plains and Midwest. Strengthening of note occurred on parts of the Mississippi and Ohio rivers, where soft red winter wheat will be needed to fill recent orders from Egypt. Hard wheat bids also firmed on rail lines on the Plains headed west and south to the Texas Gulf.

Sorghum basis also joined in though exports recently have been lackluster as the market waits for China to start buying. Farmers look ready to slash seedings according to USDA, which could eventually increase demand for leftover 2018 grain.