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Basis Outlook - Soybean buyers get ready

Basis Outlook - Soybean buyers get ready

Basis strengthens this week as shippers know river will open

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.

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.

For more corn, wheat and soy news, commodity marketing recommendations and daily commodity charts, subscribe to Farm Futures' free e-newsletter, Farm Futures Daily, and keep up during the day with Farm Futures on Twitter.

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