BargeOnRiver Ron Chapple Stock/ThinkstockPhotos
Aerial of barge on Mississippi River in Baton Rouge, Louisiana.

Basis Outlook - River reopens to mixed demand

Basis firms all around as weather impact rules

The Upper Mississippi River is finally open for business. But don’t expect business as usual as shippers try to clear a logjam of barges amid high uncertainty over supplies in the coming year.

Some 15 tows moved upriver north of St. Louis in the first 24 hours after the harbor in St. Louis was given a green flag to reopen. While seven tugs moved down river towards St. Louis they carried few barges, and will instead be putting together tows. Northbound locking was permitted to get going first get the flow of grain going again towards the Gulf.

High water is expected to limit tow sizes down the length of the river, which could face more interruptions depending on rainfall in coming days. But buyers didn’t waste any time making sure they had grain to move, keeping corn basis steady to stronger along much of the Illinois and Mississippi Rivers. But bids on much of the Ohio River faded, giving back some of the premium they enjoyed because that river was still open to the export market.

Corn basis on average strengthened a nickel last week, getting a helping hand from ethanol plants able to firm bids thanks to margins that improved on stronger prices for fuel and DDGSs

Soybean basis also firmed last week about a penny and a half on average. Gains were seen along much of the river system including the Ohio River, as shippers scramble to fulfill a record book of outstanding export sales this summer. The total of 408 million bushels includes 221 million purchased by China as a goodwill gesture when trade talks with the U.S. restarted this spring. Those negotiations stalled in May and face a potential turning point at the end of the week when President Trump and President Xi of China are expected to meet at the G-20 summit in Japan.

Bids from soybean processors were mixed as margins eased on the rally in beans. Members of the National Oilseed Processors Association crushed less than expected last month as Argentine plants recover from a poor crop last year. Bids were steady to weaker in the west but improved in the east, where production is threatened by late planting.

Stronger soybean basis was also noted in areas of the western part of the growing region hit by weather, with higher bids off the PNW also encouraging rail terminals. Toledo basis also improved again as some beans are moving out of the Great Lakes due to the constraints on the river system.

Wheat basis also firmed last week, helped by weather. Rain is hurting soft red winter wheat production and also slowing the hard red winter wheat harvest, making the known quantity of remaining 2018 crop supplies a better bet for buyers. Only 9 lots are registered for delivery in Toledo with 5 available in Kansas ahead of first notice day at the end of the week.

Sorghum bids also firmed, helped by higher corn costs. But weaker export basis at the Texas Gulf flowed up rail terminals as lack of Chinese demand remain a bearish force that makes this week’s trade talks all the more important for the feed 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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