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Cash Grain Insights

RSS By: Kevin McNew, AgWeb.com

Kevin McNew is President of Grain Hedge and Geograin. McNew was raised on a farm in central Oklahoma and received his bachelor’s degree from Oklahoma State University, and master’s and Ph.D. degrees in Economics from North Carolina State University. For over a decade, he was a Professor of Economics at the University of Maryland and Montana State University, focusing on commodity markets. He has received numerous academic awards for his research and outreach work, and was (and still is) widely regarded for boiling down complex economic issues into easy-to-understand concepts for applied life.

 

Soybean Basis Feels Effects of Domestic & International Markets

Apr 19, 2013

It was a tale of two markets this week in the cash soybean market.  Domestic end users were sharply lower on basis as soybean crushing plants begin to cut back production in anticipation of future lower prices, while river markets continue to be bolstered by strong international demand. For the week, U.S soybean basis fell 5 cents a bushel while corn basis continued to tow the line at unchanged.

In the corn market, sluggish export demand keeps basis levels stagnate although still mostly holding up at lofty levels. Ethanol processors did bid up basis this week by 1-cent a bushel on average as ethanol processing margins continue to hold up at their highest levels of the marketing year. However, at the Gulf spot corn basis was unchanged as US export business continues to be non-existent.   Basis levels at river terminals averaged a 1-cent loss.

spotcorn 2013 04 19

GHtakecontrol

For soybeans, the average US spot soybean basis was down by 5-cents a bushel, but this masked the divergence across the two key sectors. At the Gulf, export basis levels bucked the broader trend which helped push basis levels along the lower river system higher. Upper river terminals are starting to run into flooding issues which is beginning to cause some stoppages of deliveries and limiting basis gains there. For crushing plants, double-digit losses in the Eastern Cornbelt were fairly widespread, while Western processors were down only slightly or even stronger. 

spotsoy 2013 04 19

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