The historically low water levels on the Mississippi River have caused a trifecta in the soybean market. Its increased freight weights, slammed basis levels and taken a real toll on exports. So, cash soybean prices at harvest are running well under a year ago.
With impaired traffic in the U.S.’s main export shipping channel, USDA is reporting soybean exports so far this marketing year total 682 million bushels, down 32-percent from last year. And basis levels on soybeans have imploded in many areas along the river with barge restrictions and better than expected yields in some areas like Illinois.
Mike Zuzulo, Global Commodity Analytics says, “The Memphis basis for soybeans has just collapsed. I think it’s a $1.80 under right now and just two to three weeks ago it was 60 under or 70 under. And we’re sitting here with daily moves of almost 60 cents because of this pulling of the basis and just realizing we’re not going to get the demand.”
As a result, in markets farther away from the Mississippi River soybean basis levels have also weakened more than normal during harvest. That’s complicating marketing decisions for farmers who had tight basis in 2022 allowing many to sell off the combine.
Nick Tsiolis, Farmers Keeper says, It doesn’t take a genius to know out there that basis is falling. We’re also seeing outside of those areas where processors are starting to pick that up and raise their basis but what we’re noticing in the numbers is because they know that demand has fallen, and capacity has fallen so much at the river. They’re not spiking their bids nearly as much as they’re used to.”
Corn exports are pacing better than soybeans and are up 9-percent over last year, totaling 566 million bushels for the current marketing year. Zuzulo says that’s in large part due to Mexican purchases of corn, which can be moved by rail versus barge.
