Market Matters Blog

Soybeans

The accompanying chart shows the strongest (red line) and weakest (blue line) the national average soybean basis (DTN National Soybean Index minus Chicago futures contract) has been over the last five marketing years along with the five-year average basis (purple line). As the chart indicates, the national average soybean basis of -35 cents under the January futures (green line) is up 1 cent from last week and is still above the five-year average of the strongest basis at this time. However, the soybean basis levels were weak along parts of the river with bids in the Twin Cities corridor dropping at the end of last week as their shipping season ended for the winter. In the Illinois corridor, basis levels fell as spot barge freight increased due to the reduced the flow in the upper Missouri River that began on Friday, November 23. This reduction of water flow into the Mississippi River could possibly close the river from St. Louis to Cairo, Ill., where low water levels and exposed rock formations are already hampering barge traffic.

According to USDA's weekly Grain Transportation Report, "In addition, the Mississippi River Locks 27 -- the southernmost locks on the Mississippi River near St. Louis, Mo. -- will have its main 1,200 foot chamber closed for repairs from December 10, 2012, to March 1, 2013. The smaller auxiliary 600-foot chamber will be open during that period, but there will probably be delays because traffic will have to wait to use the smaller chamber."

USDA reported that barge grain movement was 20% higher to end the week on November 24, but 30% lower than a year ago at the same time. Barges unloading in New Orleans totaled 655, which was down 27% from the previous week. Soybean movement along the river still accounts for the bulk of the grain shipments with 437,000 tons of soybeans moving by barge last week vs. 335,000 tons at the same time last year. Corn movement has been behind last year's total as corn exports have been dismal as of late. According to the USDA, there was only 307,000 tons of corn moving by barge on the river last week vs. 702,000 tons one year ago at this time.

Mary Kennedy can be reached at mary.kennedy@telventdtn.com