Market Matters Blog

Weekly national average soybean basis of 47 cents over the July futures is 3 cents higher than last week and continues to move above the five-year average of the strongest basis at this time. Soybean basis and cash price moved higher last week as tight supplies are still a concern for end users. Late last week, it was reported that a second soybean processing plant in the Midwest will be idled indefinitely due to poor margins and lack of supplies. The basis along the river was lower early last week as high water caused problems along the Illinois River and the Mississippi River in St. Louis. As the week ended, river basis was firm as barges were able to move to areas waiting for empties to load soybeans to the Gulf. Over the weekend, the Marseilles lock and dam on the Illinois River temporarily reopened to allow river terminals to move previously contracted soybeans to the Gulf, which improved basis levels in that area. The lock and dam at Marseilles is scheduled to close again May 10 for further repairs and may not reopen for 5 to 10 days, according to barge line sources. Due to continued high water in the Illinois River, barges are subject to restrictions of slow speeds and no wake.

Corn

National average corn basis this week of 27 cents over the July futures is up 1.5 cents from last week and continues to move higher than the five-year average strongest basis level at this time. Corn basis has continued to stay strong as tight supplies and slow corn planting have kept prices firm. However, the cash corn price on Monday was sharply lower after futures dropped on drier forecasts, which may allow farmers in key areas to resume or begin planting corn. The basis on the interior has been strong since late last week at various Midwestern ethanol plants, as the drop in corn futures and a higher ethanol market gave margins a boost. The EIA report from last Wednesday for the week ending April 26 stated ethanol production was up .5% from the previous week, but news that supplies fell 3.2% from the prior week, the lowest level since early November 2012, gave a boost to the ethanol market.

Hard Red Winter Wheat

National average HRW basis for this week at 24 cents under the July futures is up 3 cents from last week and is above the five-year average of the strongest basis at this time. While interior demand is steady at best and nearby cash movement from farmers has been slow, basis continues to remain firm as the market is still uncertain about the quality and quantity of the new crop. USDA reported on Monday that winter wheat conditions declined last week, with 39% of the crop poor to very poor vs. 35% the prior week as freeze and drought damage have occurred in parts of Kansas, Oklahoma and Texas. Wheat heading was reported at 20% vs. 64% at this time last year, with Missouri, Oklahoma, Kansas and Indiana well behind last year's pace. The HRW cash price was strong most of last week, but ended the day lower Friday after the market saw better-than-expected yield predictions from the crop tour and forecasts for showers to head into some of the key areas of the Plains over the weekend into this week.

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