Market Matters Blog

National average soybean basis for this week at 46 cents under November futures is up 1 cent from last week and is 5 cents lower than the DTN 5-year max average at this time. Soybean basis has been firm as cash prices moved slightly lower with expectations for harvest to resume this week after rain and snow stalled weekend progress. Basis levels along the river were firm as exporters need to move soybeans to the Mississippi Gulf for the October export business already contracted. Prior to the government shutdown on October 1, the last USDA Grain Transportation report on September 26 stated grain loadings at the Gulf increased for the week ending September 19 with 43 ocean-going vessels loaded, the highest since November 15, 2012. The number of vessels expected to be loaded through the end of September was at 65 and is the highest number expected to load since Nov. 6, 2012. Barge freight has dropped after the harvest stopped last weekend and soybeans have been slow to move to the river for export at the Gulf. Barge freight moved higher from levels one week ago, but have dropped 25% to 50% in the St. Louis and Cairo corridors as low river levels caused a temporary closure in that area. The Corps has been dredging the area since last weekend and due to the narrow channel, tows were stopped from moving through Locks 27 which sees more traffic than any other lock on the Mississippi River. A barge company reported that when the area reopened to traffic, 22 tows were waiting to pass with 7 tows waiting Wednesday and 15 tows waiting Thursday morning. Until the channel is deemed safe enough for regular traffic patterns, tows will be move slowly through that area causing further delays in reaching the Gulf. While water levels in that area should improve by the weekend, the NOAA river forecast shows that unless more substantial rains materialize, levels could drop once again. The Mississippi River at St. Louis was at 1.42 feet Thursday morning and is expected to move to 2.1 feet by the weekend. While the river is not in the near desperate situation we saw 1 year ago, a lack of moisture heading into the winter will most certainly cause problems for barge traffic.

National average HRW wheat and SRW basis remained firm the past week and strength has been seen in basis levels for export at the Gulf. There have been unconfirmed rumors that China bought more SRW wheat and that Brazil was still hungry for more U.S. HRW milling wheat. The average HRW basis this week at 29 under the December futures is 24 cents higher than the max 5-year average at this time. The average SRW basis at 39 under the December futures is 1 cent lower than the max 5-year average basis at this time. The demand for winter wheat has been supported by Brazil and China as both countries have come to the U.S for milling quality wheat with some of their crops unfit for milling use due to weather problems during the growing season. Prior to the USDA shutdown, wheat inspections reported on September 30 were at 33.0 million bushels, which was above the 17.7 million bushels needed that week to stay on pace with USDA's demand projection of 1.100 billion bushels. Wheat inspections for that week to the Mississippi Gulf were for 6.5 million bushels going to China and Brazil. This past Monday, FGIS reported inspections on their website showing total wheat inspections at 29.8 million bushels which were once again above the USDA projection for that week. With stronger basis levels recently at the Gulf for SRW, HRW and soybeans, movement of these grains for export out of the Gulf for current and probable future business remains steady.

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