Market Matters Blog

Soybeans

National average soybean basis of 17 cents under the July futures is 6 cents lower than last week and is still higher than the DTN five-year average basis at this time. Even with the drop in basis again this week, the DTN average cash index is 11 cents higher than one week ago today. As cash prices in some parts of the Midwest continue to range from $15.00 to as high as $15.50, most end users have not pushed basis levels and, in some cases, continue to lower them as many saw good farmer selling in late May. Basis bids along the river continued to weaken as high waters closed the river to all traffic. The Corps of Engineers at St. Louis closed a 5-mile stretch of the Mississippi River Tuesday and the river crested on Wednesday morning at 40.52 feet. The closure is in addition to the 8 locks closed up river from northern Iowa to St. Louis. The USACE closed the locks because the river in those areas rose over the lock gates, making the locks inoperable. The Corps has reported that at least 70 barges are stranded up river due to the closures with no prediction as to when the river will reopen to traffic.

Corn

National average corn basis this week of 33 cents over the July futures is unchanged from last week and 15 cents higher than the 5-year average strongest basis level at this time. Basis strength was seen in various Midwest ethanol plants as the ethanol futures moved higher than corn late last week, boosting margins. The EIA reported ethanol production for the week ending May 24 was down 1.4% last week and 4.3% lower than this time last year. Supporting ethanol prices was EIA's report that stocks of ethanol were at historically low levels last week. Even though margins have increased for plants, cash corn is extremely tight, which has kept production levels from rising. Basis bids along the upper Mississippi River were also weaker due to high water causing barge traffic to cease. On Monday, USDA reported 91% of corn was planted as of Sunday, but states in the upper Midwest are behind and may not finish planting as rain continued to soak fields. Missouri is 14% behind from last year, Minnesota is 13% behind, Iowa is 12% behind and Wisconsin is the farthest behind at 24%. Some farmers in rain soaked northeastern North Dakota, where corn acres were expected to rise, have abandoned plans for planting corn and may turn to canola or beans.

Hard Red Winter Wheat

National average HRW basis for this week at 21 cents under the July futures is unchanged from last week and is in line with the 5-year average of the strongest basis at this time. Mills are still looking for spot supplies as winter wheat harvest continues to be delayed and there is still concern over quality in some areas of key winter wheat states. USDA reported Texas was 18% harvested through Sunday vs. 36% at this time last year and the 5-year average of 21% and Arkansas is 1% harvested vs. 91% at this time last year and the 5-year average of 28%. Development of the crop is behind with USDA reporting 73% of the crop is headed vs. 88% last year at this time. South Dakota winter wheat was only 2% headed vs. 85% last year and the 5-year average of 27%. The wheat in Oklahoma is almost completely headed, but is behind in the soft dough stage at 60% vs. 100% last year and the 5-year average of 93%. The soft dough stage is where the kernel accumulates most of its final weight as it heads to maturity and into the hard dough stage where the wheat begins to ripen.

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