Market Matters Blog

Gulf Soybean Basis, New-Crop Export Sales Firm

By Mary Kennedy , DTN Basis Analyst
(DTN chart)

National average soybean basis for this week at 94 cents over November futures is down 2 cents from last week and is 77 cents higher than the DTN 5-year average at this time. Basis levels have been mixed, but remain steady as tight supplies and lack of farmer selling continue to concern end-users. Cash soybean prices have been rising since August 12, following a bullish USDA report. Soybean ending stocks were reduced and yield estimates went from 44.5 bushel per acre in July's report to 42.6 bushels per acres which, like the stocks number, was below trade expectations. As the week continued, prices rose on concern that drier weather forecasts expected over the next 10 days will stress the soybean crop. Also supporting soybean prices are continued strong export sales with Dow Jones reporting new-crop bookings up 22% from last year with China as the main buyer. USDA reported on Thursday that since late July, soybean basis levels in the Gulf have been averaging nearly $1.80 per bushel, which is nearly twice as much as the Gulf basis for all of July. Since late July, barge freight has been rising with more demand for barges seen in the deferred months for new-crop soybean shipment.

USDA's weekly Grain Transportation Report stated for the week ending August 10, Illinois barge freight is up 9 cents per bushel and is 29% higher than last week. Barge freight in St. Louis was up the same as Illinois, up 11 cents per bushel in the Cincinnati corridor and up 10 cents per bushel in the lower Ohio corridor. USDA reported for the first quarter of 2013, the cost of shipping soybeans through the U.S. Gulf was slightly higher due to increases in truck and ocean rates and the added rail cost during that period. Remember during the first quarter of the year, the Upper Mississippi River was still closed so grain had to be railed from that area to St. Louis. The grain was then loaded on barges heading down to New Orleans and loaded onto ocean-going vessels.

A total of 284 grain barges moved down river for the week ending August 10, which was 16% higher than last week and 376 grain barges unloaded in New Orleans, which was the same as last week. Barge grain movement for the week ending August 10 totaled 427,550 tons which was 12% higher than the previous week, but the combined total is 30.7% lower than this time last year. At that same time last year, an 11-mile stretch of the Mississippi River was closed near Greenville, Miss., stranding nearly 100 barges when a barge ran aground due to drought-induced low water conditions. Traffic was stopped there for nearly 10 days as the Coast Guard worked to free the sunken barge and dredge the area near the accident. The waiting barges on either side of that stretch of river had to stagger movement north and south between night and daytime hours, further stalling traffic in that area.

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