As the 2014-15 crop marketing year draws to a close, let's look at how basis fared in the past 12 months. In general, at the end of August 2015, corn, soybean and wheat basis is about 30 to 40 cents weaker than the 5-year averages for each crop.
The national average soybean basis for the last week of the crop year is at 7 cents under the November futures, 1 cent weaker than last week and 34 cents weaker than the DTN five-year average at this time.
The average soybean basis for the 2014-15 crop year was -35. Basis spiked at the beginning of the crop year as supplies became tight ahead of new-crop harvest. Processors were bidding strong with many paying above posted prices in order to meet their needs for crushing.
Once harvest began in late September 2014, with good yields reported, soybean basis dove off its highs -- which can be seen on the accompanying chart.
Soybean basis spiked a little in June as heavy rains caused the closure of the Illinois River twice, stopping river terminals from loading out beans. High water problems also existed in St. Louis, slowing and in some cases, stopping barges from getting to the Gulf and preventing empties from moving back up river.
After USDA surprised the market on August 12 with an average soybean yield estimate of 46.9 bushel per acre, the cash price fell apart, leaving the basis to do the work of enticing farmer selling in order to meet exporter and processor needs. The market had expected USDA to report lower yields due to heavy rains and flooding in much of the Eastern Corn Belt, causing many fields to go unplanted and damaging waterlogged soybean plants. As the crop year comes to a close, basis has been mixed, but new-crop basis has been stronger as exporters need soybeans to start fulfilling export contracts at the Gulf and Pacific Northwest.
The national average corn basis for the last week of the 2014-15 crop year is at 23 cents under the September futures, 1 cent stronger than last week and 29 cents weaker than the DTN five-year average at this time. The average basis for the crop year was -28.
Corn basis was steady most of this crop year thanks to decent export and ethanol demand. Ethanol plants have enjoyed positive margins much of this year, encouraging them to keep producing ethanol, which in turn requires more corn usage. In June, basis was firm due to the heavy rains caused by Tropical Storm Bill, which greatly affected the Illinois and Upper Mississippi river levels and caused problems down river as flood debris threatened moving tows and barges. Basis remained steady as the year came to an end, mainly due to continued demand from exporters and ethanol plants and lower cash prices caused by the prospects for a large harvest this fall.
The national average spring wheat basis for the last week of the 2014-15 crop year is at 47 cents under the September Minneapolis futures, unchanged from last week and 37 cents weaker than the DTN five-year average at this time. The average basis for the crop year was -10. Spring wheat basis was strong at the beginning of the crop year due to lower protein and low vitreous kernel content, along with rain, which prolonged harvest. Premiums for higher protein milling quality wheat spiked as mills vied for blending material. The high basis for the crop year for spot 14 protein on the MGEX spot market was at +350mwz and the high for spot 15 protein was at +675mwz. In contrast, current MGEX spot 14s are trading at +70 to +105 and 15 proteins are at +160.
As the 2015 new-crop harvest moves along, average protein so far has been reported at 14.3 vs. the final 2014 average of 13.6. With 75% of the spring wheat harvested as of one week ago, the samples so far are showing test weights of 61.9 pounds vs. last year of 60.6 and average vitreous kernel count is at 77% vs. last year of 65%, making the new-crop grade DNS vs. NS last year. Dark Northern Spring Wheat is the preferred flavor of wheat by the nearly all buyers of U.S. spring wheat.
Mary Kennedy can be reached at email@example.com
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