Technically Speaking

Seasonal Soybean Basis Blues

Source: DTN

As most of you have noticed, national average soybean basis continues to weaken. Last Friday's DTN National Soybean Index (NSI.X, national average cash price) was calculated at about 8.17 1/2, putting national average basis at 49 3/4 cents under the close of the November futures contract (green line on chart). This was roughly 12 cents weaker than the previous week's close of 37 3/4 cents. However, as the chart comparing 2015-2016 marketing year basis to the previous 5-year (blue line) and 10-year (red line) seasonal patterns, this weakness is not unusual.

Note that last Friday's national average basis calculation of 49 3/4 under was almost perfectly in line with the 5-year average of 50 under and the 10-year average of 49 3/4 under. Given that 2015-2016 is following the market's averages so closely it's interesting to point out that both the 5-year and 10-year seasonal studies show national average basis tend to bottom out at the close of the first week of October at about 60 1/2 cents under and 64 1/2 cents respectively. This would imply the NSI.X could lose another 15 cents to November futures over the next two weeks.

Though not shown on this chart, DTN also has regional basis indexes that are calculated daily. It's interesting to note that Friday evening saw the strongest basis in the Illinois region at about 17 1/2 cents under. On the other end of the spectrum was the North Dakota/Minnesota region calculated at 93 cents under. Other areas of weakness are on the western fringes of the growing area from central South Dakota through northwest Kansas. As for basis strength, the backbone remains the Mississippi River corridor where terminals systematically show prices in the $8.00 range. While normally strong, this still implies firm export demand.

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andrew mohlman
9/25/2015 | 7:47 AM CDT
End users in America could end up paying more than China for soy that is messed up. We're all being played by China to bad there are people helping them for self gain at country's expense