By Mary Kennedy
The national average soybean basis chart gives a pretty clear picture of how poor the basis has been performing so far this crop year and needs some holiday cheer.
The DTN national average soybean basis has continued what I call "bottom feeding" from the prior crop year. As seen in the attached chart, it currently sits at the same level as the minimum five-year average; not quite below it like the 2016-17 basis was for most of that crop year, but close.
On top of plenty of supplies in the U.S., soybeans are facing competition from South America, which is apparent in the lagging export shipments versus last year at this time. In the latest weekly USDA export sales and shipments report on Dec. 14, cumulative soybean shipments were down 13% in 2017-18 from a year ago.
I talked to a few farmers, elevator managers and grain merchandisers around the Midwest and they didn't tell me anything that would make me think that chart will change anytime soon.
"Soybean basis in Michigan continues to be the cheapest it has been for a number of years despite a smaller crop in Michigan than last year," said Robert Geers, merchandising manager at Michigan Agriculture Commodities. "Overall soybean yields were lower than the past two years purely due to a lack of rain in August. August rains really make or break a soybean crop in Michigan, and we just didn't have rain in August like we have had the past two years, and yields suffered. I think the USDA is pretty close on their estimates at 45 bushels per acre, which is down from 50.5 bpa last year."
"Soybean yields were slightly above average and down from last year in our area, but we did have a few more acres of soybeans than last year as well, so I would say the total production is probably similar to last year," said Ryan Wagner, Wagner Farms of Rosyln, South Dakota. "We typically see a post-harvest pop in basis and that happened again this year as it has narrowed up $0.15 to $0.20 since bids were rolled from X (November) to F (January) in late October. Even with the basis improvement, cash bids are still right around -100F, which is about like we saw last year at this time. I would say demand is steady as we are highly dependent on rail moving beans to the PNW, so hopefully we can stay away from a big blizzard delay. With the flat price drop lately and corn not going anywhere, I think guys are content to keep their beans in storage for now and see what happens after the first of the year."
Mark Rohrich of Maverick Ag, Ashley, North Dakota, agrees that overall, soybean basis is disappointing. "The typical basis at the elevator we go to is -0.90 but currently today is at -1.05. But reality is, if the beans are in a bin, a futures rally or basis increase will be what it takes to bring them to market or get them sold into future months. Right now, most grain is sitting pretty tight. Our soybean crop was boosted by late rain to a good crop. Better than we were expecting most of the summer. Not as good as 2016 soybeans but decent, and in the area, soybeans were all over the board. Soil moisture from previous year's crop made a difference in this year's. Wheat, then soybeans did better than beans on beans or soybeans on corn ground."Click here to see more...