Soybean Basis Weakens Amid Farmer Sales, Cash Corn Struggles at 5-Week Lows

Strategic Insights -

Prices for soybeans showed significant weakness on Monday, despite a decline in futures, as farmers sold off large volumes of beans. Cash corn prices, meanwhile, were languishing at a 5-week low. A significant increase in soybean sales by farmers contributed to the weakening basis, while hedge pressure also weighed on the futures market.

Key Takeaways:

  • Daily spot soy basis dropped 2-9 cents per bushel at several major markets monitored by Dow Jones Newswires, following a sharp increase in soybean sales by farmers last week.
  • Daily-average receipts of soybeans at primary interior terminals surveyed by the CBOT rose by 26% last week.
  • Cash corn prices had fallen to mid-March lows, with a merchandiser for an Iowa corn processing plant attributing the decline to the expectation of a new-crop corn supply in 5-6 months.
  • US grain futures crumbled overnight, with corn futures prices settling at $3.76 1/4, down from May CBOT corn futures settlement of $3.76 1/4.
  • National cash price indices maintained by the Minneapolis Grain Exchange showed an average basis of -45 3/4 cents for soybeans relative to May CBOT futures.
  • Crop Weather reported that rain was soaking the Great Lakes and eastern Midwest, with the potential for significant corn planting in the coming week.

Statistics:

  • 2-9 cents: The drop in daily spot soy basis per bushel at several major markets.
  • 26%: The increase in daily-average receipts of soybeans at primary interior terminals surveyed by the CBOT last week.
  • $3.76 1/4: The May CBOT corn futures settlement price.
  • -45 3/4 cents: The average basis of soybeans relative to May CBOT futures.
  • 5-6 months: The projected timeframe for the new-crop corn supply.
  • 10.05 1/4: The current national cash price for soybeans at the Minneapolis Grain Exchange.
  • $3.52: The average domestic cash price for corn.
  • $4.06 1/4: The average domestic cash price for soft red winter wheat.

Sources:

  • Dow Jones Commodities News via Comtex, April 20, 2009
  • Gary Wulf, Dow Jones NewsWIRES, April 20, 2009
  • Freese-Notis Weather, April 20, 2009