Soybean Harvest Reaches Midway Mark, Basis Likely to Climb
Next week we will be reporting on the results from FBN farmer soybean yields, but right now, the early data shows little to suggest that USDA will need to lower their soybean yield.
In Indiana and Ohio where we have fairly good representation, the soybean yields from farmers reporting to FBN are up about 14 bushels from last year, but USDA for these two states expects only an 8 bushel increase.
Basis levels are starting to surge as harvest hits the final stretches of the season.
With U.S. harvest of corn and soybeans at 63% and 72% complete, respectively, as of USDA's last reading on October 28, cash basis is starting to trend higher across much of the country. In the eastern Corn Belt of Indiana and Ohio, basis levels have seen the most pressure from harvest this season as yields there are coming in very strong.
This year has one of the worst years on record for soy basis, and you have to go back to 2007 to find basis levels as bad as this year. The crop year 2007 found some support going into harvest as crop production was not as good as originally thought. But this year, production potential seems to be as good or better than what the market has been expecting.
Also helping to give basis levels a boost is a sharp drop in barge rates. Flooding a few weeks ago had hampered barge movements and elevated the cost of barge freight. As river levels return to normal, and as exports have been seasonally weak, this has helped push barge freight down by 5 to 10 cents a bushel in recent days, which gives an added boost to basis at river buyers.
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