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Rising Barge Rates Hammer Soybean Basis on River System

Rising Barge Rates Hammer Soybean Basis on River System

16 November 2013

ANALYSIS - This week, GeoGrain saw basis across the US stay mostly unchanged for corn, but fall by 2 ½ cents for soybeans.

GeoGrainThere was a lot of activity along the river this week, with barge rates rising sharply and causing soybean basis along the river to drop by 12 ¼ cents.

Corn basis was mostly steady throughout the US this week, increasing by ½ a cent on average throughout the US. Despite the sharp increase in barge rates this week corn basis along the river only fell 2 ½ cents, partially supported by a 7 cent basis gain at the Gulf.

Ethanol plants eased their bid higher by 1 ¼ cents on average throughout the US as weekly ethanol production figures came in at the highest levels since February 2012.

Soybean basis dropped 2 ½ cents this week as the futures market rallied into Thursday triggering increased farmer selling. Barge rates climbed sharply again this week along the Ohio and the Illinois river pushing basis down at river terminals by an average of 12 cents.

Unlike corn, soybeans did not get supported by a stronger Gulf bid. Instead, soybean basis at the Gulf dropped by 3 cents this week. Soybean plants also dropped their bids by an average of 4 ¾ cents this week spurred on by stronger farmer selling into a rising futures market.

With a sharp selloff in the futures market on Friday, the market is likely to see soybean basis firm next week as farmer selling dries up. Keep a close watch on barge rates next week as any declines will help firm soybean basis.

GeoGrain Cash Basis

Top image via Shutterstock

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