Did beans bounce off a seasonal low?

By Jon Scheve, Superior Feed Ingredients, LLC

The corn market wasn’t very exciting this week as the range in closing prices was only 12 cents. This was the smallest one-week trading range since late July.

Harvest is progressing rapidly with wildly variable yield reports due to disease pressure in parts of the country. The northwest Belt’s yields are coming in as predicted with the southern half of the belt having really good yield reports. With what I have seen so far, the current USDA yield estimate seems reasonable. In the last 16 years, the final yield number in January compared to the September estimates were split evenly being either higher or lower.

While basis values are pulling back in areas where harvest has started, it is still higher than normal for this time of year. Given the large basis market inverse over the last 2 months, this isn’t surprising and validates that most commercial storage and end user facilities were empty as harvest began. This should mean a nice basis bump or futures rally once harvest is complete. 

Soybeans this week traded to their lowest level since mid-June but managed to trade off those lows by the close on Friday afternoon. At this point, export sales pace will need to increase to drive futures higher than $13. However, it seems likely harvest could keep prices range-bound between $12.50 to $13 for another few weeks.

Even as harvest has started in the western Belt, the bean basis there has remained incredibly strong for this time of year. This is likely due to ocean freight rates out of the Pacific northwest to Asia being a better value than through the Gulf. If these ocean freight rates continue through winter, western states may see higher than normal basis levels after harvest.

Please email jon@superiorfeed.com with any questions or to learn more. Jon grew up raising corn and soybeans on a farm near Beatrice, NE. Upon graduation from The University of Nebraska in Lincoln, he became a grain merchandiser and has been trading corn, soybeans and other grains for the last 18 years, building relationships with end-users in the process. After successfully marketing his father’s grain and getting his MBA, 10 years ago he started helping farmer clients market their grain based upon his principals of farmer education, reducing risk, understanding storage potential and using basis strategy to maximize individual farm operation profits. A big believer in farmer education of futures trading, Jon writes a weekly commentary to farmers interested in learning more and growing their farm operations.

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