Posted by: usset001 | October 17, 2008

A better soybean basis

On July 3, Nov’08 futures peaked at $16.31 per bushel. When new crop soybean futures are $7 off the highs, it can be difficult to find good news to share. But I found some – after more than a year of weakness, the soybean basis is finally starting to show some sustained life. A soybean processor in Southern Minnesota is bidding 30 under for new crop beans and 35-45 under for several months out and into the new year. This same processor was bidding 100 cents under and wider for new crop beans through much of the summer. The story is the same in central Iowa, where new crop bids of 100 cents under or wider were the norm in August. I’m seeing quotes of 50 cents under or better just as the harvest is coming to a close. In east central Nebraska, bids for new crop soybeans of 120 cents under in August now stand at 55 under.

An increase of 50 cents or more in the soybean basis is reason to celebrate, particularly for producers who used put options, futures or HTA contracts to price before harvest.

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