Basis gains despite transport woes Floods shut river system while congestion snarls rail traffic to Mexico By Bryce Knorr

Transcription

1 Basis gains despite transport woes Floods shut river system while congestion snarls rail traffic to Mexico By Bryce Knorr Transportation problems at harvest are nothing new for farmers, but when they occur most years the result is weak basis. But cash markets for corn and soybeans firmed on average last week despite problems suffered by just about every way grain moves. Heavy rains surging into the Mississippi River closed lock and dams, and the Army Corps of Engineers reported nothing was moving over the weekend from Muscatine, Iowa all the way to Clarksville, Missouri. While drier weather is forecast for this week, high water could be an issue all week in some areas, according to the National Weather Service. With export demand strong for corn, the problems sent shippers scrambling for supplies, strengthening basis, especially on parts of the system still moving. That included the Illinois and Ohio rivers and parts of the mid- and lower Mississippi that were still open. Soybean basis in the river pipeline followed a similar trajectory, even though lack of Chinese buying has slowed normally brisk harvest traffic. Growers on the northern Plains shipping corn and soybeans west also found better bids, though many were in no mood to sell yet due to unprofitable cash prices and very weak basis. Cash soybeans were priced below $7 in some areas. But further south, land-locked farmers encountered another problem. Major rail lines have declared embargoes on connections with Mexican shippers at key junctions including El Paso and Laredo, Texas. Mexico is the number one buyer of U.S. corn and also a leading customer for corn, soybeans, wheat and sorghum. That weakened basis headed from the border as far north as Nebraska. Hard red winter wheat basis appeared hardest hit, also impacted by slow exports. Sales of hard red spring wheat have been better, helping basis for that class firm. Hauling grain by truck was no bargain, either. Midwest diesel prices hit the highest level in nearly four years earlier this month, spurred by high crude oil costs, harvest demand and cutbacks in production at refineries performing seasonal maintenance. Diesel finally pulled back about a dime from those highs last week, but was still 5 cents a gallon higher than last year. The crude rally gave ethanol prices a much-needed boost, helping firm weak margins at plants that boosted production and raised corn bids to attract feedstocks. Margins at soybean processors stayed strong, with most boosting bids too.

2 Total U.S. Grain Storage Capacity Used At Harvest 1% 95% 9% 85% 8% 75% 7% 65% 6% % Percentage Of Storage Capacity Used At Harvest % 8% 6% 4% 2% %

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4 $.8 $.7 $.6 $.5 $.4 $.3 $.2 $.1 $- Barge offers to ship corn, Illinois to Gulf, per bu. $.7 $.71 $.7 $.7 $.6 $.57 $.53 $.53 $.53 $.52 $.51 $.5 $.5 $.5 $1.6 $1.4 $1.2 $1. $.8 $.6 $.4 $.2 Cost/Bu. To Ship Corn Illinois River To Gulf $. 9/2/14 11/2/14 1/2/15 3/2/15 5/2/15 7/2/15 9/2/15 11/2/15 1/2/16 3/2/16 5/2/16 7/2/16 9/2/16 11/2/16 1/2/17 3/2/17 5/2/17 7/2/17 9/2/17 11/2/17 1/2/18 3/2/18 5/2/18 7/2/18 9/2/18

5 $.7 Cost per bushel to ship grain from St. Louis to Gulf $.6 $.5 $.4 $.3 $.2 $.1 $.6 $.6 $.57 $.54 $.46 $.4 $.36 $.36 $.36 $.36 $.36 $.36 $.36 $.36 $- Source: St. Louis Merchants Exchange Rail Fuel Surcharges (cents/car/mile) Current Average $.4 $.35 $.3 $.25 $.2 $.15 $.1 $.5 $. $.5 $.1 Jan 14 Apr 14 Jul 14 Oct 14 Jan 15 Apr 15 Jul 15 Oct 15 Jan 16 Apr 16 Jul 16 Oct 16 Jan 17 Apr 17 Jul 17 Oct 17 Jan 18 Apr 18 Jul 18 Source: USDA

6 12, Baltic Dry Index 1, 8, 6, 4, 2, ,2. Barge Movements Through Lock & Dam 27 1, tons Corn Wheat Soybean 1, /26 4/26 7/26 1/26 1/26 4/26 7/26 1/26 1/26 4/26 7/26 1/26 1/26 4/26 7/26 1/26 1/26 4/26 7/26 1/26 1/26 4/26 7/26

7 Number of barges Grain Barges for Export in New Orleans Region Downbound Grain Barges Locks 27, 1, and 52 Grain Barges Unloaded in New Orleans 2 Source: U.S. Army Corps of Engineers and GIPSA Number of Barges Upbound Empty Barges Locks 27 Lock 1 Locks 52 Source: U.S. Army Corps of Engineers -

8 Corn Basis Illinois River Corn Basis 2 1 (1) (2) (3) (4) (5) (6) (7) 9/1 11/1 1/1 3/1 5/1 7/1 Average (1) (2) (3) (4) (5) (6) River System Corn Basis 9/7 1/7 11/7 12/7 1/7 2/7 3/7 4/7 5/7 6/7 7/7 8/7 Average

9 2 Eastern Corn Belt Corn Basis 1 (1) (2) (3) (4) (5) 9/7 11/7 1/7 3/7 5/7 7/7 Average Omaha Corn Basis - (1) (2) (3) (4) (5) (6) 9/6 11/6 1/6 3/6 5/6 7/6 Average

10 Western Corn Belt Corn Basis (1) (2) (3) (4) (5) (6) (7) 9/7 11/7 1/7 3/7 5/7 7/7 Average Gulf Corn Basis 9/6 11/6 1/6 3/6 5/6 7/6 Average SOURCE: USDA, CBOT.

11 Soybean Basis Illinois River Soybean Basis 4 2 (2) (4) (6) (8) (1) 9/1 11/1 1/1 3/1 5/1 7/1 Average Gulf Soybean Basis /6 11/6 1/6 3/6 5/6 7/ Average

12 Eastern Corn Belt Bean Basis 2 1 (1) (2) (3) (4) (5) (6) (7) (8) 9/7 11/7 1/7 3/7 5/7 7/7 Average River System Bean Basis 4 2 (2) (4) (6) (8) (1) 9/7 11/7 1/7 3/7 5/7 7/7 Average

13 Western Corn Belt Bean Basis (1) (2) (3) (4) (5) (6) (7) (8) (9) (1) 9/7 11/7 1/7 3/7 5/7 7/7 Average North Central Iowa Soybean Basis (2) (4) (6) (8) (1) (12) 9/6 11/6 1/6 3/6 5/6 7/6 Average SOURCE: USDA, CBOT.

14 Wheat Basis Louisiana Gulf Soft Red Wheat Basis 6/7 8/7 1/7 12/7 2/7 4/7 Average Toledo Soft Red Winter Wheat Basis /7 8/7 1/7 12/7 2/7 4/7 Average

15 Hard Red Wheat Belt Basis 4 2 (2) (4) (6) (8) (1) 6/1 8/1 1/1 12/1 2/1 4/1 Average Minneapolis Spring Wheat Basis 4 2 (2) (4) 6/7 8/7 1/7 12/7 2/7 4/7 Average

16 Salina Wheat Basis (2) (4) (6) (8) (1) (12) 6/1 8/1 1/1 12/1 2/1 4/1 Average Texas Gulf Hard Red Wheat Basis (2) (4) 6/7 8/7 1/7 12/7 2/7 4/7 Average

17 West Coast HRW Basis /7 8/7 1/7 12/7 2/7 4/7 Average PNW White Wheat Basis (2) 6/7 8/7 1/7 12/7 2/7 4/7 Average