Finally, after two weeks of barge rate increases, we observed a sharp decline across the river system. The St. Louis rate declined 19% last week giving soybean basis along the river space to improve 11 ¼ cents between Oct. 25th and Oct. 31st. Movement of soybeans through Mississippi river Lock 27 tapered off sharply, declining from a whopping 414 thousand tons (64% above the three year average) to only 147 thousand tons by Oct. 27th. However, despite the minor lull in Soybean movement down the river, the Gulf bid should continue pulling soybeans at an above average pace. In the last week the soybean bid out of the Gulf increased 7 cents.
Soybean Basis throughout the Eastern US continued to see harvest pressure. For the states of NC, KY, VA, MD, DE and SC only about 47% of estimated soybean production has been harvested. Because the eastern states are in the peak of soybean harvest, we expect to see downward basis pressure in the weeks to come.
Harvest for corn is 91% complete, allowing basis to creep about a penny higher this week on average across the US. Despite cheaper transportation to the gulf, declining barge rates had little impact on corn basis at river terminals, which improved a cent over last week. Corn basis at the river is not responding to cheaper barge rates simply because export demand is very weak. Total amount of corn which has passed through Mississippi River Lock 27 is a little over half the volume we observed in 2011 and 47% of the three year average. Unfortunately, the export picture doesn’t look to improve as sales continue to come in below the pace necessary to meet the USDA’s forecast. We will continue to follow export sales for any indications of improving demand.