Soy Basis Surges on Demand Strength
US average soybean basis levels were up 4 cents a bushel for the week, bolstered by a strong crush and export sector.
U.S. average soybean basis levels were up 4 cents a bushel for the week, bolstered by a strong crush and export sector.
The soybean basis strength was greatest around the river system especially southern reaches of the Mississippi river and the Ohio river. River markets on average gained 7 cents a bushel on basis for the week, helped by a 5-cent gain at the Gulf where exports are robust. This week’s export sales report showed a marketing year high of 1.3 MMT of business for soybeans, with 1.0 MMT going to China. Also buoying the bean market is strong domestic crush. NOPA’s monthly crush estimate of 157.3 mb for November is the biggest November crush since 2009 and the biggest monthly figure overall since January 2010. Domestic crush operators increased basis levels by 4 cents for the week
For corn, basis levels reflect the state of demand with basis levels up a modest 1-cent a bushel for the week. Ethanol production was off 1.3% this week reflecting continued tight margins for ethanol plants. On average, ethanol plants were unchanged on basis for the week suggesting producers have little room to bid up basis even with tight pipeline supplies of corn. In the export market, the U.S. continues to see sluggish sales and stiff competition from Brazil suggesting prices may need to back off if export numbers are going to accelerate and meet USDA’s annual forecast. This week, Gulf basis plummeted 16 cents a bushel and river markets followed lower as well, losing 4 cents on the week.
Time For A Break
Stepping back allows you to put things into perspective
A friend of mine can quote just about every line from “It’s a Wonderful Life” and, I think, give a full description of at least four versions of “A Christmas Carol.” While I can’t do that, I have to admit, I do enjoy this time of year.
Yes, we’re tying up all the loose ends of one fiscal year and plunging ahead into the next. And we probably all look at our budget numbers, hoping that hard work, sweat, intelligence and a bit of fresh thinking make them achievable. But growing up on a farm, with all of the things that can and did go wrong, I always tried to look at the bright spots and always tried to figure out what the tough times taught us.
One of the things I learned, after watching Mom and Dad work so hard for all those years only to see the farm fade away, is that it’s important to step back, take a breath and enjoy the moment.
I do reflect on our business and what we did right and what we did wrong, what we must learn to do better, and what we should learn to never do again.
In talking with my boss, my peers and my team, I try to make sure I stay open-minded. No, it’s not easy. But the energy of fresh ideas, of smart people trying to uncover new concepts or ways of doing things, is important. And it ought to become infectious.
Soon, though, all the kids will be here. I’ll make time for my neighbors, my friends, my family. We’ll bake cookies, we’ll watch the Packers, we’ll play cards, we’ll talk smart and tell stories, and we’ll laugh. It’s the break we need to help us put things in perspective. It’s the pause that lets us put our minds into something other than full work mode.
Even if it’s just for a moment, I hope you can make the time to do that this holiday season. There are challenges and successes ahead. It’s what keeps us sharp and active. Taking a break is what keeps us fresh and energized.
Best wishes for a wonderful New Year!
Cloud Accounting with Freshbooks
Solution removes confusion, frustration and long hours spent invoicing clients
You provide your service or product to your farm clients and you are ready for the fun part which is getting paid, right? Not so quick, you still have to prepare an invoice for your transactions, send it to clients and then hope you get paid in a timely manner. The work involved in invoicing and waiting to be paid takes the fun out of getting paid.
When it comes to handling billing, the range of solutions can be anywhere from using a sophisticated accounting system to something as basic as an invoice template in a word processor. Each approach has its advantages and disadvantages. In addition to the high cost of implementing a high end accounting system, the learning curve involved in mastering the system and the accounting knowledge can be a steep learning curve. In many cases, such systems can be overkill for many small to medium size businesses. On the other end of the spectrum, using a basic invoicing template is straight forward and you can establish your own process that fits your needs for the time being, but as your business grows, things will get out of hand and you will outgrow your processes. Neither the high end billing system nor the basic one give you a quick way to get paid as fast as you would like.
FreshBooks is simple and intuitive, so accounting isn't intimidating. It’s a solution that removes the confusion, frustration and long hours spent on invoicing clients and also provide a solution to get you paid faster by giving your clients a way to pay their invoice online through a credit card or electronic check payment (ACH). Freshbooks offer the following benefits:
- Easy to setup your clients and generate invoices.
- Invoices delivered to clients through email or postal service.
- Option to allow clients to pay invoices online with a credit card or electronic check payment.
- Ability to schedule Recurring billing.
- Late payment fees and reminders to your clients.
- Client credit and refunds.
- Estimates - Easily and quickly create professional-looking estimates.
- Capture and log expenses with ease.
- Profit and Loss, Accounts Aging, Sales tax and balance sheet reports.
- Options to grant permissions to members in your team to handle invoicing.
- Web based, so you’re able to access your billing from anywhere.
- Automatic secure backups.
For more information, please visit http://www.freshbooks.com
River Woes Push Basis Lower
Basis slipped lower along the river system as many terminals north of St. Louis face the possibility of barge restrictions to the gulf
Basis came under pressure along much of the Midwest river system this week as terminals north of St. Louis slowed grain buying amid looming draft restrictions on the river due to low water levels. Basis levels for soybeans were off 4 cents on average along major river terminals this week, while corn river markets slipped half a cent for the week.
However, corn basis was higher in the upper Midwest and Northern Plains as ethanol plants pushed basis levels higher by 1.5 cents a bushel on average for the week. Further to the South, river terminals from Memphis running to the Gulf were higher thanks to a 5-cent increase in basis at the Gulf export market this week.
For soybeans, basis levels around the country average a 0.3 cent decline. Lower bids from river terminals in the Midwest helped ease competition for beans, and soybean crushing plants lowered their bids by 4.5 cents for the week. At the Gulf, export basis climbed 5 cents a bushel.
Continue to expect ongoing threats of closures along the river to hamper basis strength. While Gulf bids continue to be strong to encourage grain movement, there is a clear risk that the River may close or at least limit barge capacity around St Louis, MO in early December which will keep grain buyers in these areas defensive.
Keeping tabs on the practices of today’s most progressive commercial producers
Last June at the IDEAg Interconnectivity Conference, I had the opportunity to hear Dr. Michael Boehlje, a well-known and well-respected ag economist from Purdue University. Dr. Boehlje, while well aware of today’s production agriculture, also looks into the future, focusing his work on strategic planning and thinking, particularly given the dynamic (turbulent?) business climate we all live and work in today.
This month, I attended the Equipment Manufacturers Conference (EMC) in San Diego, CA, pulled together by the American Feed Industry Association. This group (which includes many of my customers — those who advertise to support Feed & Grain’s media properties) represents the interests of equipment manufacturers who are AFIA members. They track regulatory issues, are particularly involved in all-important safety aspects surrounding equipment and its use and maintenance, but also must consider the future needs of their customers — those of you working in the feed, grain, pet food and ingredient side of the business.
I’ve attended many of the EMC meetings and always have been impressed with their focus on the future. And, in particular, the demands that will be placed on the grain and feed industry in the years ahead.
This ties in quite well with one of Dr. Boehlje’s discussion points: recognizing the management practices of today’s most progressive commercial producers. One of the main elements of this presentation was that top producers are recognizing that they don’t farm. Instead, they realize that they are part of a biological manufacturing system. They have inputs, produce a product and must be involved (in today’s world) in seeing that product all the way through the food chain, right to the dinner table.
So what do these forward-thinking, progressive agribusinesses do? Though Dr. Boehlje had a more extensive list, these stood out at me:
- Adapt quickly to new technologies that either lower costs or increase value
- Develop alliances with partners — learning from the partners and looking at ways to help grow their businesses
- Use automation and information technology to improve cost-effectiveness of management and productivity
- Focus on quality of product and consistency of production processes
- Recognize and emphasize buyer expectations in the products and production practices they choose to use.
Having worked with so many of the EMC members over the years, and meeting and talking with so many grain elevator operators and feed mill managers during that same time, I had to start wondering about what each group is doing to support each other and contribute to mutual success — as part of a biological manufacturing system.
So, if the five points above highlight what your most progressive customers or potential customers are doing, what are you putting in place in your business to better meet their needs? And what are you doing to establish some of these same business practices into your operation? Adapt quickly, leverage new technologies, recognize that you must work in partnership with your producers and with your buyers... these are key points.
In talking with so many equipment manufacturers, millwrights and design/build firms, I wonder about the same issue: Are these businesses partnering with feed, grain, flour, pet food, biofuel and other businesses, focusing on mutual success.
I’d certainly like to think so. But Dr. Boehlje, in painting the picture of our industry as a complex biological manufacturing system, made me think about the future. And not just about you — but about Feed & Grain’s role as an information hub in this vital industry.
Let me know what you think!
Spike in Gulf Lifts Cash Basis
National corn and soybean basis showed strong gains this week on account of stronger Gulf bids
In the last week we observed a firm increase in national corn and soybeans basis in the cash market. On average across the nation we watched spot corn basis rise 2 cents, while beans added nearly 3 cents.
The river accounted for large basis increases this week with corn increasing on average 10 ½ cents and soybeans adding another 8 ¾ cents. The gulf bid moved sharply higher this week driven by demand for corn and soybeans delivered before any restrictions can be placed on barges. The continued dryness in the Midwest is still impacting the Mississippi river and if rain is not received within the next few weeks, there is a good chance we may see restrictions placed on the tow size and drafts of barges between St. Louis and Cairo, IL. Some anticipate restrictions as soon as December 10th.
Ethanol plants improved their basis for corn by 1 ¾ however, the river continues is rapidly approach in terms of basis competitiveness. When comparing the four year average basis for both river terminals and ethanol facilities, we observe that river terminals average basis crosses over average ethanol basis around November 9th. Due to the lackluster export demand this year and in spite of the early harvest we are observing average river basis becoming more competitive than ethanol a week later than normal. I would expect this to have an impact on the EIA ethanol production numbers in the weeks to come.
Basis also improved strongly throughout domestic soybean plants with average gains by 6 ¾ cents. Despite the bearish November USDA Supply and Demand report, which boosted soybean production and ending stocks higher than the market expected, we still see strong demand for soybeans both domestically and abroad. This week NOPA crush numbers were reported at 153.5 million bushels which beat even the highest analyst expectations and export sales bookings continue to run well ahead of the pace needed to meet the USDA’s expectations. With the decline in soybean prices, I expect crushing plants to continue reacting quickly and competitively to any basis increases along the river.
Soy Basis Heats Up on Export Driven Demand
Soybean basis up 3 points, corn basis stall due to weak export demand
Soybean basis was up 3 cents for the week as strong export business continues to lift interior basis levels. Robust business to China and others has helped fuel cash movement to Gulf ports. Year-to-date export shipments for soybeans are 57% higher than this time last year, and up 44% compared to the 5-year average pace of shipments at this time of year.
At the Gulf, soybean basis bids were up 4 cents for the week, but many river markets got an added lift as barge rates backed off from their recent rally. For the week, river terminals across the U.S. posted an average 10-cent gain in basis levels. There were, however, areas of weakness in the East Coast as harvest continues in the Carolinas and Mid-Atlantic. Also, Iowa had key soybean plants also backing off on basis which caused some weakness in Eastern Iowa.
For corn, the lack of export business has kept basis levels tied to domestic user needs. This week New Energy Corp ethanol in Northern Indiana reported that it would layoff 40 employees and idle production until economic conditions improve. With high corn prices and relatively weak ethanol, margin levels for ethanol plants continue to be slim, posting a 60% loss compared to this time last year.
Across the U.S., average corn basis levels posted a modest half-cent increase. However, ethanol plants backed off their basis by a half-cent over the past week. River markets and Gulf export bids were higher this week, suggesting export business may begin picking up. Indeed, a sale of 500,000 MT to Japan was announced this morning, a nice change from recent weeks of dismal corn business.
Save Time and Improve Value?
Digital technology gives us the opportunity to help you save time
I’ll say it right up front: If we lose your attention — we’re toast.
No, I don’t think that’s likely, particularly since Feed & Grain has spent more than 50 years working to keep your attention, but if we don’t worry about losing you, then we’re not doing our job. And our job is to deliver information you need, want and value. That’s how we earn your attention.
In today’s digital world, earning your attention becomes more and more complex — in a good way. Digital technology gives us the opportunity to help you save time and help us provide more value. We can target to you the information you need, delivered consistently or readily accessible. Less clutter and more value.
There are some technologies that help us do this; for example, we know what articles are most read, what products are most searched and other key areas of activity on our website and with our e-newsletter. That’s important, but we still want to hear from you. Which is why I am asking you to do us a favor: Help us continue to learn more about your information needs and how to meet them.
Click here to go to directly our registration page. Please provide your information, sign up for the e-newsletters and email notifications that you’d like to receive, and tell us more about your job, your responsibilities and your information needs.
With all of the options you have for finding information, we want to make sure Feed & Grain stays at the top of your list. We appreciate your help in doing so! If I am missing something or if you have questions for me, please send me an email: email@example.com.
Thank you for investing your time. We will continue working to help you save time and find more value with the content we deliver to you.
Square Up For Easy, In-the-field Payments
Swipe credit cards on your smartphone
My son is in Cub Scouts and loves to take part in the annual popcorn sales fund raising program. He has always done well but I felt could have done better if we had a way to accept credit cards, so this year we down loaded the Square Credit Card App on my iPhone and improved his sales by 20% which is roughly the amount of revenue we brought in by credit cards.
Square is an amazing service that works with your mobile phone, you simply down load the free app onto your phone, signup, and plug in the free card reader. There is a 2.75% fee when you do a transaction, so for every $100 you bring in there is a $2.75 fee. This is very low fee compared to most traditional credit card processing companies. For companies that have large transactions there is a fixed fee program which is $275/month for unlimited usage.
Here is how I envision an ag Business using the Square technology: Imagine your employee going out to the field to deliver some lubricants at harvest time, the farmer hands the employee the credit card, who swipes it through the reader plugged into his phone, an amount is entered along with any optional details, the farmer signs the phone screen for confirmation and a receipt of the transaction is forwarded via email or text. The funds are then deposited from Square to the ag businesses local bank account.
If you let your imagination go you can come up with many ideas of how this type of technology may be used by ag businesses in the future. Someday your employees may walk around with a phone capable of taking payments while you monitor the sales in real time via your office computer. You may even be able to see that a salesperson has just received a payment at the end of a field via Google Maps.
To learn more visit www.squareup.com
Barge Rates Decline, Spurring Basis at River Terminals
Sharp decline in barge rates had a pronounced impact on soybean basis, while corn benefited only slightly
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.