by JOHN BANCROFT
Market Drivers:
- Weather varying from hot and dry to cool and wet
- USDA’s lower yield estimates for new crop in the August WASDE report (next report out September 12th)
- Concern of the impact an early frost would have on crop yield
- A widely variable U.S. crop
- Farm Futures reports today that wet corn (30%+) is being harvested in southern Illinois as early deliveries in search of the basis strength has begun.
The above graph is based on daily market prices for 2013 soybeans (the crop about to be harvested):
- The new crop (2013) Chatham Average Soybeans price is shown with the blue bars.
- The blue bars are the combination of the Nov. 2013 Soybean Futures shown by the red line and the Chatham Average Soybean Basis is shown by the black line.
- The Chatham Average Soybean Price and the Nov. 2013 Soybean Futures are read from the left hand axis.
- The Chatham Average Soybean Basis (black line) is read from the right hand axis.
- The sharp rise in the futures and the Chatham Average Price since the end of July has been driven in part by the reaction to the observed weather impacts on the soybean crop during August and the concern for potentially tighter ending stocks than reported in the August WASDE report.
- One of the drivers of the basis is the value of the Canadian dollar. In January the dollar was about at par with the US Dollar and currently is about 95 cents compared to the US dollar.
Disclaimer: This commentary is provided for information only and is not intended as advice
Posted on:
September 4, 2013