Cash grain comments
With the release of the February USDA supply and demand report, soybean stocks increased by 50 million bushels this month. Domestic crush numbers fell by 10 million and exports projections were decreased by 40 million. None of this was a surprise and soybean futures were relatively unaffected by the bearish report. On Tuesday, however, weekly export inspections came in at 34 million bushels beating analyst expectations by roughly 12 million bushels. This leant some support to both futures and basis.
Across the country basis is mostly wider than last month. Minnesota, Iowa and Illinois all saw basis widen by 2 to 3 cents. In the eastern U.S., basis improved this month. North Carolina's and Pennsylvania's basis increased by 6 and 9 cents respectively. Basis across the country remains well below last year's levels. The current record high stocks-to-use ratio of 19.9% has kept basis depressed throughout the season.
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Looking at basis change over the past week, it appears that the surprisingly high level of export inspections has buoyed basis. Soybean basis at the Gulf is up 8 cents this week. In addition to strong exports, Gulf basis was bumped up due to increasing barge rates (up 15% this week on average). As barge rates increase merchandisers at the Gulf are forced to bid up basis in order to obtain sufficient grain.