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Cash bean prices roll lower

05/23/2013 @ 4:43pm

The cash soybean market has had a huge upheaval this week. Cash prices and basis levels have slipped every day despite rallies in the nearby futures contract.

    

The week started with cash bids off the July futures contract. July futures prices were (and still are) at a substantial premium to August and every other month. Then there was some farmer selling, and basis levels started slipping.  Flat prices around $15.50 apparently got people’s attention.

Then most processors switched to pricing off of August beans. The cycle continued. More farmer selling produced weaker basis levels. Processors went from having almost no inventory to having six weeks of inventory. The more coverage, the less anxious the processor is to bid aggressively for beans. Today basis levels took another dive and/or cash bids were moved to the November. The net result in north-central Iowa, for example, is that cash beans are down 50 cents for the week, while July futures are up 50 cents during the same time frame.

  

Besides the processor/cash bean story, the market has also been dealing with the theme that Chinese crushers had not yet set their prices for June imports.  They still needed to buy July futures to complete their purchases. (A similar situation had occurred in May, apparently.)  Smelling blood, the market squeezed these buyers until probably everyone was forced in. Then, suddenly, there were no more buyers. 

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The risk of loss in trading commodities can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial situation. 

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