May 10, 2013

US soy's cash basis bids trades historically high

The cash basis bids for US soy are trading at historically high levels, a signal of the tight availability of domestic stockpiles of the oilseed.

Physical supply of soy in cash markets for near-term delivery continues a firming trend, as large processors including Archer Daniels Midland Co. (ADM) and Cargill Inc. signal that soy could be tough to come by until the next harvest in the autumn.

"Midwest soy basis bids rose to new historic highs on Wednesday with published bids of $1.00-1.25 a bushel over futures for May delivery, as domestic processors are concerned about the lack of supply through summer," analysts at advisory firm AgResource Company wrote in a morning market note. The drop-off in cash prices from May delivery to September delivery is nearly US$3.00 a bushel, reflective of a market working hard to get farmers to part with any remaining stored soy supplies, AgResource Company added in the note.

Cash merchants in central Illinois are paying US$0.0125/bushel above Chicago Board of Trade July soy futures, according to data from the USDA. Merchants in Havana, Ill., report cash prices US$1.12 above futures, up US$0.12 from Tuesday (May 7), while Des Moines, Iowa, merchants are quoting cash bids of US$1.05 above futures, up US$0.15 from Tuesday.