The red bold line in the graph illustrates weekly 2017 soybean crop basis (cash price less July futures) at a central Iowa elevator since October. The basis pattern for the previous crop (2016) is the blue thin line, and black dashed line represents the last three-year average basis (2014-16). Basis has rallied since harvest, which has contributed to the higher cash price. In the period shown, cash soybeans have moved 83 cents higher with almost one-half of the move (39 cents) coming from basis strength. A futures hedge or HTA contract placed for price protection in early October would have resulted in about $9.15 cash (less costs of ownership). Large local supplies continue to keep basis wider than historical average, though the strength has moved basis levels closer to the average line. Continued storage of unpriced soybeans from this point is betting on prices moving higher to offset storage costs and risks.

Ed