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What is the Soybean Basis?

Cells of a Raw Soybean

To many of our current customers operating ExPress® Soybean plants throughout the world, the word “basis” is quite common. For those contemplating a new “all-natural” or an alternative process, sooner or later the soybean “basis’ will play an integral part of the cost of the soybeans that are purchased.

The basis is the amount above or below the CBOT (Chicago Board of Trade) futures price that a commodity is trading for at a given location. So, if your plant will be in Iowa, California, Pennsylvania, the Maritime Provinces of Canada, Africa, or Russia, it’s the difference between the local cash price, and the futures price, specified for a time and place where the soybeans will be delivered.

Some current late April/early May soybean basis existed for the following areas

CBOT- $14.11/bu (July)

  • Central Mississippi    minus   $0.10/bu
  • Central Iowa              plus       $0.63/bu
  • Pennsylvania             plus       $0.20/bu
  • Maritime Provinces   even       ——–
  • South Africa              minus     $0.33/bu
  • Russia                      plus         $0.06/bu

One can see that there can be differences in how a soybean buyer calculates the costs of beans coming into the soybean plant. The soybean basis has a direct effect on how the produced soybean meal is priced to the soybean buyer. Soybean meal buyers around the world will typically purchase their soybean meal based upon the soybean meal basis. (Some comments regarding the soybean meal basis will be written next month.)

Before establishing your soybean plant make sure you understand the soybean basis in the local market area. That knowledge will help you establish your real input costs.

 

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