Cash commodity prices on Mississippi River improve slightly even as water levels remain low

Recent rains have helped stop the Mississippi River from dropping to historically low levels and it may help Arkansas farmers in terms of basis, the difference between the cash price of a commodity compared to its futures price.

Typically, as the river level drops so does basis. Even as it dropped to minus 7.67 feet last week at Memphis, basis has actually improved, said Scott Stiles, extension economics program associate for the University of Arkansas System Division of Agriculture.

Lower river levels make it harder for barges to operate and it makes transportation costs rise which usually leads to lower commodity prices. The river at Memphis is now at minus 4 feet according to the National Oceanic and Atmospheric Administration. The river rose after a series of rain showers blanketed the Arkansas Delta last week.

However, river levels are still projected to drop through the first week of October. There’s no chance of rain throughout the region during the next week, according to the National Weather Service.

“Oddly, soybean basis has improved over the past few weeks on the Mississippi River,” he said. “This region has been very fortunate to see this given the downtrend in the river depth, increasing barge freight, and lack of Chinese demand.

“I’m really surprised to see this,” he said. “Soybean harvest is hitting its stride in the Mid-South. In the Crop Progress from the U.S. Department of Agriculture, Arkansas’ soybean harvest 35% complete, Mississippi and Louisiana were 56% and 74%harvested, respectively.”

According to the Grain Inspections report from the USDA, about 87% of soybean shipments last week departed the Mississippi Gulf, with largest volumes headed to Egypt and the U.K.

“Other destinations of size were Bangladesh, Indonesia and Japan, but, above all, nothing was headed to China,” Stiles said. “No soybeans were exported last week off the Pacific ports.”

Basis in the Midwest has dropped in many places to historic lows fueled by a lack of exports to China, according to a report from North Dakota State University.

“By the end of August, new-crop soybean sales to China stood at zero, marking the first time in modern trade records that no purchases were on the books this late in the season,” the report stated. “Lost Chinese demand has not been replaced by other foreign buyers or domestic use.

“Brazil has captured China’s peak-season demand, pushing U.S. shipments out of their traditional window,” the report said. “The lack of export pull has driven North Dakota soybean basis to a record low of minus $1.50/bushel and cash prices below $8.50, far under production costs.”

The report also noted that “states dependent on Pacific Northwest rail channels have experienced the sharpest basis declines, while railroads have shifted rates to favor gulf movements, accelerating a structural pivot in grain flows.

“The outlook underscores how absent Chinese demand is reshaping U.S. export flows, widening Northern Plains basis, and eroding farm-gate returns,” the report said.

The other major row crop that is nearly harvested in Arkansas, corn, is projected to hit record bushels nationwide. USDA reported earlier this month that corn production is now forecast to hit a record 16.8 billion bushels, but the United States average yield was reduced 2.1 bushels to 186.7 bushels per acre. Ending stocks were lowered by 7 million bushels to 2.11 billion, up 59% from last year’s 1.325 billion bushels.

USDA is forecasting a 9-million-bushel increase in production. Ending stocks are projected at 300 million bushels, up 10 million from last month on a softer outlook for exports. USDA projects new crop soybean exports to slip to 1.69 billion bushels, the lowest since 2019.