“I was very surprised. I went back 30-plus years and I thought that (the inverse contracts) would be more common in soybeans than in corn,” said Ed Usset, professor emeritus and grain marketing economist with the University of Minnesota’s Center for Farm Financial Management, adding he found it occurred in seven out of 33 years.

“Now, that’s less than one out of every four years, and except for one of those 7 years, the cash price stayed strong through the spring and often increased,” he said, adding that basis in soybeans is not as strong as in corn.

“It’s a pretty good basis historically, but not great, it’s okay. Local prices are still in the $14.50 and higher range. It’s good stuff,” he said.

At one local elevator in west central Minnesota regularly followed in this column, as of Feb. 27, the March cash price for soybeans was $14.68 and basis was -52 cents under. The September 2023 futures price for new crop soybeans was listed at $13.71 and basis was -3 cents under.

“This morning (Feb. 27), I believe we’re close to $14.60 in southwestern Minnesota, and I’m going off of one point (which is) a little weaker than some of the others, so it might be $14.70, $14.80 in a lot of markets, but that's still 50 cents off its mid-January highs,” he said.

“There are just mixed signals. I’m looking at a board fall apart, but I’m looking at carries and basis as reflecting fundamentally strong things in the cash market,” he continued. “Call me confused. I’m not ready to throw in the towel for the rest of this spring. We’ve got a few more months ahead of us, and I think we can still work higher at some point.”

In other news, at its spring outlook conference, the U.S. Department of Agriculture projected 87.5 million acres of soybeans would be planted in the U.S. in 2023, which is very much in line with last year and the year before.

USDA also projected a national average yield of 52 bushels per acre, which is just modestly above the national record of two years ago.

“That doesn’t seem to be strange to me. Nothing seems to be strange there. USDA also has the crush increasing,” he said, which is something he planned to discuss at the Commodity Classic in Orlando, Fla., in March.

“We’re going to talk about this crush. We’ve got a projected massive increase in crush capacity over the next 2-3 years with 80 million bushels of additional crush. That sounds good, but compared to the capacity coming on, it’s not that big a deal,” he said, noting there are plans for at least three additional crush plants to come on line. “I’m focused on that for the next two, three years.”

In other news, the market is looking at the corn and soybean crops in South America. Of the three main markets in South America – corn, soybeans, and wheat – soybeans appear to be kind of the strongest of the three. That said, Usset said production estimates for the Argentine soybean and corn crops keep dropping due to the dry conditions the country has been dealing with this growing season.

“It’s been a real problem down there,” he said. “Brazil is going to have a good crop, no question, but the Argentinian crop is another matter. They started the year thinking maybe 50 million metric tons (of production), something like that, and now USDA is projecting somewhere in the mid-40s range or lower and a lot of people think it will start with a ‘3’.

“It’s gotten substantially smaller. The anticipation is of a substantially smaller soybean crop, which shows in the soybean price. Even though it’s off from its highs, is hanging in there pretty good,” he added.

With lower production in Argentina, that could have an impact on demand for U.S. soybeans.

“People like to think so, yes, if South America, Argentina in particular, is having trouble,” he said. “Their ability to supply other countries with exports is going to be hurt, so we like to believe it will help U.S. demand, but we’ll watch the numbers and see where that’s at.”

Of course, if Brazil does come through with a huge crop as many expect, that could alleviate some of that anticipated demand for U.S. beans. For now, it’s wait and see.