In the US soybean market, the end of August means not only the end of Silly Season when it comes to national average basis, but also the end of a quarter and the end of the marketing year. The daily average calculation of the cmdty National Soybean Price Index (NSPI, weighted national average cash price) over the course of the 2020-2021 marketing year came in at $12.83, the highest since 2013-2014’s $13.18. Recall from numerous discussions this past year that 2013-2014 was the benchmark 2020-2021 was being measured against, as the earlier year saw a record small stocks-to-use calculation of 0.1%. Yes, you read that correctly. No, I don’t care if USDA had it pegged at 2.6% (or something in that neighborhood). The average price for 2020-2021 brought my final stocks-to-use calculation for the marketing year at 0.2%, unchanged for much of Q4.

What this means is we are headed into the new marketing year with the second tightest supply and demand situation on record, a situation also reflected in the futures spreads for the 2021-2022 marketing year. However, a look at the end of August cost of carry table for soybeans shows us these spreads have undergone a Chili Pepper Regression, meaning they’ve gone from red (inverted) at the end of July to green (carry) at the end of August (see Cost of Carry table as second attachment on website). While still covering a bullish level of calculated full commercial of less than 33%, mostly, this regression means the commercial side is not as bullish as it was before. Why? Recall my argument that at their core, grain and oilseed futures are weather derivatives, and the weather improved across parts of the US Northern Plains and Upper Midwest as August progressed. It’s also interesting to note the initial 2021-2022 Nov-Jan spread closed August at a carry of 7.75 cents and covering 36% cfcc.