Weak basis ahead of harvest is nothing new, but growers selling into the export pipeline saw cash prices plummet more than usual this week. Low water closed the La Grange Lock and Dam on the Illinois River, and barge rates were up almost 15 cents a bushel on the week. Slow traffic was also noted on the Ohio River after emergency repairs to a lock there.
Lack of barges moving up the rest of the river system caused the cash market to spiral lower, even though farmers remain reluctant sellers at best. With corn shipments starting the marketing year at below average levels, shippers aren’t bidding up for corn either, waiting for what still looks like a decent harvest. River basis plunged a dime on average, with bids on the Illinois River off even more.
Barge rates for harvest slots on the river are now trading more than 20 cents a bushel above spring costs. Coupled with December-July carry in the corn futures market that widened out as far as 28 cents Thursday, that provides additional inventive for growers to hedge inventory for basis gains. Cheaper freight in the spring should allow buyers to bid up their cash prices if farmers are still holding tight.
Average basis at terminals only was a penny or two weaker for corn. Bids firmed in some areas with heavy concentration of livestock. Ethanol plants also raised their basis outside of areas near the river thanks to the best processing margins of the year.
Soybean basis on the river system was also weaker due to higher freight costs, even though bids at the Gulf strengthened on surging export demand. Processor basis appeared generally weaker, though some points in the western Midwest were able to firm.
Basis for soft red winter wheat shipped on the river followed the path of corn and soybeans, with weaker bids noted. But hard red winter wheat was firmer across the Plains as movement to the Texas Gulf resumes. Basis also gained across the northern Plains to the Pacific Northwest, with U.S. originations gaining due to lower than expected production in Australia.
Sorghum basis followed the path of the rest of the market on the river system ahead of harvest. But the cash market, though weak, has finally started to firm a little on the Plains, helped by higher wheat costs.
The interactive maps below show how basis fared around the country. Click the box in the upper left-hand corner of the map to bring up the legend, and to turn features shown on or off.
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Senior Market Analyst Bryce Knorr first joined Farm Futures Magazine in 1987. In addition to analyzing and writing about the commodity markets, he is a former futures introducing broker and is a registered Commodity Trading Adviser. He conducts Farm Futures exclusive surveys on acreage, production and management issues and is one of the analysts regularly contracted by business wire services before major USDA crop reports. Besides the Morning Call on www.FarmFutures.com he writes weekly reviews for corn, soybeans, and wheat that include selling price targets, charts and seasonal trends. His other weekly reviews on basis, energy, fertilizer and financial markets and feature price forecasts for key crop inputs. A journalist with 38 years of experience, he received the Master Writers Award from the American Agricultural Editors Association.