It’s been a tough winter on parts of the river system still open for business. Ice, low water, fog and an aging lock and dam system slowed traffic. The only factor that wasn’t a problem at the end of 2017 was demand: A series of weak export inspection reports show shipments slowing noticeably.
Warmer weather and rains that started over the weekend could ease some of those problems just as business shows signs of picking up. That could help support basis trying to strengthen into March delivery before northern stretches of the river reopen.
Corn basis firmed a penny last week on average, aided by stronger bids in the export system. Basis at the Gulf and PNW strengthen, and some of the gains flowed up river as the cost of shipping corn south eased noticeably. Freight for a bushel of corn down the Illinois River to the Gulf fell by more than a nickel as river problems eased and more barges made it up stream to pick up loads.
Corn basis was noticeably stronger along the Illinois and Ohio Rivers, which both had problems this winter. Basis also recovered in St. Louis. River levels there are still a little low but are forecast to rise this week. Bids in the upper Midwest also benefited from stronger basis off the PNW. Overall bids along the river system are just about average, while average basis levels in the eastern Midwest are firm as well. The Dec. 1 inventory report released Jan. 1 showed corn stocks down from last year’s levels in Indiana, Michigan and Ohio.
The stocks report also showed first quarter feed usage that was less than expected. Right on cue basis weakened in areas heavy with livestock, including the western Plains and the Carolinas.
The mood at ethanol plants was mixed. Bids generally were stronger mid-week but eased a bit into Friday after the government reported increased production.
Soybean basis was also a mixed bag last week. The average at terminals weakened fractionally as the rally on the board brought some supply out of storage. Dec. 1 inventory levels were up in most states, with total supply a record. Bids were mixed in the export pipeline and at processors, too, despite record December crush reported by members of the National Oilseed Processors Association.
Basis in wheat varied by region and class. Concerns about acreage and winterkill appeared to help hard red winter wheat bids, with cash at the Texas Gulf and PNW both strengthening. That helped basis in the export pipeline and through most of the central and southern Plains. Soft red winter wheat basis was also generally stronger. But spring wheat bids faded as USDA lowered its forecast of exports. White wheat bids remain strong thanks to a stronger estimate from USDA reflecting lower production in Australia.
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 show on or off.
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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 Advisor. 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.
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