With every minute counting during the crucial spring planting season, most growers don’t have time to move grain. And with futures depressed, motivation to sell is also lacking.
But good demand continues in most segments of the grain market, forcing end users to bid up basis to attract the supplies they need. Large stocks of grain from record 2016 yields is keeping basis below average. Still, growers should consider locking in some basis, at a minimum, to avoid holding on to inventory too long.
Corn basis on average firmed about a penny this week, with strength noted among exporters and domestic users. Bids were steady to stronger up the river system, with freight rates relative cheap and easing slightly amid plentiful supply of barges. There currently is nothing registered for delivery against May futures, ahead of first notice day at the end of next week.
Strong ethanol prices and positive margins helped ethanol plants maintain bids, and rail terminals were also better.
The only regions with weaker basis focused on the livestock industry. Plentiful supplies of feed grains weakened basis in Texas feedlots, while part of North Carolina were also weaker, with news buyers were importing a rare cargo from Paraguay. Sorghum basis improved on average, but bids were widely varied this week as demand ran hot or cold.
Average soybean bids were also a penny or so stronger, though the cash market is much weaker than normal. Processor basis in the east was mixed, with better strength seen in the western part of the growing region. But plants crushed fewer soybeans than in expected in March, keeping buying in check.
While the U.S. soybean selling season should be winding down, movement overseas remains good, keeping bids in pipeline firm. But country basis out west was mostly weaker, as growers still seem to be selling beans ahead of corn if they’re selling at all.
Wheat basis was also a mixed bag. Bids for soft red winter wheat remain fairly firm, despite poor export demand. Sales of hard red winter wheat are improving, but basis weakened at rail terminals feeding the Texas Gulf, where bids also eased a penny. But wheat headed west to the PNW was stronger thanks to Asian demand.
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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.