SeaportShipGrain022417-1540x800 tntemerson/ThinkstockPhotos

Basis Outlook - Gyrating futures bring cash market swings too

Corn and soybean basis mostly firms with exports in focus.

Futures markets saw plenty of moves in the past week or so, bringing fluctuations in cash markets as well. Basis firmed as the board slumped as end users continue to book supplies of both corn and soybeans.

Corn bids firmed a penny or more at terminals though basis in the country was up only fractionally. Farmers continue to move old crop inventory from the record 2016 crop.

Terminals raised bids in the export pipeline thanks to good late season demand and lower barge freight rates that cut the cost of moving corn to the Gulf by four cents. Buyers in areas hard-hit by drought are also scrambling to secure supplies of old crop, not knowing how much farmers will have to sell in the fall. Rail bids also fell for harvest slots as shippers anticipate having less to move.

Basis at ethanol plants went in the other direction. High corn costs dampen margins at plants, which backed off bids after boosting production and inventories.

Soybean processors appear to be following a different strategy. Members of the National Oilseed Processors Association reported crushing fewer than expected soybeans in June. That helped support their margins and allowed some to push bids a little this week. Export basis was also stronger, thanks to shipments that held up much better than expected despite huge supplies harvested in South America. China is still taking delivery on old crop purchases, and those beans are mostly in the strong hands of commercial firms at this point. Those traders make money on basis appreciation and don’t sell on a flat price basis the way farmers tend to.

Wheat basis remains highly mixed. Farmers with soft red winter wheat mostly move it by the end of summer, before elevators stop buying and switch over to corn and soybeans. Overseas demand for SRW also remains pretty thin, mostly weakening bids for that class this week.

Hard red winter wheat basis also remains historically weak, but flat prices are better than producers expected just a month or two ago. That’s keeping them selling, though basis firmed in some western feedlot areas as ranchers wonder about corn supplies this fall. Those concerns also helped firm sorghum bids in parts of the West.

Wheat basis in areas hit by the drought like South Dakota continues to firm..

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.

Download the complete report using the Download button below.

More from Farm Futures:

Corn Outlook
Soybean Outlook
Wheat Outlook

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.

TAGS: Outlook Corn
Hide comments

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Publish