Though corn and soybean crops are maturing slowly in parts of the U.S., harvest pressure is starting to show up that could mark a crucial test for the market.
Normally, corn and soybean futures make lows in early October as some crops are sold off the combine. But ability to hold August lows could be a sign the market is stronger than expected, perhaps kicking off a fall rally.
Corn and soybeans face different markets as harvest gets underway. Average corn basis was firm last week as growers resist selling old crop at lower prices until they’re forced to move inventory to make way for 2017 crops. But the cash trade was a tale of two Corn Belts. In the eastern part of the growing region, basis was weaker. Parts of the Ohio River closed for shipping due to emergency repairs, and harvest is gaining traction in the southern part of the region.
Ethanol plants also lowered bids last week, reflecting lower production. Basis was also generally weaker along the river system after the cost of shipping corn down the Illinois River to the Gulf went up 3.25 cents a bushel.
Corn bids still had a firmer tone on the western Corn Belt, which is trending drier, starting to raise concerns about drought. That could affect corn twice, both by hurting late development and by cutting seeding of winter wheat, some of which will be fed next summer.
Soybean basis also weakened along the Ohio River, and processors generally cut bids too as margins reflect strong prices for oil but not meal. But a continued strong soybean shipments kept basis strengthening along much of the river system, thanks to higher bids at the Gulf.
Another sign of the season is underway in the wheat market. Farmers needing to make room for fall crops are getting rid of remaining wheat inventory, especially in the eastern Midwest. Some of that was noted in hard red winter wheat country, but basis there was mostly stronger. Basis at the Texas Gulf perked up and the strength flowed back to the country as rail facilities are coming back on line, which could boost shipments soon.
Basis for wheat was steady to firmer on the northern Plains, where the lingering impact of the drought is supporting bids from the Twin Cities out to the Pacific Northwest.
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.