While growers are trying to figure out the direction of futures prices, the cash market was also a puzzle last week. Highly variable bids for corn and soybeans resulted in basis overall that was steady to firmer despite weak bids in parts of the country.
Export traffic on the river system slowed noticeably for both corn and soybeans as harvest got going. But demand from Asian corn buyers picked up, strengthening basis off the Pacific Northwest. That helped boost basis in parts of the western Corn Belt, thanks to declining rail costs that are the lowest in five years for harvesttime slots.
Profit margins for ethanol plants remain a mess, thanks to the weakest prices for the biofuel in more than a decade. Several plants shut recently, but production bounced back last week. With corn prices weak plants had to boost bids to obtain feedstocks.
Weather also played a role. Rainfall was scarce in the eastern Midwest, allowing combines to cut both corn and soybeans. Bids were a little better in parts of Iowa and Minnesota and eastern South Dakota where heavy rains stalled progress.
Crush margins at soybean plants are still above average but weakened as harvest approached. Plants responded last week by mostly pulling back their bids. Still, overall soybean basis was unchanged as gains offset losses, in part because cash is so weak it’s tough for it to get much worse.
Wheat exports got off to a slow start this summer and bids were mostly softer at in the export pipeline last week. That weakness was most noticeable for hard red winter wheat, thanks to lower bids off the PNW and at the Texas Gulf. Some wheat may still be hitting the market as farmers clear out bins for what looks like a huge fall harvest that will fill 98% of the available storage capacity.
Average nearby sorghum basis is nearly 40 cents off January highs, when the market collapsed as China slapped penalties on imports in the opening skirmish of the trade war with the U.S. Bids remain soft in the export market due to lack of Chinese interest. But basis firmed in western feedlot areas.
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.
Download a complete version of the outlook with extensive charts and analysis using the Download button at the end of this report.
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.
For more corn, wheat and soy news, commodity marketing recommendations and daily commodity charts, subscribe to Farm Futures' free e-newsletter, Farm Futures Daily, and keep up during the day with Farm Futures on Twitter.