March 1 traditionally marked a milestone in the cash market for grains. The day when some farm loan payments were due coincided with the start of deliveries against March futures contracts. Cash flow sales by farmers sometimes swamped the market, weakening basis. Other times low cash prices kept grain bins locked as shippers eyed the start of traffic on the river system on parts of the Mississippi that shut for winter.
This year the cash market is mostly a standoff as trading begins in the last full week of February. In addition to the usual tug-of-war between buyers and sellers, transportation remains a wild card on much of the Mississippi and Ohio Rivers. High water and ice raised barge rates to unusually high levels last week, increasing the cost of shipping corn from the Illinois River to the Gulf by another 6.5 cents a bushel.
The increased expense mostly weakened bids on the waterways, though basis was stronger in export markets thanks to good demand. Better basis off the PNW kept rail markets headed west good and the market overall got a boost at last from ethanol. The rally in crude oil lifted prices for the biofuel, improving margins as demand appeared to firm too. Plants raised basis to attract needed feedstocks, helping offset some of the river weakness. Average basis was steady to a penny stronger for corn as a result.
Basis in the soybean trade followed a similar trajectory: Weakness on the rivers but strength elsewhere. Bids strengthened at the Gulf and PNW, and processors also were mostly bidding up prices as margins remain decent. Members of the National Oilseed Processors Association reported record January soybean usage last week, and average soybean basis firmed a penny or two.
While more than 1,000 lots each of soybeans and corn are registered for delivery, only 10 lots are ready in Toledo with just 2 in Kansas. Wheat basis overall is faring much better than corn and beans, which could be a measure of the effectiveness of the variable storage rates used in futures contracts.
Still, basis last week in wheat was a regional affair. Bids for soft red winter wheat faltered from Missouri to Ohio, thanks in part to high shipping costs. But basis for hard wheat strengthened off both the PNW and Texas Gulf, lifting cash markets.
The sorghum market hasn’t had much to cheer about after Chinese trade retaliations squelched demand. But hopes for a resolution to the tariff dispute appeared to lift the mood of the market last week, firming basis on average a couple of cents.
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.
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