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Basis Outlook - Can corn avoid summer blues?

Seasonal trend is for weaker basis into end of the marketing year

It goes without saying that 2019 is far from normal. That could be an ace in the hole for farmers clinging to old crop corn.

Most years corn basis weakens into the end of the marketing year Aug. 31 as those storing grain clear it to make room for new crop. But this fall those bushels could be needed to fill a hole in production from a later harvest caused by late planting, which should stretch the marketing window for 2018 inventory. And if the 2019 crop is as small as expected, elevators may be willing to buy some of that old crop to ensure keeping facilities full.

Of course, storing corn could be a winner if futures rally. But that’s not a done deal by any means. Neither is the scenario for strengthening basis.

Indeed, corn basis weakened around a half cent last week on signs of wavering demand. Export shipments remain sluggish and buyers at ethanol plants face margins that continue in the red. Bids were also weaker last week in livestock-heavy areas like the southwest Plains, where corn faces competition from cheap hard red winter wheat and a sorghum market with weaker basis hurt by the trade war with China.

The Dakotas and Nebraska, two areas hurt by spring weather, saw stronger bids, an indication growers there are still holding tight. Friday’s rally did bring out some movement, however, when prices rebounded.

With basis in many areas well above average levels, growers should make sure they can afford to gamble on a rally.

Soybean basis bucked the trend in corn, thanks to export demand that remains robust due to a record book of unshipped sales. That lifted basis just about anywhere an ocean-going vessel could load, helping average bids improve nearly three cents. Soybean processors were also bidding more aggressively, despite news of disappointing crush in June from members of the National Oilseed Processors Association.

Wheat basis was firm overall last week despite pressure from winter wheat harvest. Rail markets to the Pacific Northwest and Texas Gulf showed strength, though soft red winter wheat basis weakened at the Gulf due to weak demand. Some improvement was also seen in spring wheat, despite indications the crop on the northern Plains is in good shape.

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 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.

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