Corn basis was steady on average last week. That may not seem like much, but it was something of an accomplishment considering the challenges faced by the cash market.
Bids at the Gulf and Pacific Northwest weakened as exports appeared to falter at the beginning of the year. Plenty of corn moved earlier than normal after harvest, thanks to shipping slots opened up when Chinese soybean purchases dried up with tariffs. That may have left some foreign customers sated for now.
Weakness up the river system was exacerbated by weather. That included high water that slowed movement, and then heavy snow, which kept movements limited over the weekend. Barge freight rates rose because fewer empties can make it up river, adding 10 cents a bushel to the cost of shipping corn down the Illinois River to the Gulf. Much of that cost was passed onto farmers with weak basis.
Weather wasn’t all bad for some markets, however. Areas with heavy livestock concentrations in the Southeast and western Plains were active buyers ahead of the snow storm to make sure they had enough inventory.
Winter is a slow time for gasoline usage, holding down demand for blending. Ethanol margins remain under pressure despite falling production, which caused plants to weaken corn bids last week too.
A good early week rally in soybeans also brought more inventory to town, weakening bids at some country points. But as with corn, bids in livestock-heavy areas improved. That strength didn’t extend to the export market, which also suffered from higher freight costs and overall tepid demand.
Average soybean basis firmed three to four cents, though it remains very weak in most areas.
Wheat basis slipped around four cents on average, with most locations steady to weaker. There were a few bright spots, notably hard red winter wheat. U.S. HRW was fairly close to offers out of Russia delivered in the latest tender by Egypt, helping firm bids at some Plains rail terminals.
Sorghum basis was steady again this week, staying below average on slow exports. So far it doesn’t appear China has returned as a customer, keeping the market soft.
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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