BargeOnRiver Ron Chapple Stock/ThinkstockPhotos
Aerial of barge on Mississippi River in Baton Rouge, Louisiana.

Basis Outlook - Weather felt far and wide in cash market

Basis strengthened for those in the right places

The historic wet spring of 2019 continues to reverberate through the cash market as summer begins, creating winners and losers last week depend on where you sell and what you’re selling

Corn basis remains the poster child for weather’s impact, for better or worse. Export sales slipped to almost nothing in last week’s reports, as foreign customers search for lower prices out of South America. Corn isn’t readily available for near-term shipment either, thanks to high water that should close the river system north of St. Louis into the final days of June. The water level in St. Louis could fall below the 38-foot trigger for reopening the harbor there June 17. But it could take days to clear debris from locks up river on the Mississippi and Illinois rivers.

Bids were mixed even on areas still shipping corn south along the Ohio and Lower Mississippi, reflecting the weaker tone for corn at the Gulf.

But average corn basis firmed two pennies as farmers lightened up on old crop sales with the retreat in futures and a bleak outlook for 2019 production. Bids got some help from a source that’s been missing in action lately: Ethanol plants, which were able to push their basis a little as margins improved on higher cash ethanol prices.

Weather also played a role for rail shippers. Troubles remain on some lines due to spring flooding, and lack of barge movement sent rail car premiums for summer soaring, even as fall bids were pulled due to uncertainty over when harvest pressure will hit and how heavy it will be.

Soybean basis also showed a highly variable pattern last week, though average bids improved a half-cent or so. Weaker basis at the Gulf hurt some bids on the Ohio and Lower Mississippi rivers, but upriver terminals unable to ship south were still buying. They’re anticipating a rush of shipments this summer to fill a record book of outstanding sales. China has 245 million bushels of unshipped sales and signaled last week it would take delivery and add to its reserves despite the trade dispute the with U.S..

Beans are still moving off the Pacific Northwest to Asian buyers, helping firm rail bids headed west. Processor bids were mixed, strengthening in the eastern Midwest, where buyers don’t know how production will turn out after a wet, cold spring. But basis at western processors appeared to weaken as planting improved.

Geography was also the name of the game in the wheat market. Basis for soft red winter wheat weakened most areas along with bids at the Gulf as buyers wait for new crop supplies. But Toledo was stronger as some exports may be filled out of the Great Lakes this year.

While hard red winter wheat slipped at the Gulf, country buyers appeared to be bidding up for old crop inventory, which is a known quantity as rain makes the quality of the new crop uncertain. Higher protein was also stronger from the Twin Cities out to the PNW, thanks to questions about the impact on drought on the crop in Canada.

Even the sorghum market on the southwest plains had something a split personality. Bids weakened at the terminals feeding the Texas Gulf and along the river as lack of Chinese demand due to tariffs stymies exports. But country buyers bid higher as supplies of corn grow more questionable and the wheat harvest could be later than usual.


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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