Basis Sliding Towards Harvest

Weather concerns have driven the market over the past week. Soybean futures traded lower as Hurricane Dennis approached, promising rain to dry areas of Illinois and Indiana. Today, updated rain forecasts look like Dennis will bring less rain than expected, and soybean futures are moving up again. Weather, rust, and insect concerns are adding uncertainty to the final production number.

Basis has also been strong in South East Nebraska and Northern Kansas. While Minnesota and parts of the dakotas have seen basis drop about 10 cents.

Basis change over the past week is listed in the table below. Basis dropped 3 to 5 cents at key markets in Iowa, while Illinois markets gave up a penny or two. In the East, at Toledo and Raleigh, basis fell 5 and 2 cents respectively.

Exports for last week were 14% higher than the previous week, and lower futures this week if moisture materializes and slow grain movements we may see higher basis in this coming week. On Tuesday morning the USDA will release July's supply and demand report, which will included updated acreage numbers. Unless there are any big surprises watch for more movement based on weather. (Corn comments follow map and table.)

Nearby corn futures traded lower last week, but climbed higher on Monday as rain forecasts were diminished. Demand has been relatively weak for corn and exports were down 36% this week. Year-to-date corn exports are running 8.5% below last year's levels.

Mapping monthly change in corn basis it is clear that most of the country has seen a decline in basis over the past month, which is not surprising considering we are moving towards harvest and their are ample supplies of old crop corn. South Dakota saw the largest decline with a drop of 10 to 15 cents for most of the state. Basis was strongest near the Gulf.

The table below the map shows basis at key markets across the country. Basis decline significantly in the past week, with many locations showing drops of 7 to 8 cents. Illinois again continues to have a stronger basis than its neighbors, and most Illinois locations fell only 1 to 2 cents.