Corn futures slid further this past week, with the December corn contract closing at 234.5, its lowest level since June 30th. Traders and coffee shop drinkers alike are beginning to speculate about the upcoming USDA supply and demand report. Several private forecasts this week predicted corn production of 10.3 billion bushels. Even more bullish forecasters have made predictions below 10 billion bushels. While the USDA is typically conservative in the adjustment of their reports, crop conditions have been poor for long enough that the USDA's surveying techniques should pick up the yield losses that crop conditions are suggesting. If so, we could see a fairly substantial decline in the USDA's current forecast of 10.7 billion bushels.

A decline in futures prices this week adds to the pain that some producers are facing with low yields in the field and low basis at the elevator. In the last two weeks, basis levels have begun to stabilize somewhat. Along the Mississippi river region, basis levels havve started to inch higher from their lows thanks to a stronger basis out of the Gulf. In addition, corn basis in the Plains has also rebounded as drought conditions may be limiting farmer sales of old-crop supplies. Even with the rebound, basis levels continue to run 20 to 30 cents lower than this time last year. In dry states where there has been significant damage to the crop, such as Illinois and Indiana, basis held steady this week at around -21 cents. Despite having a basis higher than nearby states, basis is down nearly 15 cents from this time last year in Illinois and Indiana. For the Southeast, basis levels began to slide in antcipation of a good crop. Alabama corn conditions put the crop at 87 percent good-to-excellent.

Basis will likely stay depressed until a bulk of last years plentiful crop can be sold. In these kind of conditions smart cash marketing becomes very important. A savvy marketer can pocket additional cents per bushel by tracking basis and selling to premium locations. Even smaller operations, without trucks, can pay commercial trucking rates and still earn around 5 to 10 cents a bushel more than their local elevator. We track the net profit from trucking by examining several key markets across the country. We calculate the profit that producers in surrounding areas would earn, net of trucking costs, if they were to ship to these key locations rather than their home markets. These average returns are displayed in the tables below. Depending on your local market, your actual net-returns may be high or lower than these average values.

The returns from trucking corn increased in some of the drought stricken states this month. Premium markets such as Mendota, IL and South Bend, IN have seen the difference between their price and their surrounding markets increase, and as a result profits from trucking to Mendota and South Bend are up 1 and 2 cents respectively. Nebraska has also been dry, and trucking to both Albion and Columbus were a penny more profitable this month. Although not shown in the above table, these locations are drawing grain from even more distant locations that a month before.

Locations in Iowa, where basis is especially low saw the returns from trucking drop this past month. Farmers in Iowa are selling their grain closer to home and at lower prices. Producers in these regions may need to search beyond their typical selling zones, and consider selling grain at distances of 80 to 100 miles in order to find a more premium market if possible. On average the returns from trucking corn are lower than this time last year. Higher fuel costs have taken some of the profit out of trucking grain, but as more of the old crop stocks move through the system look for the variability between regional pricing to increase further and with that increase will come an even greater profit from trucking.

The Optimizer will search for all markets within a 200 mile radius of your home market and compute the net return from trucking grain to each location. Never miss another opportunity. A free trial of the Cash Grain Optimizer is now available at www.cashgrainbids.com.