Basis Continues to Rise
November's USDA supply and demand forecast was released this past
Thursday. Corn production forecasts were increased to 11.03 billion
bushels, but the increase in production was anticipated by the market, and
there was minimal downward pressure as a result. Futures rallied late in
the week, and some analysts predict corn will move even higher. While it
is still too early to see if corn futures are on the upswing, a basis
rally is well underway. Lower barge rates continue to drive basis up. With barge rates down 57%
from last month it is not surprising that we are seeing 25 cent basis
gains along the river. Moving away from the river basis is still improved,
anywhere from 5 to 15 cents. Corn exports were also strong this week. Monday's inspection numbers,
at 39.09 million bushels, were above trade expectation of 29-34 million
bushels. This pushed cumulative exports to 17.9% of the USDA forecast for
the season; 1.2% above the five year average. With strong exports and
lower barge rates -down 20% this week alone- many of the key markets below
boosted basis substantially this week. Davenport and Clinton saw basis increase 12 and 10 cents respectively.
This puts these markets well above last year's levels. In fact many of the
key markets near the river are now at or above last year's levels. Despite
gains of several cents this week, Minnesota's basis continues to linger
well below last year's levels. A similar scene is playing out in South
Dakota. Soybean Inspections this week came in at 20.1 million bushels, 10 to 15
million bushels less than expectations. Cumulative export inspections are
now at 19.9% of the USDA forecasts, compared to the 5 year average of
27.5%. Despite lackluster export numbers soybean basis has done well this
month. Much of this month's gains in soybean basis occurred this week alone.
NOPA crush numbers came in at 150.8 million bushels, right at expectation.
With weak exports and only neutral US demand it might be surprising that
basis has jumped so considerably. Yet the main drivers of basis continues
to be lower barge rates and farmers holding tight to their grain. With
commercial stocks down elevators are forced to bid up basis. Iowa has seen
some of the most dramatic increases this week with Cedar Rapids and
Davenport aggressively bidding up their basis 16 and 22 cents
respectively. Basis at the Gulf was up 10 cents this week, but still remains below
last year's basis of 49. This is not overly surprising considering that
basis at the Gulf is fed by export demand, which has been weak. Ocean
freight rates are slowly declining, however, and this could help Gulf
basis going forward. sales@cashgrainbids.com
City
Clinton
Coon Rapids
Davenport
Eddyville
Mendota
Pekin
Evansville
South Bend
Gulf
Bingham Lake
Marshall
Columbus
Toledo
Big Stone City
Chancellor
Soybean basis is experiencing a river effect, similiar to
corn, as basis is up over 25 cents along the river. The basis strength
emanating from the river is spreading further into neighboring states,
with even parts of South Dakota and Nebraska seeing 25 cent basis gains.
To the West and the East basis has failed in increase as quickly this
month, and in some periphery markets we have seen basis slip slightly
lower. 
Soybean Basis For
Select Markets
City
Cedar Rapids
Davenport
Des Moines
Bloomington
Danville
Galesburg
Quincy
Evansville
Gulf
Zeeland
Mankato
Raleigh
Hastings
Lincoln
Toledo
Volga
Both corn and
soybean basis have improved rapidly. If basis starts moving well above
last year's levels in your area, you may want to consider locking it in.
Everyone is holding their grain right now, but at some point it will have
to move into the market. The historical trend is towards higher basis at
this time of the year, yet these recent gains are somewhat surprising
considering we have had two years of record level production. How long can
all of that grain stay in the bins, and what happens when it comes out?
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