Corn basis moved higher again this past week, as futures continued to drop. December corn futures hit a contract low on Monday. With bird flue spreading through China there is a concern that Chinese demand for feed grain will decrease, forcing China to increase corn exports. U.S. corn export inspections were also slightly lower than expectations, coming in at 27.8 million bushels compared to analyst expectations of 30 to 35 million bushels. This puts cumulative inspections at 21% of the USDA forecast for the year, just slightly above the 5 year average for this time of the season.

This week basis experienced the largest increase in parts of NorthWest Iowa, Southern Minnesota where basis was up more than 5 cents. Basis was also strong in Northern Indiana and Southern Michigan. Basis increased slightly slower along the river and down into the SouthWest; up less than 2 and half cents. This reverses a recent trend of basis increasing the most along the river.

Basis at most of the key markets across the country increased several cents this past week. Strong gains were seen at Clinton, Iowa, up 5 cents and Marshal, Minnesota, up 8 cents. Some weakness was seen at Eddyville, Iowa and Pekin, IL down 1 and 3 cents respectively.

Transportation costs helped basis again, but barge rates may be set to move higher. Barge rates dropped roughly 2% this week. While barge rates are still down significantly from last month, they are now above the rates found two weeks ago. It appears as though barge rates have found a bottom and may be on the verge of moving higher. Trucking rates fell another 3% this week. Despite a 4% decline in ocean rates, basis at the Gulf dropped a penny, likely due to slow exports this week.

Soybean basis also moved higher, however the strongest gains in soybean basis occurred further South. Parts of Oklahoma, Kansas and Missouri saw basis climb over 5 cents. To the South and the East basis was also strong. Basis increased the least in Wisconsin, parts of Illinois, and further to the West. These regions saw gains of less than 2 and a half cents.

Soybean exports continue to be sluggish, with export inspections coming in under analyst expectations at 22 million bushels. Cumulative inspections for the season are at 26%, that is roughly 8% below the 5 year average for this time of the year.

With futures declining, basis has been bid up in order to keep grain moving. Of the select markets listed below, all of the Iowa and Illinois locations raised soybean basis except for Des Moines where basis fell 2 cents. Decent basis gains were seen in Ohio, with Toledo basis increasing 6 cents.

Both corn and soybean basis climbed this week, but at a much slower rate than past weeks. Basis appears to be at or near its peak, and may be ready for a correction. With low futures prices and poor weather expected for most of this coming week cash sales could continue to remain slow. No one wants to drive a grain truck through a blizzard to receive a poor price for their grain. This slowdown may help to sustain basis in the short term. Watch your local basis closely. About the time the sun comes out basis could be moving lower.

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