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Cash Grain Commentary by Cash Grain Bids Inc

Basis Inches Up

Sharp declines in grain futures over the past week did little to stimulate basis. Even with corn futures sliding 12 cents and soybeans posting a 7-cent loss, basis gains amounted to only a penny on the week for US corn and soybean basis.

Regionally, some areas saw better gains in basis. Increases of 2 to 3 cents in corn basis were fairly common in parts of the Western Cornbelt and the Plains, while the Eastern Cornbelt was up only slightly for the week. For soybeans, areas of basis strength were more limited to Nebraska and South Dakota in the West and Illinois in the East.

Average Corn Basis

State	Current	Last Week
AR	-19	-20
CO	-17	-17
IA	-51	-52
IL	-31	-33
IN	-29	-30
KS	-22	-24
KY	-20	-21
MI	-41	-42
MN	-62	-65
MO	-30	-33
NC	14	13
ND	-63	-65
NE	-39	-41
OH	-33	-33
OK	-8	-8
PA	12	10
SC	8	8
SD	-59	-62
TN	-17	-19
TX	11	11
VA	7	5
WI	-56	-59
WY	-24	-26

Average Soybean Basis

State	Current	Last Week
AR	-28	-28
IA	-63	-63
IL	-44	-45
IN	-32	-32
KS	-69	-69
KY	-29	-32
MI	-59	-59
MN	-81	-80
MO	-48	-49
NC	-25	-23
ND	-93	-91
NE	-66	-69
OH	-35	-35
OK	-58	-55
PA	-48	-48
SC	-19	-18
SD	-82	-83
TN	-26	-26
VA	-25	-25
WI	-78	-80

Basis should continue to hold steady for the near-term but seasonal weakness could start to take hold in mid to late August. Ample old-crop supplies will keep end-users content for sometime. Also, high barge rates will continue to hamper any gains in basis between now and harvest.

In the case of corn, however, conditions should change after fall harvest. While the verdict is still out on the 2006 corn crop, even with above average yields stocks should fall sharply for 2006/07 helping to push cash prices higher. Because of large acreage, soybeans may end up being a different story. However, if August weather continues to be hot and dry yield losses may offset some of the higher acreage.