Slow Corn Sales Lifts Basis

Corn futures seemed to reach a bottom in the last week after losing nearly 50 cents since early July. Soybeans, on the other hand, continued to establish new lows as the market grapples with ever-growing expectations of larger carryouts.

In the cash market, basis levels for corn continue to move higher as farmer sales have all but dried up. At CBOT delivery points along the Illinois River, receipts of corn for the week were off over 40 percent from the previous week. In contrast, soybean receipts were up 12 percent for the week.

Also helping to fuel corn basis is the brisk pace of exports. Weekly exports have been totaling 40 to 50 million bushels for the past few weeks helping to keep the river markets pulling grain through higher basis quotes. On the Mississippi, river basis levels for corn are up 30 to 40 cents a bushel in the last month while the Gulf basis is up 20 cents a bushel. For soybeans, basis at the Gulf has managed only a 10 cent gain in the past month.

More recently, gains in corn basis over the past week were 4 cents or more in Western Kansas and Oklahoma, as well as parts of Illinois and Indiana. In the Western Cornbelt, were basis levels have skyrocketed in recent weeks, corn basis levels stabilized and were mostly unchanged to a penny higher. At some key western Cornbelt ethanol plants, basis levels are now trading at or above normal for the first time in two years.

For soybeans, farmer sales have been relatively brisk for this time of year and with a bumper new-crop supply a few months from harvest, basis gains have been more muted. In the Southeast, effects of farmer harvesting is starting to emerge as losses of 2 to 4 cents a bushel in the past week were common.

Corn basis should hold fairly firm for the next few weeks as end users will need to keep farmer sales from drying up altogether. For soybeans, weak fundamentals and ample supplies for end users we expect basis levels to start moving lower once the futures market finds a bottom.

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