Slow Sales Bolster Basis

Slow sales continued to be the norm in the cash grain market, as falling futures prices in September kept farmers out of the market. This helped bolster basis levels in many parts of the country over the past week.

On average, corn basis increased about 3 cents a bushel over the last week while soybean basis was up 4 cents a bushel. Double-digit basis gains were also fairly common at key end-user markets were pipeline supplies are dwindling before harvest. As such, many end users are trying to entice more grain with significant premiums for immediate delivery. 

Gains in corn were concentrated around the rivers and Central Cornbelt. Barge rates at St Louis fell 3 cents a bushel over the past week, which helped lift basis levels higher. Also, Western Kansas, Oklahoma and Nebraska. Many elevators that we’ve talked to in this region are out of old-crop corn and the prospects for a smaller crop cut by drought are helping give basis a lift.

For soybeans, gains in basis were largest in the Central Cornbelt as well. The Eastern Cornbelt continues to hold steady as near-ideal crop conditions are keeping buyers from bidding up basis in anticipation of large production this fall.

With the recent two-day rally in futures prices and the strong basis, we would expect grain flows to pickup this week and be sufficient to keep end users satisfied until harvest. Look for basis levels to start backing off this week and head lower as we move towards harvest.

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