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Basis flat in the face of higher futures

Agriculture.com Staff 03/13/2009 @ 8:25am

Grain futures moved higher as improved supply and demand balance sheets combined with short-covering helped fuel the rally. Unfortunately for producers, gains in basis over the previous few weeks stalled with higher futures prices.

For corn, average U.S. spot basis was unchanged for the week. Basis at the Gulf managed a 4-cent loss for the week, which kept interior river markets weaker as well, especially along the Eastern Cornbelt regions of Illinois, Indiana and Ohio. In the Western Corn Belt, corn basis did improve a few cents for the week with some end-users in Iowa boosting basis levels 3 to 5 cents for the week.

In the cash soybean market, U.S. average basis levels were mostly unchanged but was off 6 cents at the Gulf. A similar pattern of strength and weakness occurred for soybeans as it did for corn. Gains in soybean basis were fairly typical across the Plains and Western Corn Belt, but weaker in the Eastern Corn Belt.

Continue to expect basis movements to be tied to action in the futures markets. As long as futures are moving higher, pipeline supplies should be adequate and keep basis levels flat are even lower.

Grain futures moved higher as improved supply and demand balance sheets combined with short-covering helped fuel the rally. Unfortunately for producers, gains in basis over the previous few weeks stalled with higher futures prices.

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