Home / Markets / Markets Analysis / Basis to be depressed for months

Basis to be depressed for months

Agriculture.com Staff 07/11/2006 @ 2:06pm

Basis has been mostly unchanged over the past week, in part due to the sideways movement in the futures market. Despite higher barge rates - up roughly 6 % this week- and a surprise slowdown in export inspections, there were a few markets along the Mississippi that raised corn basis by several cents.

Corn buyers in central Iowa, northern Minnesota, and North Dakota also bid up basis a penny or two, while Eastern Seaboard markets saw basis fall by 1 to 2 cents.

Monday's weekly export inspections came in at 32.8 million bushels, compared to analyst expectations of 40 to 43 million bushels. Despite this week's slow down in inspections, corn exports are still moving along very well, and it would appear that the USDA may still need to revise export numbers higher.

Grain merchandisers along the River were eager to pull in more soybeans, and basis along the River narrowed by several cents over the course of the week. Soybean export inspections were unimpressive at just 5.19 million bushels as compared to the 6 to 11 million bushels expected.

Basis continues to be depressed due to high transportation costs, and it doesn't look like this story is going to change anytime soon. Unshipped export balances, or grain that has been sold for export but not yet shipped, is running fairly high. Unshipped corn exports are 59% higher than last year and unshipped soybean exports are 46% higher than the previous year. All of this sold, but untransported grain needs to move out of the Midwest to an export market. This is putting considerable pressure on the transportation sector.

Grain barge traffic is up 36% from this time last year and rail origination is up 12%. Barge and rail rates will continue to be high for at least the next several weeks. If exports remain strong we should barge and rail transportation could be high priced and congested all the way to harvest; when things will only get worse.

Basis has been mostly unchanged over the past week, in part due to the sideways movement in the futures market. Despite higher barge rates - up roughly 6 % this week- and a surprise slowdown in export inspections, there were a few markets along the Mississippi that raised corn basis by several cents.

CancelPost Comment
MORE FROM AGRICULTURE.COM STAFF more +

Farm and ranch risk management resources By: 07/07/2010 @ 9:10am Government resources USDA Risk Management Agency Download free insurance program and…

Major types of crop insurance policies By: 07/07/2010 @ 9:10am Crop insurance for major field crops comes in two types: yield-based coverage that pays an…

Marketing 101 - Are options the right tool… By: 07/07/2010 @ 9:10am "If you are looking for a low risk way to protect yourself against prices moving either higher or…

MEDIA CENTERmore +
This container should display a .swf file. If not, you may need to upgrade your Flash player.
Case IH Magnum Rowtrac