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Bean basis sinks while corn holds steady

Agriculture.com Staff 01/15/2009 @ 9:33am

USDA's latest round of supply and demand numbers sent grain futures lower this week as higher old-crop production and weaker demand numbers lifted ending stocks for corn and beans. Basis levels, which usually counter-balance losses in futures, were mostly unchanged for corn and weaker for soybeans.

On average across the U.S. soybean basis dipped 2.5 cents a bushel. Hardest hit areas included the Western Cornbelt and areas around major river terminals. Barge rates along the Illinois River jumped 20 cents a bushel over the last week, with other river systems having a similar cost increases. Losses in basis were even larger in some key markets, with soybean basis down 25 to 30 cents a bushel over the past week.

For corn, basis managed to hold relatively stable, with the exception being the river markets impacted by rising costs. A few select processors in Iowa and Illinois bolstered their corn basis this week, but by and large stability in basis was the mainstay of most end users.

The spike in barge rates should be short-lived with weak exports and a slumping general economy. As such, expect barge costs to return to normal which should help basis improvement. In addition, pipeline supplies should start to shrink with the sell-off in futures as farmer selling slows.

USDA's latest round of supply and demand numbers sent grain futures lower this week as higher old-crop production and weaker demand numbers lifted ending stocks for corn and beans. Basis levels, which usually counter-balance losses in futures, were mostly unchanged for corn and weaker for soybeans.

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