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Grain basis holds steady in new year

Agriculture.com Staff 01/07/2009 @ 8:43am

The new year started with little change in corn and soybean basis with both posting only modest gains over the past week. Since the second week of December corn futures have gained a $1 while soybean futures have shot up $2. As a result, farmers seem willing to feed the pipelines of grain merchants, keeping basis levels fairly stable.

However, basis continues to widen along normal seasonal patterns. At the Gulf, corn basis is up 15 cents a bushel since the futures rally took form in December, while soybean basis is up about 10 cents a bushel. Interior basis levels are not as strong. Corn basis at key processors in Iowa are up only about 2 cents a bushel since December, while soybean basis is unchanged to slightly weaker. In the last few trading days, some processors started to drop basis as futures moved higher.

Over the past week, corn basis levels were mostly unchanged across the Corn Belt. Some southern markets had 2 to 4 cent basis improvements over the past week while areas around processors in Nebraska and Iowa saw basis start to widen.

For beans, much of the western Corn Belt had weaker basis levels but areas along the river system were higher on weaker barge rates. Eastern Corn Belt and mid-Atlantic markets were also stronger for the week.

Basis levels will likely be stable to slightly weaker over the near term. Hefty gains in futures of late should keep pipelines full. However, look for basis levels to start marching higher by mi-month with steady growth into the end of February.

The new year started with little change in corn and soybean basis with both posting only modest gains over the past week. Since the second week of December corn futures have gained a $1 while soybean futures have shot up $2. As a result, farmers seem willing to feed the pipelines of grain merchants, keeping basis levels fairly stable.

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