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Grain basis moves higher on barge rate reversal, slow harvest

Agriculture.com Staff 10/16/2008 @ 4:40pm

Grain futures continued to head south this week, with soybean prices seeing the most red after suffering an 80-cent slide in a few days. Grain basis levels, on the other hand, were mostly stronger around the country, bucking the normal seasonal trend for weakness during harvest. A combination of slow harvest and sharply lower barge rates helped lift US average corn basis by 5 cents for the week, while average soybean basis levels were up 10 cents for the week.

Corn basis levels were up sharply in the Upper Midwest and along the river system this week, as gains of 7 to 10-cents were fairly common. As of Sunday, USDA pegged Minnesota’s corn crop at only 5% chopped versus a normal pace of 24% for this time of year. Further south, basis levels on the river were buoyed by falling barge rates over the past week. Rates along the Illinois, Ohio and Lower Mississippi River were off 10-cents a bushel or more over the past week, helping push both corn and bean basis levels higher.

For soybeans, double-digit basis gains were fairly typical, especially in Northern parts of the country. Some processors were up 15-cents or more on basis in MN, IA, IL and OH. Although soybean harvest as not as far behind as corn harvest is, the sell-off on the futures market is likely limiting cash sales by farmers.

Basis levels should start to back off especially as corn harvest picks up pace in traditional grain states. For soybeans, a weakening Gulf basis over the last week could spell further weakness upstream. However, once we get past harvest basis levels should start to improve. With falling fuel costs, grain transportation costs should follow suit and help lift interior basis levels in the coming months.

Grain futures continued to head south this week, with soybean prices seeing the most red after suffering an 80-cent slide in a few days. Grain basis levels, on the other hand, were mostly stronger around the country, bucking the normal seasonal trend for weakness during harvest. A combination of slow harvest and sharply lower barge rates helped lift US average corn basis by 5 cents for the week, while average soybean basis levels were up 10 cents for the week.

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