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Kevin McNew: Basis levels mostly steady

Agriculture.com Staff 01/30/2007 @ 7:26am

Basis levels held mostly steady this past week as futures traded sideways to slightly lower. The Gulf market saw some abrupt changes in basis levels, however, as corn lost 6 cents a bushel while soybeans improved by 6 cents for the week.

In the corn market, losses in basis were tied to the dive in the Gulf market. Terminals along the Ohio, Lower Mississippi and Illinois rivers experienced drops of 7 to 10 cents a bushel in basis. However, in the Western Cornbelt end-users appear to be bidding up basis. ADM’s ethanol plant in Marshall, MN bumped their basis 7 cents a bushel on Friday. Other plants in the Western Cornbelt remain mixed, with some increasing basis and others keeping basis steady or lower.

For soybeans, end-user demand seemed content with current basis levels as most soy plants around the country kept their basis fairly steady over the past week. Any increases in basis seemed to be tied to export as a strengthening Gulf basis lifted bids at key river terminals.

Continue to expect very little positive movement in basis in the coming weeks. The good news is there is still reasonable carry in the cash market to justify storage into spring for corn and mid-summer for soybeans. For the Eastern Cornbelt in particular returns to storing are quite hansom. Locking in basis may for old-crop could prove to be a reasonable strategy to assure storage returns. If futures continue to escalate these returns will dissipate even further.

Basis levels held mostly steady this past week as futures traded sideways to slightly lower. The Gulf market saw some abrupt changes in basis levels, however, as corn lost 6 cents a bushel while soybeans improved by 6 cents for the week.

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