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Basis levels are improving

Barge rates were off 12 to 18 cents a bushel this past week, which helped lift basis levels at markets along river routes.

For the week, average basis gains in corn were 5 cents a bushel while soybean basis gained over 7 cents a bushel. Corn harvest continues to lag behind last year's pace and the 5-year average. Current projections from USDA put the corn crop at only 53 percent chopped, which is supporting basis.

Areas of Minnesota and North Dakota did have slightly weaker basis as harvest progress in these sates jumped significantly in the last week. However, the big driver in much of the Corn Belt was lower barge rates which helped basis post double-digit gains in most areas of eastern Iowa and western Illinois. For beans, basis gains were more pronounced as harvest is reaching an end in many parts of the country.

However, areas in the Plains and eastern Corn Belt still have a fairly sizable portion of their crop to harvest which is keeping basis in these regions mostly stable. Basis should continue to hold firm over the next 4 to 6 weeks. However, with futures and basis seeing sharp gains in recent weeks, 'carry' returns in many cash markets are starting to evaporate.

At the beginning of October, the average spread between corn contracts for January and March delivery was 6 cents a bushel. Today, the average 'carry' being paid is only 4 cents a bushel.

While some buyers continue to offer profitable 'carry', the opportunities are harder to find and should continue to dwindle in the coming weeks.

Barge rates were off 12 to 18 cents a bushel this past week, which helped lift basis levels at markets along river routes.

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