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Kevin McNew: Corn basis rally stalls

Corn cash prices are up this month with help from the futures market. Nearby corn futures are up over 15 cents since last month. Basis, on the other hand, has been less than helpful this holiday season. Recent high futures prices have generated increased cash sales and have brought last month's basis rally to a standstill.

The average basis in both Iowa and Illinois improved only 2 cents this month. Both states are roughly 4 cents below their respective basis levels of last year. Nebraska and Kansas saw basis move up 3 and 4 cents respectively this month, averaging -35 and -29 cents. While basis improved in both Wisconsin and Minnesota, these states are still considerably below their average basis for this time of the year.

Average Corn Basis

State

Current

Last Month

Last Year

AL

-25

-25

-7

AR

-3

3

-2

IA

-37

-39

-33

IL

-20

-22

-15

IN

-21

-23

-16

KS

-29

-33

-20

KY

-6

-5

1

MI

-32

-40

-23

MN

-43

-46

-33

MO

-21

-23

-25

MS

-13

-22

-10

NC

6

9

22

ND

-49

-49

-40

NE

-35

-38

-31

OH

-24

-27

-19

OK

-1

-7

2

PA

-3

4

7

SD

-45

-45

-40

TX

7

11

9

WI

-44

-50

-19

More recently it appears that basis has been mixed over the past week. In Iowa select markets such as Clinton, Davenport and Eddyville were down roughly 3 cents. Coon Rapids, on the other hand raised basis 3 cents this past week. In Illinois, most of the select markets listed below were down a penny or two. Similar basis drops were seen through out most of the Midwest. Wisconsin was an exception, as basis at Milwaukee and Stanley moved up 7 and 3 cents respectively. Despite Milwaukee’s gains this week, corn basis at -41 is down 3 cents from last month.

Corn Basis For Select Markets

City

State

Current

Last Week

Last Month

Clinton

IA

-7

-4

0

Coon Rapids

IA

-35

-38

-42

Davenport

IA

-21

-19

-14

Eddyville

IA

-22

-19

-9

Bloomington

IL

-15

-15

-17

East St Louis

IL

-3

2

6

Mendota

IL

-20

-17

-15

Pekin

IL

-6

-4

-9

Burns Harbor

IN

-21

-20

-18

Evansville

IN

-5

1

6

Mount Vernon

IN

-5

0

4

South Bend

IN

-19

-20

-22

Gulf

LA

46

51

49

Bingham Lake

MN

-43

-42

-48

Marshall

MN

-35

-34

-26

Albion

NE

-32

-32

-31

Columbus

NE

-24

-22

-14

Cincinnati

OH

-12

-9

-5

Circleville

OH

-17

-19

-16

Toledo

OH

-20

-18

-23

Big Stone City

SD

-39

-37

-41

Chancellor

SD

-33

-33

-36

Milwaukee

WI

-41

-48

-39

Stanley

WI

-29

-32

-33

Gulf basis slipped 5 cents this week to 46, that is a 3 cent decline for the month. The recent decline is due in part to slightly weaker export demand. Export inspections for the week were 32 million bushels. Cumulative corn exports for the year are 607 million bushels as compared to 618 million at this time last year. With barge rates falling again this week, down nearly 15% on average, more corn is moving to the Gulf, further depressing Gulf basis.

ADM, Cargill and Bunge all raised basis about 2 cents this week on average across all of their facilities that we follow. Consolidated Grain and Barge was the only major company to lower basis on average across its locations.

Basis appears to be moving sideways, trading up and down based on demand and the pace of cash movements. These trends are likely to continue through January. The USDA reported commercial stocks unchanged this week, at 53%. Basis is not likely to move much higher until commercial stocks fall. Historically commercial stocks tend to be drawn down in February and basis can once again move higher.

Corn cash prices are up this month with help from the futures market. Nearby corn futures are up over 15 cents since last month. Basis, on the other hand, has been less than helpful this holiday season. Recent high futures prices have generated increased cash sales and have brought last month's basis rally to a standstill.

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