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As harvest goes by

Basis levels for corn continue to hold up very well during harvest and in many areas are improving.  This is coming from processors, the gulf (even though exports are so small!) and other end users. 

With the corn harvest well past 50 percent, many elevators and users may be evaluating whether or not they bought the kind of volumes they were expecting.  Thus begins a end-of-harvest scramble for the last bushels.  Farmers with corn in a bin typically don’t respond to these immediate basis improvements--it’s hard to empty a bin when you just filled it.

So, despite the “just get it done” mentality that goes with the last half of harvest, pay attention to any basis shifts that occur in the local area.  With the futures market not showing any return to storage, strong basis levels should be an important factor in selling decisions. 

Meanwhile, it would seem the market can still get excited about 2012 crop size and other supply tidbits.  Friday morning, during trading, there will be crop size estimates released by a widely watched analyst.  The October USDA report is Thursday, October 11th. 

It would seem the biggest struggle is the soybean crop size.  The list of anecdotal crop yields suggests a larger crop.  The demand for soybeans, especially from the export market, is larger.  Sales on the books for soybeans already total 82 percent of what the USDA is estimating.  This week’s sales were a whopping 1.297 mmt (over 47 million bushels).  Will the two factors offset each other?  And what price is required to ensure adequate supplies of beans for the spring/summer domestic crush?

The risk of loss in trading commodities can be substantial.  You should therefore carefully consider whether such trading is suitable for you in light of your financial situation.

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