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Basis levels march higher

10/20/2011 @ 2:56pm

There is not much news this week regarding grains. The European situation is once again attracting the most attention.  When it looks like the Europeans are coming to a solution, the dollar is weak and grains rally.  When it seems like Europe is falling apart, grains fall apart.  

One grain market trend, however, continues through harvest and through the whole European crisis.  Basis levels, especially for corn, continue to march higher. There are apparently still commercials and end-users that have inadequate physical coverage of their needs at this time.  

There may well be an ethanol plant or other end-user in your area which has a strong enough bid for you to alter your harvest/grain hauling plans.  It may be uncomfortable to change your routine, but it could be rewarding to your bottom line.  

There could also be opportunities to quickly unload a bin of corn before winter strikes.  Again, flexibility is key in the face of changing grain flows.  With ethanol plants here to stay, everyone in the market needs to adapt to the range of marketing possibilities presented by the corn market.

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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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