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by Higher barge costs hamper grain basis

Corn and soybean basis levels were mixed this week as corn inched higher by a penny, while soybeans moved lower by one-cent a bushel.

The biggest driver over the last week has been the rising costs of grain barges. Along the Mississippi and Illinois River systems, barge costs have increased 6 to 9 cents a bushel. Barge traffic has been surging of late, albeit still running behind normal levels of grain movements in recent years. Although the Ohio River market has been immune so far to the rising costs, we would expect barge costs to increase there in the coming week and basis levels to be hampered in the Lower Ohio River region.

Although grain exports have perked up of late, especially with news that China is buying U.S. corn, the oil slick the Gulf of Mexico poses a potential risk to U.S. grain exports. With about half of U.S. grain moving to international markets through the Port of New Orleans, any shutdown of export vessel traffic would be detrimental to the U.S. grain market.

So far, there have been no immediate impacts from the oil spill on cash grain movement, but some experts say the oil spill could approach the export terminal areas in the next few days and could potentially shut down traffic. From there, it becomes a question of how quickly the oil spill issue can be contained and abated, but it seems likely from the reports that this will not be an easy fix. As such, grain basis and prices could be in for a jolt.

Corn and soybean basis levels were mixed this week as corn inched higher by a penny, while soybeans moved lower by one-cent a bushel.

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