Historically high U.S. cash-corn basis levels for this time of year continue to reflect a market that seeks the physical ownership of corn supplies.

Cash-basis levels are off the peak in prices witnessed earlier in the week but haven't displayed much deterioration. The firm prices are a signal that commercial elevators still don't have much ownership of cash-corn inventories, said Dave Marshall, an independent grain-marketing advisor in Nashville, Ill.

Cash-corn basis is down 7 cents from Monday's peak at 65 cents over July futures in St. Louis, Mo., but remains at incredibly high levels, Mr. Marshall said. "I can't ever recall corn basis this high at this time of year since I began keeping records in 1991," Mr. Marshall added.

End users and grain elevators alike are finding it tough to get supplies adequate to meet strong demand.

Solid demand from ethanol processors and exporters creates a basis battle, with exporters forced to keep bids elevated to encourage movement of grain to the Louisiana Gulf.

Exporters at the Louisiana Gulf are paying from 83 cents to $1.00 over the July Chicago Board of Trade corn futures contract to secure available supplies.

In Decatur, a major grain-processing area housing processing plants from Archer Daniels Midland Co. (ADM) and A.E. Staley, cash basis for corn is quoted at 60 cents over July CBOT futures.

Producers have been reluctant to part with supplies amid uncertainties ahead of a summer-weather market in a year where large U.S. production is needed to rebuild depleted inventories.

Yet, cash-grain merchants report increased farm sales in recent days. The decline reflects sellers taking advantage of soaring cash-basis levels and farmers with time to market supplies after rains briefly sidelined planting operations, said Karl Setzer, analyst with MaxYield Cooperative in West Bend, Iowa.

The rise in farm sales saw processors immediately cut their basis bids in anticipation of buying cheaper supplies from producers instead of paying the higher price of commercial elevators, Mr. Setzer said.

Ethanol plants have been forced to lower their basis to improve cash flow, reflective of poor processing margins in the face of slumping crude oil prices, Mr. Setzer added.

Nevertheless, analysts and grain merchants don't expect a significant decline in basis moving forward, as corn demand remains strong and supplies are still tough to come by.

Declines in basis continue to attract buyers, as end users still see a drop in futures and cash basis before Thursday's world supply and demand reports as buying opportunities in the face of limited farm movement.

Overall, buyers and sellers are taking a cautious approach before the U.S. Department of Agriculture releases its latest estimates on world and U.S. grain supply and demand. "Traders and cash merchants may think they know what's going on, but they still have to wait and see what USDA says is going on in their reports Thursday," Mr. Marshall said.