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Basis erodes as harvest picks up

09/19/2011 @ 2:57pm

U.S. cash grain prices and basis levels continue to erode, with increasing harvest activity keeping buyers on the sidelines awaiting cheaper prices.

Grain buyers expect the influx of fresh supplies from the fields to put further pressure on prices, creating even better buying opportunities, analysts said.

The declines come as demand for the crops remains sluggish.

The national cash price index for corn, maintained by the MGEX in Minneapolis, showed a price of $6.64 3/4 a bushel, down from $6.74 1/2 a bushel. That reflected an average basis of -23 1/4 cents to Friday's settlement of the nearby Chicago Board of Trade December corn futures contract.

Basis is the difference between cash prices and futures market prices.

The national cash price index for soybeans slipped to $12.81 3/4 a bushel, down from $12.86 1/2 a bushel, according to the data from MGEX. That reflected an average basis of -49 3/4 cents a bushel.

Sluggish export demand is adding to the price weakness of corn and soybeans. The U.S. Department of Agriculture on Monday reported 22.4 million bushels of corn and 10 million bushels of soybeans were inspected for export in the week ended Thursday. Both amounts came in at the low end of estimates from analysts surveyed by Dow Jones Newswires.

Midday barge basis levels for shipment of corn to the Louisiana Gulf ranged from 47 cents to 58 cents over December futures, unchanged from Friday, according to data from the U.S. Department of Agriculture.

Meanwhile, processors and ethanol plants in the eastern Midwest that have not secured enough inventories to carry them through the fall harvest continue to report price premiums for corn supplies. Nevertheless, the premiums are slipping in unison with other basis levels.

In Indiana, the basis ranged from 10 cents lower than December futures to 25 cents over December futures, according to data from USDA. In Ohio, ethanol plants are paying from 20 cents to 30 cents over December futures.

-By Andrew Johnson Jr., Dow Jones Newswires; 312-347-4604;andrew.johnsonjr@dowjones.com
(END) Dow Jones Newswires
September 19, 2011 13:10 ET (17:10 GMT)

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