Navigating the 180-degree transition from ‘12 crop to ‘13 crop will be difficult, but reality will be more complex than simple numbers. The Sept. 1 totals in Chart 1 and Table 1 assume corn and soybean harvest is complete, when it’s really barely underway. And daily consumption also serves to free up space. Total bin space is higher now than in 2009; USDA statistics indicate around three-fourths of a billion bushels of space have been built in 2010 through the end of 2012, plus more this year. Regional variations also become a factor, in carry-over stocks as well as production. Southern and Eastern states will hold a larger percentage than usual of carry-over stocks this year, and these areas are no longer in drought, improving their production prospects. The Western Corn Belt remains the greatest concern, with the double whammy of minimal carryover stocks and ongoing severe drought.
Overall, the reversal to a tsunami of grain means implications of cheap basis and wide carries across corn, soybeans, and wheat. But those empty bins in early September and the depleted pipeline will take time to replenish, and steep basis premiums are likely for the early bushels — premiums that can often roll forward. Plan for cheap basis this fall, but be careful about shorting basis for early slots.