Corn and soybean spot basis were hammered this week as end users see some relief from newly harvested southern crops. For the week, spot corn basis was off 50 cents a bushel while spot beans were off 35 cents a bushel.
In the corn market, early season harvesting in the South continues to move by barge and rail to the Midwest in an attempt to replenish tight pipeline supplies. As a result, basis levels have moved sharply lower in the past few weeks with little if any premium being offered by buyers for old-crop delivery as compared to new-crop delivery. Ethanol plants were a big mover to the downside losing 38 cents a bushel on average as a group, while some Eastern Cornbelt plants were lower by a $1 a bushel. On the river terminals, followed in sympathy but were only down by 28 cents a bushel, as they have been out of the market for some time and their basis had not kept pace with the lofty prices paid by end users.
For soybeans, it was much the same story as Eastern Cornbelt markets were hardest hit, largely taking out the premium they had been offering for the later half of the marketing year. Bean plants were off 40 cents a bushel on average as compared to river terminals which saw only a more modest 20 cent erosion.
Spot basis should continue to fall, but we would expect it to be short lived as full swing harvest in the Midwest is a ways away. With basis levels taking and nearly on par with new-crop delivery, the economic incentive for farmers to harvest wet corn early will likely be muted, and could lead to a mini recovery in the first part of October.