An early grain harvest this year has meant an earlier peak in barge rates. Over the past few days barge rates have begun to fall suggesting that the trend may be set for barge rates to continue the post-harvest harvest seasonal slide. Although average corn and soybean basis this week was up only modestly, areas around the River system posted solid gains thanks to 5 to 10 cent a bushel declines in barge rates.
For corn, basis levels were mostly unchanged through the heart of the Cornbelt, but Eastern areas saw more weakness as harvest hits full swing. Areas along the River system saw higher basis with average corn basis at river terminals jumping 4 cents for the week even though the Gulf basis was off 1 cent. At ethanol plants, basis levels were up 1 cent on average across the country with large gains noted at key plants in the Western Cornbelt.
In the soybean market, basis levels on average were modestly higher but showed more weakness in the Eastern Cornbelt with losses of 5 to 10 cents fairly common. However, strength out of the Gulf and lower barge rates helped lift interior river terminal basis by 5 cents for the week while soy crushing facilities were mostly unchanged for the week.
With harvest now surpassing the half way point, it will be interesting to see if basis levels will start to climb higher. The short-crop this year has definitely limited the usual pressure on basis and kept spot bids fairly strong through the harvest season. Adding to the upside potential for basis will be the likely erosion in barge rates over the next few months. Forward barge rates are 15 to 20 cents lower than current barge rates -- which means river terminals should start to be more competitive in the market place in coming weeks.
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