August 19, 2013 | Grain Hedge Insights | | Views: 157

More Basis Volatility in the Grains

The national average corn basis slipped 2 cents this week while soybeans pushed 8 cents higher

Cash market volatility continued this week as tight near-term supplies combined with an outlook for ample production in the coming months keep buyers moving basis erratically. For the week, corn posted an average gain of 2-cents a bushel, while soybeans were up 8 cents on average.

In the corn market, basis levels at the Gulf were higher for the week, but rising barge costs are keeping river terminals steady to even in some cases weaker on basis levels.  Barge rates had been climbing in the past two weeks but have started to stall out in recent days. For ethanol, average gains across all plants was 2 cents a bushel for the week, but Western Cornbelt plants had numerous plants with double-digit gains, especially in the Upper Midwest were new-crop corn harvest will likely be late to arrive this year. Weekly ethanol grind was up 4,000 BPD rising for the third straight week in a row.

For soybeans, river terminals were weaker on average, falling 5 cents a bushel on the heels of higher barge freight and a falling Gulf market. For soybean processors, basis levels were mostly weaker but extreme volatility was common across plants as some buyers boosted basis by 20 cents or more while others were dropping basis. The NOPA’s monthly crush report for July showed 161 MB of total crush for US soybean plants, off marginally from the June number of 163 mb.

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