Grain basis had extreme bouts of volatility this week driven in part by a spurt in harvest progress as well as low river levels which sent barge freight shooting to 3-year highs. But, by the end of the week the meteoric rise in barge costs reversed course giving way to basis levels to return to a more normal state. On the week, corn basis was unchanged while soybean basis was off 2 cents.
For corn, the upper Midwest and WCB regions continue to be slow to harvest which has given some limited life on basis and a few buyers occasionally popping quick-ship premiums. This week saw another ethanol plant in NW IA put a premium to their basis boosting it 7 cents a bushel. In Illinois & Indiana as well some corn plants there also found the need to push their basis higher by 10 cents. While these few isolated buyers bid up their basis, this was against a broader backdrop of weakness or steady basis for much of the remaining corn processors. In the southern Plains, basis levels have been holding firm as strong feed demand and a mediocre crop has made for some early season premiums existing in the marketplace for OK feed buyers.
In the soybean market, crush plants were mostly under pressure this week with a loss of 4 cents a bushel as a group. However about 25% of the plants saw 5 to 15 cent losses on the week as there were virtually no quick-ship premiums to be found. For river terminals, after the dust settled from the barge freight gyrations on the week the average river basis was mostly unchanged. But this masks significant losses in areas on the lower MS River that ended the week with double-digit drops.
With big crops on the way to market and large carry-out from the old-crop 2016 marketing year basis levels seem likely to face more pressure ahead. Crop storage space will be at a significant premium this year making on-farm storage an attractive marketing tool to capture better basis levels into late 2017 early 2018. The average carry from now until January across all grain buyers is 18 cents a bushel for corn and 22 cents a bushel for soybeans.
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