Basis across the country fell this week for both corn and soybeans. Since August 29th the average corn basis across the grain belt fell five cents, while beans recorded a 9.8 cent loss over the same time period. The effects of increasing barge rates, shrinking export demand and harvest pressures has dragged down the front of the cash curve, but basis for October delivery has firmed. Since August 29th we have observed average new crop basis across the grain belt strengthen by 1.83 cents while beans posted a minor loss of 1.15 cents.
As of Sunday, this week’s crop progress report showed a record harvest pace with 10% of the corn crop already harvested, which compares to the previous record set in 2010 of 6%. This harvest pace should continue to drag down spot basis across the country in the near term, but it bodes well for anyone who had an HTA for a more typical harvest date of October and November. Most likely we will continue to see firm basis in the typical new crop months since many merchandisers are concerned it will be difficult to draw grain out of the bins once the producer locks them after harvest. In particular, basis for November will have room to run due to drought yield reductions. Farmers that sold set bushels have seen their overall percentage gain from sharp declines in production. Due to these larger than intended levels they will likely hold on to their remaining bushels until after the New Year.
River markets continue to put pressure on basis throughout the heartland by dropping on average ten cents for soybeans and eight cents for corn since August 29th. While there are a handful of end users that are still posting very strong basis throughout the country, the aggregate basis outlook for spot delivery does not show signs of strengthening in the coming weeks. This is particularly important for the producer who is trying to market soybeans because there are few opportunities in the forward months as a result of the steep backwardation in the futures market.