While basis at the Gulf for corn, soybeans and wheat continues to weaken steadily, bids upriver are headed in the other direction as farmers start to get back into the field this spring.
Gulf prices are struggling under the weight of more shipments arriving now that the river is opening for traffic. Shippers are eager to send barges down river thanks to a plentiful supply of freight that's lowered costs substantially from high prices of the winter, when weather constrained availability.
At the same time, demand from foreign buyers for U.S. originations is slipping seasonally as the old crop marketing years for corn, soybeans and wheat begin to wind down.
While farmers focusing on trying to get fieldwork going after a harsh winter, merchants are wondering if the problems seen on the nation's rail system will cause trouble again this fall when farmers harvest what likely will be good 2014 crops.
Barge freight costs to ship corn downriver remain high, with harvest slots running 30 to 35 cents above old crop months, further helping erode new crop bids.
Testimony prepared by USDA for today's hearing of the U.S. Surface Transportation Board on rail service issues said problems on the system might not be repaired in time for harvest.
"Although there have been recent signs of improving rail service, there is concern that this year's crop will not be moved before new crop has to go into storage, which could create major problems during the upcoming 2014 harvest," USDA said. "There are reports of elevator operators storing millions of bushels of grain on the ground and refusing to buy more from farmers. Reports from North Dakota co-op managers indicate 85% of this year's corn crop is still in either on-farm or warehouse storage."
Rail capacity was limited first by construction on tracks undertaken to increase capacity. Then winter weather hit to further limit shipping speeds.
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Senior Market Analyst Bryce Knorr first joined Farm Futures Magazine in 1987. In addition to analyzing and writing about the commodity markets, he is a former futures introducing broker and is a registered Commodity Trading Adviser. He conducts Farm Futures exclusive surveys on acreage, production and management issues and is one of the analysts regularly contracted by business wire services before major USDA crop reports. Besides the Morning Call on www.FarmFutures.com he writes weekly reviews for corn, soybeans, and wheat that include selling price targets, charts and seasonal trends. His other weekly reviews on basis, energy, fertilizer and financial markets and feature price forecasts for key crop inputs. A journalist with 38 years of experience, he received the Master Writers Award from the American Agricultural Editors Association.
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