Futures and cash grain prices don't always move in tandem, but this week they've at least had one thing in common: lack of direction. Erratic moves on the board were matched by cash markets following their own individual pressures from supply and demand, which varied greatly by location.
Corn and wheat basis had another consideration, as most buyers switched bids from December to March. Carry in corn ranged from 9 to 11 cents over the past week, and most basis stuck close to that pattern as well. But there were some surprising exceptions. Basis into North Carolina actually firmed a little, gaining on the roll thanks to strong demand. Winter weather also was a factor, a reminder that pushes can sometimes occur this time of year for farmers who can move grain on short notice in demanding conditions. While movement on the northern stretch of the Mississippi River shut down for winter, basis in Minneapolis surged as the northern Midwest was blanketed with snow. Basis at the Twin Cities was steady on the roll, with no carry to river open.
Rail freight costs also remain near record levels. But demand to feedlots and Asian buyers is strong, too, keeping bids firm off the West Coast.
Soybean basis was mostly weaker around the Midwest this week, as farmers took advantage of higher prices to sell $13 cash beans at some locations. But basis in the export pipeline remains red-hot, as shippers scramble to fulfill record sales. There were a few hundred contracts worth of soybeans registered for delivery at the start of the week along the Illinois River, which stays open all winter normally and is the focal point for futures settlement. By the end of the week those registrations were all pulled, as cash beans stayed well above January futures.
There were plenty of deliveries against December futures in all three wheat markets. While there was carry in Chicago and Minneapolis, Kansas City December maintained a strong premium to March, affecting basis on the roll. White wheat basis measured against Chicago firmed despite the roll – the class led export sales last week.
Protein premiums off the Pacific Northwest also firmed this week, moving another time higher for 14%, which is trading at a $1 premium over ordinary. While the spring wheat crop in Canada was huge, much of it is out of position due to winter weather. And, protein levels were below average, just as they were in the U.S. this year.
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Senior Editor 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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