Weak Basis Continues to Plague the Grain Market
Outlook for marketing spring planted crops uncertain headed into fall.
Compiled by staff
Published: Aug 23, 2008
While corn basis in the east continues to strengthen, it remains historically below average, and value elsewhere declined despite stronger values at the Gulf. The culprit again appears to be barge freight rates, which turned higher in the latest week thanks to low water that continues to challenge shippers.
The increase in the nearby contracts narrowed the gap to harvest slots to 10 to 15 cents, suggesting fall basis may not completely collapse from current levels, though it should remain at historically weak levels. The good news, if there is any, is that some of the forces that drove barge freight higher a year ago won't be at work this year.
One factor that came into play in 2007 was a surge in corn production tributary to southern stretches of the Mississippi River that drew barges away from the Midwest. This year that land wasn't planted to corn by and large; and yields are lower in many areas due to drought. The harvest in the Midwest also will be down from a year ago, and spread out over a longer window due to planting delays.
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