Weekly Basis Review: Demand Rules Basis Market, For Better or Worse
Cash bids are responding to market signals again.
Bryce Knorr
Published: Nov 20, 2008
Markets have acted pretty unruly of late, but there's at least one arena that's following form: basis. After experience bouts of extreme volatility in 2008, cash bids are responding to market signals once again.
For soybeans, that means stronger basis, especially along the Illinois River where deliveries are concentrated. Exports are surging again, because Chinese buying is strong. That means buyers are passing along cheaper barge freight rates along to the farmer, bidding up cash prices trying to secure supplies to ship.
Indeed, freight charges continue to fall, thanks to the slow pace of corn harvest and weaker economic activity. Rain charges in the secondary market are down, too, with more of cars available this year than in the past.
For corn, however, weak demand isn't helping basis pushes along the river. While farmers are mostly holding tight, waiting for higher prices, export demand isn't that great as the river gears up for its seasonal shutdown. Even if ice isn't a problem locks will close for maintenance Dec. 1 above Minnesota City and Dec. 8 above Guttenberg, IA.
Western Corn Belt basis is picking up, however, as serious harvest delays remain a problem, especially in the Dakotas.
To read Bryce Knorr's complete weekly basis review, click HERE.
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Tagged: Harvest, soybeans, farmfutures, farmfutures.com, www.farmfutures
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