Even severe recessions have silver linings. The cost of shipping grain to export terminals continues to fall, thanks to the economic downturn. More barges, trucks and rail cars are available — they're not tied up with other goods needed during boom times. And the fuel for tractors, tugs and locomotives is cheaper two, a one-two punch that's helping strengthen basis.
Indeed, as delivery on March futures contracts approaches, basis along the Illinois River for both corn and soybeans is above the option price. Tight farmer holding is bringing up country prices, too, as sluggish futures prices provide less incentive to sell. With basis at or better than average levels at many locations, it's time for producers to consider locking in the basis if contracts are available for old crop delivery periods.
To read Bryce Knorr's complete weekly basis review, click HERE.
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