Grain basis was higher this week, but mostly on weaker futures and slow country movement. Corn futures slipped 20 cents a bushel while bean futures were lower by about 40 cents a bushel over the past week. Basis levels firmed by 4 cents for corn and 5 cents for soybeans.
In the corn market, regional basis levels were up the most along the Lower Mississippi and Illinois River regions thanks to falling barge rates. Gains of 6 cents or more for the week were the norm. Barges rates at St Louis tumbled 10 cents for the week and further declines seem likely. However, most of the Midwest continues to see more modest gains in corn basis and ethanol plants continue to be limiting their purchases.
Although corn basis was up 4 cents a bushel on average across the country, ethanol plants as a group were off 4 cents on corn basis over the past week. In the table below is a snapshot of the average corn basis change for the week by ethanol buyers versus all grain buyers. Every state showed weaker basis levels by ethanol buyers on average, while state-average basis levels posted a stronger showing basis. Indications are clear that ethanol buyers are taking a backseat this year on corn demand!
Weekly Corn Basis Change By State, Cents Per Bushel
State Ethanol Plants All Grain Buyers
CO -12.0 3.7
IA -3.4 3.0
IL -6.7 9.8
IN -1.3 3.9
MI -3.5 2.5
MN -3.9 3.9
MO -6.0 6.8
ND -3.3 5.1
NE -3.5 3.1
OH -1.4 3.1
SD -2.9 3.6
WI -4.5 1.1
For soybeans, basis levels were similarly higher along key river markets as barge rates helped spurn some basis strength. Gains of 6 to 10 cents were quite common in the Illinois, Iowa and Missouri thanks to falling barge costs. However, outside of these areas, soybean basis gains were more tempered with 2 to 4 cent gains more typical.
Look for basis levels to continue to narrow and gain ground as weak futures markets will keep grain pipelines fairly tight in the near-term.
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