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Cash Grain Insights

RSS By: Kevin McNew, AgWeb.com

Kevin McNew is President of Grain Hedge and Geograin. McNew was raised on a farm in central Oklahoma and received his bachelor’s degree from Oklahoma State University, and master’s and Ph.D. degrees in Economics from North Carolina State University. For over a decade, he was a Professor of Economics at the University of Maryland and Montana State University, focusing on commodity markets. He has received numerous academic awards for his research and outreach work, and was (and still is) widely regarded for boiling down complex economic issues into easy-to-understand concepts for applied life.

 

Cash Grain Basis Firmer

Feb 03, 2010

While grain futures continued to slide lower this week, basis levels around the country posted solid gains. For the week, both corn and soybean basis levels were up 3 cents on average across the country.

 

Corn basis levels posted solid gains throughout much of the country. Barge rates slipped a few cents over the last week along the Illinois and Ohio River, which helped lift basis levels. But, ethanol plants also helped contribute to strong basis gains. Gains of 5 cents or more were fairly typical for ethanol plants. Although areas in the Northern Plains and Upper Midwest are somewhat lagging and still seeing weak basis levels thanks to a very late harvest.

 

 

For soybeans, basis levels saw similar gains as the corn market. The US average gain was 3 cents a bushel, with soybean plants bidding up basis.

 

 

The carry in the cash market continues to favor corn storage at most markets across the country. Average cash forward contract carry in the corn market is 21 cents per bushel for 4 months of storage. In soybeans, the carry is much less favorable giving farmers little incentive to store soybeans.

 

Average Cash Forward Contract Carry for Corn

State

Mar

Apr

May

Jun

Jul

IA

1.9

6.3

9.1

14.6

16.3

IL

5.0

9.7

13.4

19.8

22.9

IN

5.2

13.8

18.5

26.8

27.9

KS

2.5

12.5

15.0

18.8

21.0

MN

2.3

8.7

10.9

17.1

18.3

MO

3.3

9.2

14.6

21.3

21.7

ND

2.7

14.9

19.5

27.4

29.7

NE

2.6

6.7

10.2

14.8

18.2

OH

6.3

15.3

20.3

27.1

29.8

SD

5.1

10.8

15.9

20.3

23.9

WI

4.3

12.2

14.4

20.5

20.7

.

 

Average Cash Forward Contract Carry for Soybeans

State

Mar

Apr

May

Jun

Jul

IA

-1.8

5.8

8.1

14.8

15.8

IL

-0.9

3.9

6.3

10.1

15.4

IN

-0.5

2.7

3.4

8.2

10.3

KS

-1.5

-4.5

-3.7

1.9

2.2

MN

-3.2

0.7

2.1

9.0

9.7

MO

-1.6

2.8

1.6

6.0

8.3

ND

-0.1

-5.1

-6.7

-0.2

-0.8

NE

-3.8

3.0

4.7

16.7

12.2

OH

0.3

6.7

9.0

15.9

11.4

SD

2.2

5.4

5.3

9.6

4.8

WI

3.1

15.0

17.8

24.5

23.9

 

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COMMENTS (1 Comments)

spotts
What is a basis?
8:18 AM Feb 4th
 
 
 
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