The following commentary does not necessarily reflect the views of AgWeb or Farm Journal Media. The opinions expressed below are the author's own.
Kevin Van Trump has over 20 years of experience in the grain and livestock industry.
Corn producers who are still holding old-crop supplies are now left scratching their head. It seems that as US producers became more comfortable with the prospects of new-crop production (mid to late-July) they also became more comfortable releasing more of their old-crop inventory. This has resulted in the elevators and end-users getting more supply than they bargained for, hence the crack in the basis. Now all of a sudden there is talk of a large wave of new-crop supplies getting ready to come to Midwest via the upcoming Delta harvest and the South American imports. Moral of the story, old-crop basis may NOT rebound. If the end-users now have 3-4 weeks of coverage like most suspect, they should be able to hold off until new-crop supplies from down south start to arrive or the imported bushels from Brazil start to hit the marketplace. Form my perspective, end-users should remain patient and continue to go hand-to-mouth. On the new-crop side, producers may want to continue waiting to lock in the "basis," as we might see heavy competition from the elevators to secure "early" supplies create a stronger than normal harvest basis. Remember, with most commercial bins in low supply, competition for bushels might help us during the first part of harvest. My fear however is once everybody starts to build up inventory the "basis" could really take a hit...Just keep that in mind moving forward. We might want to lock basis in earlier this year as compared to the past couple of years.
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