Keep an Eye on New Crop Basis as We Approach Planting Intentions
Mar 12, 2012
As we inch closer to the planting intentions report at the end of the month, we direct our attention to new crop basis levels. Just within the last week new crop corn basis gained half a cent while soybean basis increased a penny. Throughout the year we have seen both corn and soybean new crop basis continue to make steady improvements. Since the first of the year, new crop corn basis has increased five cents and soybeans have increased nine cents.
Comparing this year’s new crop basis levels to last year’s, we are seeing a substantial difference. Taking an average of current new crop basis levels seen this month and comparing them to new crop basis levels from the same time last year, we see corn at an average of 16 cents stronger than last year and soybeans around 9 cents higher on average. Although new crop basis is rising to seasonally uncharacteristic levels, historical analysis would suggest that basis has the capacity to continue improving at least for the foreseeable future.
New crop soybeans seem to be gathering the most strength from river terminals as well as soybean crushing facilities that have been consistently strengthening their basis. Strong corn basis is more evenly distributed throughout the country and looks especially strong in the fringe areas where additional corn may be planted this season. We do expect new crop basis to maintain its strength going into planting and pollination, but we would warn producers that July will mark an important pivot point to this trend. If 94 million acres are planted to corn this year and weather is cooperative, new crop basis could face strong headwinds in the second half of the growing season.
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