Basis has improved through much of the Corn Belt, reports Kevin McNew, president of CashGrainBids.com. "We've seen basis levels return to what we used to think of as normal in the early 2000s. Farmers are not having to bear the impact of high transportation costs, so they've won in that sense,” he says.
As the map shows, weaker barge rates have helped raise basis levels, especially in the Illinois and Ohio River regions, where rates fell 40¢ in the past six months (Mississippi River rates fell 20¢).
"Another reason Eastern Corn Belt basis has strengthened more than the Western Corn Belt is because corn use for ethanol has been sluggish,” McNew says. That may turn around in 2009/10 because of new ownership of some key VeraSun plants, energy prices moving higher and corn prices dropping, he says. Acres also may be up more in the Western than the Eastern Corn Belt.
"Looking ahead for fall, barge rates are contracted at levels we were accustomed to last year when prices were still high,” McNew says. "My gut says that those will come down when we get to harvest, so I think basis levels should be fairly favorable this harvest.”