Cash rents are due in roughly 30 days, and some farmers are looking at ways to generate some cash. One way to do it is to move grain, and that’s when basis can come into play.
Garrett Toay of AgTraderTalk, soybean stock on the farm are larger now than they were at this time in 2017, with the exception being in eastern Corn Belt states of Ohio, Illinois and Indiana where those stocks are flat.
“All those extra bean stocks are out in the western Corn Belt and that’s going to mean that your basis in the western Corn Belt is probably going to appreciate as well,” he said on AgDay. “It also means from here on out you’re going to have additional movement for meal demand.”
In terms of corn, stocks seem to be on par with that of January 2017. Last week, Brazil made the announcement it would consider lifting the 20 percent tariff on U.S. ethanol, and basis appreciation might be seen in some elevators, according to Toay.
To make the best action, Toay suggests looking at basis contracts and come on the board and defend sales even though there are carries in the market.
“You never know with the large specs short that we get some sort of rally potential,” he said.
Watch his full comments about basis on AgDay above.