With USDA releasing numbers on Tuesday, farmers may want to take a look at their grain marketing plans and local basis trends and adjust accordingly.
“As a farmer, you want to go into a USDA report with everyone expecting it to be extraordinarily bearish, so we’ve got that going for us,” said Angie Setzer, vice president of grain for Citizens LLC, speaking on U.S. Farm Report. “When you go into a report expecting some extreme bearishness, the numbers are really going to have to be bearish to see the next leg down.”
As of Monday morning, the trade expects USDA on Tuesday to raise yields for soybean and corn, boost the 2015-2016 carryover to 1.597 billion bu. for corn and 436 million for soybeans, and trim exports.
Against that backdrop, farmers may want to make a few sales and capture whatever gains they can in these sideways markets.
“I think the basis and spread levels have been narrowing pretty dramatically, and it’s sending a signal to try and market your grain sooner rather than later,” said Don Roose of U.S. Commodities, also speaking on U.S. Farm Report. “Make sure you take advantage of some of those merchandising opportunities. If you want re-ownership, go to work and change your ownership through futures or options. … It’s more in the basis than spreads.”
Watch Setzer and Roose on U.S. Farm Report:
Setzer agreed. “I think between now and Christmas, you’re going to have some of the better basis opportunities to sell in the eastern Corn Belt, because … eventually we are going to hit a point in price where we can move the grain from where it is to where it isn’t,” she said. “There is a lot of grain out there, especially in the western Corn Belt, that’s got to go somewhere.”
As many predicted this year, basis is certainly diverging on a regional basis. On Monday, grain merchandisers in eastern Nebraska were posting a basis of -30 cents on corn and -70 cents on soybeans. Nearly 1,000 miles to the east, Central Ohio elevators promised between 3 cents to 18 cents on corn and between -15 cents and -32 cents on soybeans.
“To take advantage, as Don said, of the basis strength, the lack in spreads and the ability to move your grain sooner rather than later may not be a bad idea,” Setzer said. “You’d beat the commercials to the punch, because guys like me are going to have to clean out those bin and start to move that grain eventually, so someone going to sell it to these guys who are offering big numbers. It might as well be you if you have the grain available and can make money doing it.”
See what closing words of advice Roose and Setzer offer on U.S. Farm Report:
What's the basis situation in your area? Is it enough to persuade you to sell some grain? Let us know in the comments.