Lower Transportation Costs Support Basis Prices

April 1, 2009 07:00 PM

Sara Muri, Top Producer Business & Crops Online Editor
The low costs you've been seeing at the gas station are helping your corn and soybean basis prices. JC Hoyt, director of risk management services for Cash Grain Bids, says lower fuel costs across the U.S. are supporting strong basis gains this year.

In 2008, between harvest and March, there was around a 15 cent improvement in basis, Hoyt says. For 2009, during the same time period, corn basis increased by 40 cents.
There's a similar story for soybeans. This year, soybeans have marked a 60 cent gain since harvest. For the same time period in 2008, no gain was recorded.
Hoyt says the increases in basis are following the river, since barge rates are also significantly lower than previous year.
"Barge rates are the lowest they've been in two years,” Hoyt says. "We don't think the market is going to go much lower in the barge rates.”
These low barge rates are directly exemplified in the corn and soybean basis prices, he says.
The green areas in this map show the great basis gains, while the yellow show moderate gains and red illustrates basis losses.
"The green portion along the river is definitely the strongest in basis for the corn market,” Hoyt says.
Similarly, the strongest soybean basis is along the major rivers.

Hoyt spoke during Top Producer Pre-Planting & Weather Outlook Webinar on March 25.
For More Information

You can e-mail Sara Muri at smuri@farmjournal.com.

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