The following commentary does not necessarily reflect the views of AgWeb or Farm Journal Media. The opinions expressed below are the author's own.
The Grain Hedge Team provides a macro-focused daily view of the world’s grain markets. Kevin McNew received a bachelor’s degree from Oklahoma State University and his master’s and Ph.D. degrees in Economics from North Carolina State University. He spent 10 years as a Professor of Economics with the University of Maryland and Montana State University focusing on commodity markets and is widely regarded for his ability to boil-down complex economic situations into easy-to-understand concepts for applied life.
Grain futures found a boost this week with corn futures up about a dime while soybean futures advanced 30-cents over the last week. This took its toll on basis improvement as corn basis gained only one-cent on average across the country while soybeans were up 3 cents on average.
In the corn market, ethanol plants continue to lag the rest of the markets on average although some plants in IA and IL did manage fairly strong basis gains. At the Gulf, corn basis was off 1 cent a bushel but continued declines in barge rates helped keep upstream river terminals mostly in check.
For soybeans, basis levels were up 3 cents for the week, but the improvements were not uniform across much of the country. Gulf basis slid 11 cents a bushel and corresponding southern river markets and were hit by weaker basis. Basis gains were more prominent in the Upper Midwest and Northern Plains as gains of 5 to 8 cents were fairly typical as processors bid more aggressively in these sections of the country.
Basis gains will continue to be somewhat tempered but with sluggish to lower futures the bias in basis should be to the upside. Barge rates continue to be down and should hold steady for the short-term, but the lack of significant demand drive from the end-users will keep basis gains in check.
Thinking about selling all grains in stock, I think corn will go lower in coming months. The squeeze is on food production animals like dairy cows that will lower demand.