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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.
Farmers finally got a reprieve from the weather and made ample progress getting the corn and bean crops harvested. USDA’s latest figures show the corn crop at 37% chopped versus 25% last week, while soybeans jumped to 75% harvested from 51% last week. Soybean basis felt the brunt of the strong harvest as basis levels were off 14 cents for the week while corn was off 3 cents.
Barge rates were up sharply this last week, another sign that harvest is kicking into high gear. Across major River markets, barge rates jumped 20 to 30 cents a bushel over the last week, which led to losses in basis levels along the river system. Indeed, losses of 30 to 40 cents in basis for corn were fairly typical along major river areas.
For soybeans, the impact of higher barge rates and a strong harvest left basis levels firmly lower for the week. On average, bean basis was off 14 cents for the week, with the bulk of the losses occurring around river markets.
Continue to expect basis levels to come under heavy pressure in the next few weeks. Basis levels had been running exceptionally high because of the delayed harvest. But, ample new-crop supplies and a run-up in barge rates will put pressure not only on nearby basis levels, but also basis levels for delivery in the next few months.