The aftermath of winter storm Elliot might linger in farm country for a while....from poor performance in cattle feedlots and possible winterkill in winter wheat.... to additional transportation issues that have slowed cash grain, export and feed movement.
River and barge traffic has been backed up, and rail and truck transportation has also slowed. At the same time, the demand for grain from end users and feed for livestock operators remains strong.
Nick Tsiolis, founder of Farmer’s Keeper, specializes in cash grain marketing. He says: “Transportation has been very difficult. Even if you can buy it at a really good price, with all the winter storms and everything logistically it’s been a big challenge as well as availability of trucks around the holidays too.”
As a result cash basis levels are historically strong. The DTN national cash index on soybeans is near 20-year highs, while corn basis is at the highest level in over 20 years. That’s despite U.S. corn exports being down nearly 50% from last year.
Tsoilis says his cash merchandising contacts and elevators are indicating supplies are tight.
“The elevators might think there’s even less grain out there than what USDA is showing. We’ll see on Jan. 12 what happens in the next report but that could be an indication they’re trying to grab what they can and sell as old crop,” he explains.
Tsoilis says farmers have been pretty tight holders, until this week’s rally, which has also supported strong cash basis levels. However, he predicts cash grain sales will pick up after the first of the year due to income averaging for tax purposes, which could result in the basis widening out.
