This year’s harvest is a tale of two crops, not just in size but in logistics and price.
In drought areas of the western and southern Corn Belt, cash basis is on fire, which has created strong prices for farmers at harvest, due to the short crop. It’s a stark contrast to the east where farmers are seeing logjams trying to get the harvest to market this fall, especially around the Mississippi River where transportation is slow, leaving long lines at the elevator and growing piles of grain.
The slower barge traffic on the Mississippi River has produced a wide basis in the East. Basis at La Grange, Mo., right on the river, was negative 70¢ for corn and a $1.10 under for beans on Oct. 25. In Jeffersonville, Ind., corn was $1.10 under the December futures, with soybeans $1.38 under the board.
“Basis is tight in the west, not so much east of the Mississippi, that’s a function of where the product is,” says Alan Brugler of Brugler Marketing.
However, in the drought-stricken areas of the South and West cash corn bids are well above $7 in eastern Kansas and western Missouri, well over $8 in western Kansas and the Texas panhandle and over $9 farther south.
“What we’re seeing is very aggressive bidding by ethanol plants and feedlots in the West to get the cash corn in their drawing area nailed down,” Brugler says. “Corn export sales haven’t been very good, those domestic end users don’t have a lot of export competition right now, but you can see it coming in December, January and February, so they want to get all those bushels nailed down now.”
Darin Newsom, Darin Newsom Analysis, agrees basis in the West and South is on fire. “We’re hearing some incredible stories of cutthroat business being done, especially in the Southern Plains where merchandisers will to anything to get their hands on some corn bushels,” Newsom says.
Cash basis is also stronger in the north as more soybeans are being exported and shipped to China in the Dakotas and Minnesota due to barge issues in the Gulf.
Randy Martinson with Martinson Ag, says, “A lot of the beans are being shipped through the PNW and that has helped strengthen or hold up the basis here at harvesttime.”
Newsom adds those prices might get even stronger after harvest: “Feed demand remains strong, ethanol demand remains strong and these things aren’t going to go away. Newly harvested bushels are getting tucked away until possibly the beginning of the year or next spring. I think the basis market is going to stay hot.”
