Basis Worth Watching this Winter



Doug Tenney, Leist Mercantile | Ohio Country Journal

Corn basis for fall 2019 and into January-March 2020 has been relatively flat for months. Numerous Ohio locations have the nearby corn basis at anywhere from 10 to 40 cents over the December CBOT. Flat price levels from fall into January often only provided a gain of 10 to 15 cents compared to that of past years when the gain could have approached 30 cents or more. Producers seem content to sock as much corn away as possible into home storage bins with the anticipation of higher prices down the road.

Soybean basis on the other hand late October and early November saw improvements in numerous facilities across Ohio of 10 to 20 cents for nearby delivery as the harvest wound to completion. Also, deliveries for January to March had basis improvement of 5 to 10 cents.

Demand bears have been most pleased to see corn prices stall and retreat the last two weeks of October. Corn then made several new 30-day lows multiple days the first week of November. Supply bulls were most disappointed USDA only made a change of 1.4 bushels in the U.S. corn yield with the Nov. 8 WASDE report. Producers and analysts have commented for weeks that the last 40% of the U.S. corn harvest will see a reduction, perhaps even a sharp reduction, in the U.S. corn yield. It was somewhat common for producers to see a decline in yields when comparing their first harvested corn acres to the last third.

December CBOT corn continues to be in a trading range of $3.70 to $4 following its rally back over $4 when it reached $4.02 very briefly on Oct. 14. Since then funds have continued to add to their short positions, convinced that the demand bear story is entrenched for several months. Producers seem content to wait for prices above $4.10. End users look to add additional coverage if prices dip back to the low $3.60s.

U.S. corn exports continue to shrink from projections in May when USDA estimated they would reach 2.275 billion bushels. The Nov. 8 report saw a decline of 50 million bushels. In addition, October had a decline of 150 million bushels. South America corn acres planted in their spring, (our fall) were above those of the previous year.

Weather forecasts for this winter range all over the board from colder than normal with at least average snowfall amounts to very mild this winter. Don’t be surprised with the potential for huge temperature and precipitation extremes for the next three months. Producers will need to be paying attention to weekly forecasts for grain deliveries from December into early March in order to keep grain moving on the scheduled timetable.

Trade talks between the U.S. and China are making progress according to reports early November with several phases likely extending well into 2020. It’s no secret China wants to see the talks continue beyond the 2020 U.S. Presidential election as they anticipate a much better trade deal should President Trump not be reelected.


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