Basis in the Eastern Corn Belt remained high this week as feed supplies in the southeast remains tight.
According to Successful Farming, basis – the price paid above the Chicago board price – in Indiana was as much as 75 cents. That puts it at about $164 per ton before its transported, traded and processed.
Greg Lumsden, product line leader, Cargill MarketGuide, told Successful Farming that there are multiple factors holding up the basis market.
“The U.S. Southeastern feeding market is hot,” Lumsden says. “Plus, last year’s corn quality is poor in the eastern Corn Belt (ECB), and maybe the crop wasn’t there in the first place.
For us here in California, basis is about $7 per ton higher than what we were seeing last year. Or about $194 FOB Penny-Newman to end the week.
The question is if the corn supply is there or if it’s tight and persistent holding by farmers, Scott Irwin, University of Illinois agricultural economist, says.
“As economists, we can observe the facts of a strong Southeastern feeding market, supply issues, etc. But the real question about how long this strong cash basis market will last has to do with whether it’s supported by stubborn farmer-selling. I think it relates more to supply-and-demand issues,” Irwin says.
On another tune, soybean meal had a down week, and as you can see in the chart below, its pretty cheap historically.
This week it was the potential for an epidemic, but fundamentally it seems like we have an abundance of proteins available. South American harvest is underway, farmers in the Midwest will start planting soon and China’s hog population is still decimated.
For canola specifically, rail traffic to California is currently steady and the weather forecast in Canada is favorable for the next month.
While some are predicting it could go lower still, at some point bargain buying will take hold and move markets the other way.
To get updated on pricing, keep in touch with you Penny-Newman sales rep.
5-year Soybean Meal Chart