Market Matters Blog
Mary Kennedy DTN Basis Analyst

Wednesday 11/14/12

Basis Levels Remain Strong as Cash Price Weakens

Corn

(DTN chart)

The national average corn basis this weekof 9 cents under the December futures is still higher than the 5-year average strongest basis level at this time and is up 1 cent from last week. The corn basis is still strong as interior demand from corn millers and ethanol plants has been steady as well as demand along the river as barge freight stabilized. The USDA S&D/Production report last Friday was somewhat bearish for the cash price as the USDA raised corn production to 10.725 billion bushels, which was up from their prediction last month of 10.706 billion bushels and higher than what the trade had guessed it would be.

Soybeans

The national average soybean basis of 34 cents under the January futures is 4 cents higher than last week and is above the five-year average of the strongest basis at this time. The soybean basis was 4 cents higher than last week as the soybean futures have continued in a downward trend, causing the cash price to drop 94 cents in the past 7 days. Another factor helping the basis has been the decline in barge freight causing basis bids along the upper and lower river to improve. The USDA S&D report last Friday was one of the bearish factors for the drop in the soybean cash price as the USDA raised its projection for the national soybean yield to 39.3 bushels per acre from its forecast of 37.8 last month.

HRS:

The national average HRS basis for this week at 58 cents under the December futures is 2 cents higher than last week. The spring wheat spot basis for milling 13% protein has been firm and the PNW export 14% protein basis was higher in the past week. Cash movement was a little stronger in the country as the cash price improved through most of last week. With the global wheat situation still looking negative for yields and quality, the market continues to expect that demand for U.S. wheat will increase. Last Friday, the USDA lowered the Australian wheat crop by 2 million bushels which is now estimated at 21 million bushels after rain and cool weather has caused quality issues in the new crop prior to harvest.

Mary Kennedy can be reached at mary.kennedy@telventdtn.com

Posted at 1:07PM CST 11/14/12 by Mary Kennedy
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