Market Matters Blog
Mary Kennedy DTN Basis Analyst

Thursday 01/17/13

Corn Basis High; Corn Exports, Barge Freight Low

The DTN National Average corn basis is currently higher than the five-year average, even with lower corn exports to the Gulf during the last two quarters of 2012 and into January 2013. The biggest demand for corn comes from the interior with processors, feeders and ethanol plants needing supplies for daily grinds. The corn basis at river terminals has been mixed due to low water conditions as corn shipments trickle down river on previous export sale commitments. The attached table provided by the USDA in their weekly Grain Transportation Report shows that corn barge movements were 51% lower than the 3-year average and 55% lower than last year at the same time. If you consider the 3-year average for all grain movements, corn is responsible for 65% of those movements. The USDA stated, "In 2012, barge movements of corn, as the percentage of all grain, dropped to 50%."

(Source: U.S. Army Corps of Engineers via USDA)

Barge freight continued its weekly decline as the river conditions in the St. Louis through Cairo corridor remained dangerous and slow due to low water and the rock removal at Thebes. Barge freight in the Illinois corridor was down $1.16 per ton (3 cents per bushel) from last week and was 4% lower than last year at this time and 12% lower than the 3-year average for this time of year. Rates in the St. Louis corridor were $2.28 cents per ton lower (6 cents per bushel) than the prior week and 5% lower than at the same time last year and 5% lower than the 3-year average.

However, towards the end of last week, rain in that area improved the river levels and the rock removal was nearly completed. USDA reported the gage at Thebes, where the rock removal is the most intense, went from 3.7 feet on January 9 to 12.2 feet on January 17. With the increase in water depth, the Coast Guard allowed draft restrictions to go from 8 feet to as high as 10 feet, which allowed barges to carry heavier loads. Current predictions are for the river to be able to sustain the higher levels at least for another week, but with a dry weather forecast for the next 10 days, levels may drop, which could cause barges to have to go back to 9-foot drafts. When barge lines and shippers are required to load less grain, as has been the case more often than not, their costs go up and their profits go down.

With the temporary increase in water levels the past 5 days and heavier loads permitted, barge grain movement on the river increased from the prior week. The USDA reported that during the week ending January 12 barge grain movements were 460,810 tons which was 19% higher than the previous week but was 23% lower than the same time last year. Actual barges moving down river totaled 255 which was up 1% from the prior week.

Posted at 2:10PM CST 01/17/13 by Mary Kennedy
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