Market Matters Blog

Corn Barges Continue To Move Up River; Basis Moves Lower

Mary Kennedy
By  Mary Kennedy , DTN Basis Analyst
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DTN national average corn basis for Thursday, Sept. 26 is at 5 cents under the December futures, down 9 cents from one week ago. Basis has been in a downward slide as it faces a possible record harvest with better-than-expected yields reported so far. Even still, there is demand for corn in areas where harvest has yet to progress and many processors sourced new-crop corn from the south. USDA's Grain Transportation Report stated Thursday, "The unusual transportation pattern of up-bound corn movements continues." For the 7-week period through Sept. 21, 324,000 metric tons of corn moved through the Mississippi River Locks 27 near St. Louis and that amount was 71% higher than the same time one year ago. With the higher demand for up-bound barges, freight costs have increased. Freight costs for barges heading to the Gulf also increased, but backed off late this week as demand began to slow nearby. Freight rates in the Twin Cities corridor are unchanged from the beginning of the week, 20% lower (9 cents per ton) in the Illinois corridor, 15% lower (8 cents per ton) in the middle Mississippi corridor, 75% lower ($2.35 per ton)in the Cairo to Memphis corridor and 60% lower ($2.67 per ton) in the Ohio corridor. The other factor affecting freight costs has been lower drafts in place for loaded barges recently due to the low water levels. However, barge lines reported early this week that drafts moved from 9 to 10 feet as water levels improved in Cairo and south of there. Levels are still fluctuating in the St. Louis corridor where the level on Sept. 26 is at .33 feet above zero gauge, but expected to drop below zero once again without substantial rains in the next week.

Total grain movement down river increased last week as inspections at the Mississippi Gulf for the week ending Sept. 19 were up 31% from the prior week, thanks to a 749% jump in soybean inspections. Total soybean inspections at all ports increased 513%, which was the highest increase since March 21 thanks to the large quantity of purchases by China. While wheat and corn inspections were 9% lower than the prior week, according to USDA, both grains are still above their 4-week running averages. USDA reported that during the week ending Sept. 21, barge grain movement increased by 31.4% from the previous week with a total of 283,000 mt of grain, which was 51.7% higher than the same time last year. A total of 189 barges moved down river, which was 33% higher than last week and 676 grain barges unloaded in New Orleans, which was 28.3% higher than one week ago. Grain loadings at the Gulf increased for the week ending Sept. 19 with 43 ocean-going vessels loaded, the highest since Nov. 15, 2012, according to USDA. The number of vessels expected to be loaded in the next 10 days is at 65, which equals the same number reported last week and is the highest number expected to load since Nov. 6, 2012.

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Freeport IL
10/1/2013 | 12:49 AM CDT
Hard red winter wheat could be heading for a double digit ending balance. This projection would place ending stock for this class of wheat at the lowest level in the last forty years. Price rallies will be limited by the current production estimates of hard red spring wheat in the US and Canada. Domestic durum supplies will need additional supplementation from Canadian production to meet our projected use. Soft red winter wheat might see ending stocks for the 2013-14 marketing year near the level of 2012-13. This is somewhat higher than USDA's current projection. All in all this would appear to be supportive to wheat prices. Corn may benefit as well with potentially more acres switching from corn to wheat. If KC wheat price does not move high enough to attract more acres to be planted this fall then Minnesota wheat might have a "fun" this spring. USDA will provide their outlook on wheat in the October WASDE. Freeport, IL