Market Matters Blog
Pat Hill DTN Markets Editor

Monday 02/08/10
Basis Gains Evident Last Week

Not much net movement in cash grain bids last week, as some big advances on one day were offset by equally dramatic losses the next. But through it all, the basis continued to strengthen.

National average corn basis has firmed in recent weeks, but it's still running well below avearge. [DTN graphic]

The DTN corn index finished the week at $3.16, with national average basis firming by 3 cents, to 35 cents under the March. The DTN soybean index added 4 cents for the week, to $8.68, all due to a 4-cent stronger basis, which ended the week at 46 cents under the Mar.

The winter wheat indexes saw basis gains of 2 to 3 cents, and the HRS index had an 8-cent basis gain, finishing Friday at 4 cents over the March.

The recovery in corn basis has been dramatic -- recall it widened to more than 50 cents in late Nov/early Dec -- but it's still well below the average for this time of year, as a look at an average corn basis graph will show.

Traders have started the new week off with a surge of buying interest. DTN Analyst John Sanow called the gains a "recovery bounce," supported by a weaker dollar and a rally in crude oil.
Posted at 11:44AM CST 02/08/10 by Pat Hill
Comments (2)
the more interesting question is what is firming basis? i.e. for spring wheat is the firmer basis because of good end user demand or simply very slow moving freight?? also for corn basis i think it would be interesting to see a chart or graph of basis into the PNW for #2 corn......versus #3........as I am not so sure that #2 corn isn't worth more today then it was a year ago into that market
Posted by Jeremey Frost at 5:28PM CST 02/08/10
Good questions, Jeremey! I'll see what we can dig up. Interesting point about what quality is going to do to basis as we get down the road and into spring. Will it be hard to find enough good corn to meet export specs?
Posted by Pat Hill at 6:47PM CST 02/08/10
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