National basis change - June 15, 2019

Cash grain markets surged on basis this week as concerns about supplies next fall sent basis levels soaring for old-crop bushels. On the week, corn basis was up a modest 3 cents on average while soybean basis shot up 8 cents.

Late week aggressive buying in the eastern Corn Belt was matched by strong gains at the Gulf, which helped fuel much of the broader cash market rally. Eastern Corn Belt corn plants had eye-popping gains of 20 to 30 cents on the week, with some reports of trades going on 40 cents above those inflated values. A combination of no farmer selling and concerns about new-crop supplies fueled the move and is helping reverse yearlong stagnation on spot basis. In the western Corn Belt, corn plants are actually backing off basis by a fairly wide margin as a decent planting season that is nearing completion is helping turn farmers’ attention to grain hauling. Losses in the western Corn Belt were 5 to 10 cents at some key plants.

The Gulf basis for both corn and beans surged this week, advancing 15 and 27 cents, respectively. Logistical problems continue to escalate as river flooding adds to the pain of moving barges. Upstream river markets were up as well but saw less-tempered gains.

For the southwest Plains, we are starting to see wheat get traded as a replacement for corn. This week, a Texas Panhandle feeder was bidding +18U for wheat in August as it tries to secure alternative supplies ahead of corn harvest. Feedlots will generally start to use wheat in the ration if it can be traded at 85% of the corn value in the feedlot market.

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