Analysts Say Basis May Present Some Opportunities

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It’s no surprise the wet spring and slow harvest has created a tricky market. However, depending where you live, analysts say it has created some basis opportunities.

“Make sure you’re talking with your elevators out there because grain is not going to market right now,” says Jim McCormick, an analyst with AgMarket.net. “It is staying in the field or going in the bin. So, these end-users are bidding up a little bit around the country.”

A higher corn basis is seen in some pockets around the country, especially in Northwest Ohio where a lot of corn didn’t get planted due to a wet spring.

“Right now, we are 23 [cents] over the December contract, which is very unusual for a harvest basis,” says Neil Rupp, president of Pettisville Grain Company in Pettisville, Ohio. “Typically, we would be at 30 cents under this time of year. Probably 20 to 25 percent of our acres are planted. It makes demand super high.”

Even if producers are selling, some export sales are lacking in different countries.

“[Last] Thursday export numbers were pathetic outside of soybeans,” says John Payne, an analyst with Daniels Trading. “[With] soybeans, without some prearranged Chinese purchase, those exports wouldn’t be doing very well either.”

In a roundtable discussion with AgDay host, Clinton Griffiths, McCormick says he believes the market will get very volatile going into the November USDA reports which will be released on Friday.

“Don’t be afraid to take the profits,” said McCormick.

Payne says time is a component.

“If you need cash-flow, it’s better to move it now and I think to look to re-own it than it is to hold out and hope for a better price,” says Payne.

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