The corn basis—the price difference between Chicago and the local cash price—has been historically tight across much of the Midwest.
University of Illinois ag economist Darrel Good says harvest-time spot cash bids in south central Illinois are usually at least 20 cents under Chicago—but last week they were running about the same. In other words, zero basis.
“That would be the strongest basis—for this time of year—that we’ve ever experienced,” says Good.
The president and CEO of Omaha-based ethanol producer Green Plains Renewable Energy, Todd Becker, agrees with that assessment.
“Go up to even northwest Iowa—and typically this time of year, you could be paying 25 to 40 under for corn across the dump,” Becker says. “To buy any real quantities of corn from commercials—if you’re an ethanol company—it’s taking at least five under to five over. So we’re at 25 to 40 cents higher than historically on corn.”
And Becker says that, in Indiana and parts of Ohio—where harvest has been pushed back by rain, the corn basis has been running as high as 40 to 60 cents over. Normally, it would be 10 under.
Good says that when basis is tight at harvest, it usually means farmers should just sell their corn right out of the field.
“It’s saying that corn demand is pretty strong right now—that there is a shortage of spot market supplies,” says Good, “and all the numbers we look at right now seem to me to be very friendly from the demand side.”
Market analysts say one reason for the slower movement of corn to market is the tremendous amount of on-farm storage that has been constructed over the past few years.