Solid basis continues through harvest

first_imgShare Facebook Twitter Google + LinkedIn Pinterest Weather was nearly perfect for harvest the entire fall season for much of Ohio. Some parts of Ohio — particularly in the northwest — had six weeks without rain, a far contrast to the spring when it rained week after week. It was a bittersweet reminder of how fickle the weather in Ohio and the Midwest can be. Rains in early October for central and south central Ohio provided a break from a wide-open harvest during September. Winter wheat in Ohio emerged rapidly following rain totals of one to two inches which fell slow and steadily, allowing for maximum soil penetration. December CBOT wheat closed October 30 at $5.22, a weekly gain of 32 cents. This was the strongest weekly gain wheat had seen in four months.Harvest progress across Ohio and the Midwest progressed rapidly in October. U.S. harvest progress the last week of October was 75% for corn and 87% for soybeans. Ohio’s corn harvest at that time was 75% complete, a mind boggling 30% ahead of the five year average. Couple that with the absence of long truck lines for the entire harvest at some Ohio elevators, and you can quickly begin to appreciate the staggering amount of on farm grain storage that has been erected in the past 10 years. Farmers have gone to the bins in storing corn across Ohio this fall. It reminds me of a saying relayed to me from an Illinois friend, “Show me the floor, I’ll shut the door.” Producers across Ohio and the eastern Corn Belt have kept corn off the market, selling very little this fall season. They see more value down the road if they just hold their corn off the market for several months. It has resulted in unprecedented corn basis levels, unseen in my 35 plus years in the grain business.Numerous Ohio locations have a plus basis for corn as harvest is winding down. We are already fielding calls from grain merchandisers seeking corn, willing to push the basis at least a nickel at the outset. Train shipping points are often bidding more than ethanol plants. The next two months or more could be like the Wild West for corn basis levels. Strap on your gun belt and get ready. While you may have the bin door closed and even locked, keep in close contract with local merchandisers. At some point you will have to take advantage of the strong basis levels. If you offer corn just a few cents above published bids it could be a done deal very quickly. Producers during the late summer and early fall were citing the $4 mark as one where corn could start to move. Who would have thought that the strong basis levels were already yielding that $4 mark as harvest was winding down? In mid-October we were seeing corn basis levels in western Ohio at December plus 10 to 25 cents in the midst of a wide open harvest window due to great harvest weather. In the meantime, basis levels in central Ohio were December minus five to 20 cents.Soybean yields seemed to climb even higher as the harvest was drawing to a close. It was a trend well entrenched as harvest progressed across the United States. The October USDA supply and demand report pegged the U.S. soybean yield at 47.2 bushels per acre. U.S. production was estimated at 3.888 billion bushels.  Soybean acres for 2015 were down 1.1 million acres from earlier estimates. The decline was not a surprise as FSA acres had been below expectations for several months. The upcoming November USDA monthly report will likely show a small yield increase for the 2015 U.S. soybean report.U.S. producers will soon be receiving roughly $4 billion in USDA payments from the 2014 crop year. Early estimates suggest producers could be receiving about $70 per acre in payments from the 2014 corn program acres. Payments will be reduced by previous budget sequester near 7%.last_img

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