Bottom Line: Corn basis at the Gulf, Illinois and Iowa are well below last year and at multi-year lows (for this time of year). From a seasonal perspective, winter is a time when the basis is relatively flat after strengthening off a harvest low. This year, the forward basis bids for January-February are flat or up only slightly from current spot basis. May-August tends to be the time when corn basis is at or near seasonal highs. However, is also a period when basis can be very volatile.
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Corn export commitments were 958 Mil Bu as of Dec 07. That’s down from last year’s 1,337 Mil Bu. Given the sharp year-over-year decline in export demand it shouldn’t be surprising that basis for corn at the Gulf is at its lowest level in 8 years (for the month of December). The chart below shows the December average of corn basis at the Gulf. For 2017, the basis is the offer as of December 18 (see orange column at right). If the entire month of December averages $.23/Bu or less it will be the lowest December average for basis since 2009. However, from the perspective of the last 44 years of history, basis will only be slightly below the long-term average of $.27/Bu.
For all of this year, the Gulf basis has been below the previous year but has managed to close to the long-term average. However, forward basis bids (see empty red triangles in chart below) are well below average for January and February.
In Central Illinois, the bid for December basis is also at an 8-year low (see chart below). The December basis bid as of December 18 was $-.29/Bu (see orange column at right). That is below last year’s December average of $-.16/Bu. It is also one standard deviation below the long-term average of $-.18/Bu.
The chart below shows that the basis bid for December is the highest in the last four month but there is no appreciation in the basis offers for January-February.
Some of the weakest corn basis that we’ve seen are in the Western Cornbelt (WCB). One location that we track, which we think may be representative of the overall trend of basis in the region, is North-central Iowa elevator prices. As of December 18, the December basis for corn delivered to selected elevators in the region was $-.44/Bu. This is tied as the lowest basis in 36 years and is nearly one standard deviation below the long-term average.
Even though $-.44/Bu is a very weak basis, there are other locations in the WCB where basis is even weaker. For example, in Finley ND, the October basis bid was $-.60/Bu. The N. Central Iowa chart below shows that the basis bids for January-February are unchanged to slightly above the spot bid.