Cash Market Disequilibrium for Corn

Cash Market Disequilibrium for Corn

Kevin McNew

Dec 04, 2019

A challenging growing season may have not done enough to put a big dent in the U.S. corn supply, but it is having a big impact at the local level.

Parts of South Dakota and the Eastern Corn Belt with localized production shortfalls are seeing premium bids from end users that are causing grain to be pulled from unusual drawing regions.

The map below illustrates premium markets that are drawing from regions from which they normally do not get corn.

The blue lines represent low-priced regions where it is economically viable to truck grain to one of the premium markets at a profit. 

Conclusion

Challenging markets in 2019 provide limited upside here. Looking for ways to capture an extra 5 to 10 cents per bushel above hauling costs may be a prudent move for stored bushels. Basis levels are already trading at inflated values and probably won’t keep moving higher, so looking for near-term opportunities to capture the best return is a prudent move in FBN’s estimation.

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Kevin McNew

Dec 04, 2019