Despite Reported Transportation Issues, Corn Basis is Strong

Despite Reported Transportation Issues, Corn Basis is Strong

We’ve all heard and read about the rail transportation woes of the Mid-West and the poor plight of the corn farmers. However while at the Colorado Ag Classic recently Colorado State University Ag Professor of Commodity Markets and Price Analysis Dr. Stephen Koontz shared an interesting perspective that I hadn’t heard before.

Koontz: “In all the crops, especially corn, we have a very large crop you’d expect to see a relatively weak basis — the cash relative to futures — that cash would be low. And everyone has talked that up with rail problems. But if you look at the history, there is really nothing different there that is happening. So I have no doubt that it is more expensive and harder to schedule, but it is a relatively small impact on price.”

I know I’ve been guilty of repeating what I’ve read or heard to others, Dr. Koontz has a good reminder not only for me as a reporter.

Koontz: “You hear it. It gets said again and again and again. You should go check the data. When I check the data, I don’t see a corn basis that is a fabulously weak basis because of transportation problems or because of a huge crop. I see very strong demand for cash corn.”

 

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