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CASH CORN IN THE NORTHWESTERN CORN BELT FALLS TO $2.50
AgWeb.com reports:

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As mid-August approached, the unthinkable was happening to corn prices. For producers on the northwestern fringe of the Corn Belt, local corn quotes were as low as $2.50/bu. for fall delivery, not much better than that for old crop.

Tumbling futures prices since late spring were a major reason, but basis was also weighing down corn bids. The spread between futures and local prices has widened to more than $1/bu. in isolated cases, with average basis in this part of corn country the widest since 2008.

"From the 2012 to the 2013 crop, we had an under-supplied, high-demand corn market; now the market is over-supplied and that's reflected in basis," says John Melius, farm market consultant for Hurley and Associates in Brookings, S.D.

While basis has widened considerably for new-crop corn regardless of location, the spread from region to region is huge. This could result in major crop acreage shifts come spring 2015 in the outer reaches of the Corn Belt, Melius says. Current basis bids for Valley City, N.D., are 80 cents and 85 for new crop; 80 current and 87 cents new crop for Aberdeen, S.D.; Kelly, Iowa, 21 cents current basis bids/46 cents new crop; and Champaign, Ill., 0.01 cents old crop/27 cents new crop.

At the extreme, however, some producers have seen basis as wide as $1 to $1.25 under corn futures prices, says Nate Franzen, agribusiness division president of First Dakota National Bank in Yankton, S.D. The math doesn't lie: as much as $1/bu. separates what producers in Illinois and some in North Dakota and South Dakota have received.

Key causes of wide basis in North Dakota, South Dakota and northwestern Minnesota are transportation bottlenecks. The No. 1 culprit is the railcar shortage that has hammered basis since winter.

In comparing basis this winter and spring to the benchmark year of 2009/10, corn, soybean and spring wheat basis widened from about 40 cents to 80 cents, costing state farmers an estimated $66.6 million for January and April alone, says Frayne Olson, ag economist from North Dakota State University. "The potential exists for additional losses unless the situation improves."


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