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How long before basis widens back out?

An extension grain marketing economist suggests basis levels are in a precarious spot.

Ed Usset with the University of Minnesota says cash corn and soybean prices are relatively strong, a reflection of a short crop and drawn-out harvest.

“A wide basis (at harvest) is often the result of too many bushels seeking limited storage space. Well, when you stretch out a harvest over a two month period, that crunch for space isn’t there.”

He tells Brownfield Market Facilitation payments have also lessened the need for farmers to sell grain.

“And those things altogether resulted in a good basis. Could the bottom drop out on this thing? I’m worried about it. I’m worried about it because there is grain out there.”

Usset says he’d like to think basis levels will stay firm through mid-spring.  But if the 2020 crop gets off to a good start, he expects the market to make a sharp adjustment.