Wheat basis in drought-plagued Dakotas and Minnesota strong despite increased shipping costs

A shrinking spring wheat crop is firming up basis in the moisture-starved Northern Plains and Upper Midwest.

Al Kluis with Kluis Commodity Advisors says the drought is taking a toll in the Dakotas and Minnesota.

“The spring wheat crop is down by about 30 to 40 percent, so the basis bids have really started to improve for delivery right at harvest.”

He tells Brownfield the cost of shipping for grain companies serving the Pacific Northwest has gone up.

“But for many farmers, the net bottom line is still some very attractive basis levels versus recent history.”

A recent U.S. Wheat Associates report says current rail rates for shipping wheat are about equal to or slightly less than a year ago.  But the group points out with only four major carriers to haul most grains and oilseeds by rail, they are closely monitoring a proposal for control of Kansas City Southern Railroad by Canadian National Railway and a potential competitive offer by Canadian Pacific.

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