URBANA, Ill. — Based on expected fall supplies of corn, widespread use of temporary storage facilities will be required again this year, but overall use will probably not be more extensive than in recent years.

“However, significant storage capacity issues could develop in areas that experience a large increase in corn production and limited expansion in storage capacity,” added Darrel Good, University of Illinois Extension marketing specialist.

Good’s comments came from reviewing old and new crop corn and soybean basis levels that remain generally weak in many areas. The weak old-crop basis reflects higher futures prices and ample crop supplies, while the weak new-crop basis may reflect concerns about storage capacity for the coming harvest.

The average spot cash bid for corn in the south-central area of Illinois, for example, was $3.725 on March 23. That price was 42.5 cents under July 2007 futures.

The basis is about 6 cents weaker than at this time last year, and about 20 cents weaker than the four-year average basis for the third week of March.

“The current July basis is at about the same level as experienced at the end of harvest last fall,” said Good. “The implication is that storage hedges using the July 2007 corn contrast have not yet earned a positive return, let alone covered the cost of storage.

“The continuation of a weak basis suggests that the flow of corn to market is sufficient to meet the accelerated level of consumption associated with larger exports and increased processing use of corn for ethanol.

“A weak basis is likely to persist until there is some evidence of tightness in corn supplies in the country.”

For soybeans, the average spot cash bid in south-central Illinois on March 23 was $7.27. That price was about 58 cents under July 2007 futures. The basis is 14.5 cents weaker than on the same date last year, and 36 cents weaker than the four-year average basis on that date.

“The extremely weak basis experienced since harvest time reflects higher soybean futures prices driven by higher corn prices in the face of a surplus of soybeans,” Good said.

“The recent slowdown in the domestic crush rate, the harvest of a record-large South American crop and record levels of domestic soybean stocks suggest that the basis will continue to be weak during the remainder of the marketing year.”

For the 2007 corn crop, the average bid for harvest delivery of corn in south-central Illinois was $3.75 on March 23. That bid was 36 cents under December futures, about 7 cents weaker than the basis on the same date last year and 14 cents weaker than the four-year average basis on that date.

A U.S. corn crop of 12.5 billion bushels, Good said, would be two billion larger than the 2006 crop, but year-ending stocks of old-crop corn will be about 1.2 billion smaller than at harvest time in 2006, suggesting an 800-million-bushel larger supply.

He said the fall supply of soybeans (production plus carryover stocks) will likely be smaller than in the fall of 2006.

The average harvest bid for soybeans in south-central Illinois on March 23 was $7.78, 38 cents under November 2007 futures.
That basis was about 9 cents weaker than on the same date last year and 14 cents weaker than the four-year average basis on that date.