2017 Fall Farm Outlook

2017 Logan County Fall Farm Outlook Magazine LINCOLN DAILY NEWS Oct. 25, 2017 Page 25 A strong (over) market means that future buyers are anticipating there will be a larger demand for product than sellers can supply in the immediate future. Prices quoted on the CBOT are based on points of time in the future, i.e. the term “futures” is often associated with the CBOT prices. As the cash price dates draw close to the futures month, the basis between cash and futures will most often narrow. When the futures price month changes to another point in the future, the basis will widen. For example, in the month of August 2017 the futures price quote was based on a September end date: On August 2nd, the Illinois USDA reported the average cash price for corn at $3.40 with a -.305 basis for September. On August 30th the basis dropped to -.22 because the date was extremely near the futures end date. In start contract, when September rolled around, the futures end date changed to December and the basis immediately jumped up to -.375. There are also other factors that can influence basis that are not visible in a market report. Supply and demand is simple, but other factors include storage costs and interest, and transportation costs. These factors impact regional basis figures, as do geographical variations. Basis is figured using CBOT with the cash price at local elevators. Cash prices in local elevators can vary according to the state and even the region of the state. For example, the Illinois USDA records cash prices by regions including Northern, Western, North Central, South Central, Wabash, W.S. West, and Little Egypt. On October 18th, 2017, those prices were reported as below: Commercial grain prices paid farmers by Interior Illinois Country Elevators after 2.00 p.m. are listed below in dollars per bushel: The cash prices recorded for the Wabash Region had the highest price range of all. The reason for this is based on geography as well as regional conditions. The region which borders the Wabash River and the Indiana State line has seen large amounts of rain throughout the growing season, rain significant enough to hinder planting, damage standing crops, and possibly impact the ability to harvest. Continued ►►