Many of us working in the swine industry are aware of the impact of corn prices on our feed costs in a general way. However, we don’t often think about the actual problems local feed mills face in keeping a steady supply of corn coming into the mill for our needs.

As we go into the corn planting season this year, getting corn delivered for our feed needs is becoming a growing challenge for feed mills in the upper Midwest. Evidence of this is the tightening corn basis.

I receive a daily USDA report on average corn prices across Iowa, along with a basis (difference in price versus nearby Chicago futures price). This basis has been narrowing and now stands at -$0.18/bu. This compares to the previous 5-yr average basis of -$0.33 in April.

However, the average Iowa basis doesn’t tell the whole story. I routinely follow the cash corn bid at several locations across Iowa and the local basis is now at $0.00 or even slightly positive. I have seen several ethanol plant bids also nearing $0.00 basis.

Read more...