By Jon Scheve, Superior Feed Ingredients, LLC
I’ve often been asked why basis is so high in some areas but lower in others. There are many factors contributing to these variances, but it’s important to realize that basis values across the U.S. also correlate with each other.
Land values and basis values
While local yields can impact land values the most, basis values have a strong relation to those values as well. I’ve seen social media posts recently with farmers comparing basis values across the U.S., specifically that Ohio is getting +50 while parts of North Dakotas get -80. While this might frustrate some farmers, it’s important to realize that average basis values are actually “baked” into land values and cash rents. For instance, Ohio usually has a +20 basis in a normal year; but Ohio’s land costs are typically double of North Dakota’s, where -70 basis is common.
Basis values move together
When basis values in one area move in any price direction, other areas shifted similarly.… Continue readingRead More »