Updated April, 2022
File A2-43

July Corn Basis

Basis is the difference between the futures price and your local cash price. More specifically, basis is the difference between the current local cash price and the futures price of the contract with the closest delivery month.

Basis patterns in this file were computed by subtracting Thursday’s closing futures price from Thursday’s cash price. Cash price represents the price for No. 2 yellow corn and modified No. 1 soybeans. Cash prices were collected from every county in each price reporting district. The basis for the state average and specific locations were also taken. These areas include: Clinton – North River, Davenport – South River, Omaha and Southern Minnesota Markets. Since there is usually a range of several cents in cash quotations, the midpoint of the daily prices was used. In each table the average July basis along with the maximum and minimum basis for the last five marketing years is shown. The basis for the last two years is also included. This information is then given in the accompanying graph for a visual picture of the basis trends.

Weekly corn and soybean basis data for Iowa for futures contracts ending in other months is in Information Files Corn Price Basis and Soybean Price Basis. More information on basis is in Information File Corn and Soybean Price Basis.

Factors affecting basis

The difference between local cash price and futures price is due to transportation costs, storage costs, supply and demand, local conditions and other factors. 

Transportation costs
The local cash price and Chicago cash price differ by transportation costs. The transportation cost differential is due to the added cost of shipping grain from Iowa to market. Transportation costs will vary as gasoline, diesel, and energy prices change.

Transportation costs are also affected by the mode of transportation used, truck vs. rail vs. barge. The large number of ethanol plants and feed mills in Iowa has impacted this dynamic. The market destination for much of Iowa’s corn is now local, and changing markets can change the corn basis patterns.

Storage and interest costs
Storage costs and interest (charge against money held in unsold grain inventory) vary throughout the year. Grain offered for sale at harvest incurs no storage and interest costs. However, as the year progresses, storage and interest costs accrue and the cash prices increases to cover these costs. So cash prices, all else being equal, increase from harvest into the following summer to cover the accruing costs of storage and interest.

However, futures prices do not increase during the year due to storage and interest costs. Regardless of when a futures contract is traded, the storage and interest costs from harvest until contract delivery are included in the price. For example, regardless of whether July futures are traded during January or the following June, the storage and interest costs from harvest until July are included in the futures price. So, cash prices tend to increase relative to futures prices from harvest through the marketing year.

Supply and demand
Basis is also affected by supply and demand conditions. Heavy farmer selling, especially at harvest, will tend to lower cash price but will have little effect on futures price. Basis is traditionally wide at harvest (more than can be explained by storage and interest costs and transportation). Conversely, light selling (often during spring planting) will tend to strengthen cash price but will have little effect on futures price, and basis will narrow. Variations in export demand further affect basis.

Geographic variations
Basis patterns vary from one geographic area to another. As the production of biofuels has expanded with the large number of ethanol plants located in Iowa, the relative basis patterns in Iowa have changed. Heavy local demand for grain due to livestock feeding and biofuels processing have bid up local cash prices and the basis has narrowed.

A geographic area that uses more grain than it produces is called a grain “deficit” area (versus a grain “surplus” area) and needs to import grain into the area from outside. This will increase cash price relative to futures price and the basis will narrow.

The tables and figures of July corn basis are presented in the accompanying "pdf" file that you can access by clicking here or on the icon above.


Ann M. Johanns, extension program specialist, 515-337-2766, aholste@iastate.edu
Chad E. Hart, extension economist, 515-294-9911, chart@iastate.edu


Ann M. Johanns

extension program specialist
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Chad E. Hart

extension economist
View more from this author