Corn usually is harvested in the midwest, before it is sent south to be exported, according to Bloomberg. But because farmers in the east, hurt by a spring-time deluge, are holding back on supplies in hope of higher prices, the commodity’s price has been pushed higher than the futures market in east – while it remains lower than the futures market in the west. It’s a phenomenon known as “basis arbitrage”.
Dan Basse, president of consulting firm AgResource said: “Corn from the west going to east? It should happen at some point but it’s not the way the U.S. market is set up to transport. If basis is strong enough, we will get that pull into Ohio.”