For Vince Reincke, basis is not all that complicated. It’s paying attention to demand. It’s looking for an opportunity to disrupt. It’s staying in touch with folks who focus on cash grain. It’s a constant calculation.
It’s math.
“It’s important to understand how the math works. When you understand how the math works, then you can affect the result,” Reincke says.
Listen to Reincke for just a few minutes and you understand that maximizing basis opportunity is the difference between windshield scouting and intensely managing a crop. Only instead of counting bushels, he’s calculating nickels.
Reincke studies basis daily. “Every situation has to be calculated,” he says. “There’s challenges and pennies to be calculated all the way along.”
Rising to the challenge of counting those pennies pays off.
“Usually, I find that basis has a huge impact on profitability,” Reincke says. He explains how to get 30 cents in basis on a yield of 200 bushels per acre: “Thirty cents times 200 gives us the difference in profitability. That’s a $60-an-acre difference, just because of basis.”
Basis is local
Location. Location. Location. Though Reincke avoids the old real-estate joke, he does note that location offers either a bonus or a challenge for producers. Take the case of Agriculture Partners LLC in Hillsboro, Ill. Its ready access to the Mississippi River and nearby end users offers regular opportunities to sell into basis. Like watching the moon to schedule fishing trips, Reincke watches the local market to time grain deliveries.
“Something that’s unique to where we farm is we can see what the export market really looks like pretty quickly,” he says.
A river doesn’t have to run through the farm, however, for agricultural communities to create basis opportunities.
Community view on basis
Communities can build basis into their economic structure. Reincke suggests contemplating what ethanol and soy crushing have done just in the last 10 years for farmers in communities with that infrastructure.
“That really did ramp up cash demand, local demand,” he says.
And be aware that local demand can fluctuate quickly. Producers on the Canadian border, for instance, saw demand plummet — and basis quickly follow — almost immediately after the Trump administration threatened tariffs on our country’s neighbor to the north.
“Almost always where agriculture is concerned, we’re talking about commodity markets — not really specialty markets, Reincke says. “Even with niche markets, such as non-GMO, we’re talking about a commodity.”
When the commodity is in high demand — even if the demand is for products that traditionally are lower prices — the selling opportunity improves.
For example, Reincke recalls when he ran a small elevator in northwest Indiana about 25 years ago. He was working with a manufacturing company to be the corn supplier. The economics of the local ethanol plant were good. Corn was cheap. And that cheap corn started attracting dairy and hog operations. Then demand ramped up, and so did prices.
“Communities need to recognize the value that working with an end user for the commodity that’s most beneficial to that area can really bring end benefits,” Reincke says.
Farm view on basis
For farmers who don’t think of themselves as marketing managers, Reincke suggests setting up a self-serve mini course. Chances are your best professors work near town, such as the elevator merchandiser.
“Just walk in the door and say, ‘Can you teach me a little more here?’ Then keep going back,” Reincke says. “It doesn’t necessarily come quick, but it’s worth the time.”
To stay up to date, Reincke talks to three cash grain folks about once a month. “My job,” he says, “is to make sure I understand where the value of cash commodities is today and where it might be in a few months.”
That’s because basis simply is not a once-a-year conversation.
“Basis is a six-month discussion at the most,” he says. “Doesn’t mean it will change. But it could.”
In a year such as 2025 when cost of production could easily slide higher than the price of the grain, Reincke sees a strong basis as a way to make up the difference.
“If the American corn farmer — very broad-based — is expected to lose money on corn, but they can change their net revenue, that makes a big difference,” he says. “And that’s the part that’s important for producers to understand.”
That said, however, Reincke notes, “There’s challenges and pennies to be calculated along the way.”
Storage and interest are two cost pits. Basis improvement past harvest is a potential opportunity.
“The willingness to not deliver anything during harvest is one of the things that we’ve looked at — skeptically,” Reincke says. “Our willingness to look at that and hold it off the market in some situations has proved beneficial.”
As a cash grain adviser, he says, “Obviously, none of us can tell a producer when to or not to do it.”
What Reincke does on his farm and what he advises others to do is study each situation and be willing to consider a shift in marketing strategy that opens the door to
basis opportunities.
And that brings him back to math. “When it comes right down to it, for profitability purposes, I look at basis — which is either a plus or minus number — on top of futures prices,” Reincke says. “Those differences end up being real dollars.”