Evening Arbitrage Brief

Executive Summary

The evening run of our 16-dimensional manifold analysis processed 5,543 state and location pairs, identifying 76 viable grain arbitrage opportunities across corn, soybeans, and wheat markets. The opportunity set continues to display heavy logistics constraints, with 89.5% of routes dependent on truck transport and only 10.5% utilizing rail. Policy distortions remain a defining characteristic of the market structure, as 3,344 routes across the full universe are trading below RMA insurance price floors, with an additional 1,775 routes trading near these floors. Cash-flow pressure manifests clearly in the data, with 19 routes flagged as distressed among the 76 viable, reflecting the intersection of harvest liquidity needs and tight local storage capacity.

Intraday Evolution

Market structure was stable from morning to evening. Viables nudged from 75 to 76, and mode share tilted slightly more toward trucks (from 88.0% to 89.5%). The count of distressed routes was unchanged at 19 (about a quarter of the viable set). Our sentiment layers remained neutral—no social or expert boosts or penalties—so the economics you see are being driven primarily by basis, transport frictions, and policy floors rather than psychology.

Leading Opportunities

The evening's top ten risk-adjusted opportunities reveal clear geographic and commodity patterns. Missouri-centric corridors dominate, with a few key routes highlighting the market's current state:

• MO Northeast to IL Central (Corn, Truck): Yields $0.247 per bushel with 81.6% confidence.
• IN Mills to IN Central (Wheat, Truck): Maintains strong performance at $0.237 per bushel.
• MO Northeast to MO Kansas City (Corn, Rail): A top performer at $0.213 per bushel, representing a rare, viable rail opportunity.

Market Dynamics

The persistence of barge bottlenecks continues to sustain truck economics across the grain belt. Low Mississippi River levels and draft restrictions maintain floor pricing for truck movements and select rail routes, explaining why approximately 90% of viable opportunities rely on truck transport. The record-scale corn harvest meeting storage constraints creates the localized basis volatility that the model captures in short-to-medium haul spreads. These storage limitations force rapid grain movement into whatever capacity exists, widening spreads between origin and destination points. Soybean export demand remains weak as international buyers continue diversifying their sourcing. This dynamic concentrates soybean opportunities around the remaining processor locations and export terminals where basis levels remain workable. The 25% distressed rate among viable routes aligns precisely with the timing of operating loan deadlines and elevator queue management pressures that characterize harvest season. Freight costs remain stable to firm, with diesel prices and seasonal rail congestion supporting current truck and rail economics despite compression in terminal basis levels.

Daily Performance Metrics

September 24th generated 150 total opportunities across all commodities, with corn leading at 63 opportunities, followed by soybeans with 45 and wheat with 42. The average profit margin across all opportunities held at $0.076 per bushel, maintaining consistency from the morning report. The hit rate of 2.7%, representing 150 viable opportunities from approximately 5,500 evaluated pairs, falls within normal harvest window ranges for the model's filters. The run parameters show terminal deflation at 0.70, base transport rate at $0.00046 per bushel per mile, average floor distance at negative 1.5%, average subsidy distortion at 0.475, and average subsidy per acre at $14.17. These calibration settings reflect current market conditions where terminal prices face downward pressure while transport costs remain elevated, creating the spread opportunities the model identifies.

Geographic Concentration and Outlook

The Missouri to Illinois corridors merit continued observation for basis spread persistence, particularly given their dominance in the top opportunities. Indiana mill zones require monitoring for wheat protein premium stability on short-haul routes. Nebraska's southeastern and central clusters show ongoing recalibration as harvest accelerates, potentially creating new opportunities as local basis adjusts. River-adjacent gateway terminals may see basis or cycle-time adjustments that could shift the economics between truck and rail movements overnight.