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DJ US Cash Grain Outlook: Weaker Basis, Farmers Sell Corn/Wheat83 days ago
By Gary Wulf
of DOW JONES NEWSWIRES
Domestic basis premiums paid for most classes of US cash grain are under pressure, falling off by an average of about 1 cent per bushel for corn/soybeans and nearly 3 cents for soft red winter, since late last week.
"The recent run [of 35-40 cents] in the [cash] wheat market has led to significant engagement by producers, as many of whom--after reaping record yields--have plenty of crop left to market", said Brian Liedl of Country Hedging.
Country movement of corn has also increased, concurrent with this week's appreciation of over 10 cents in national-average cash market prices.
"Corn harvest may be taking place faster than [the USDA's] weekly report indicates," said Iowa commodity trade advisor Karl Setzer, who notes that buyers are now finding a "more adequate flow of corn" available on the cash market.
Farm-gate soybean prices are also up more than 40 cents for the week.
Farm Futures analyst Bryce Knorr said the government's current 275 million bushel carryover estimate for soybeans is likely to be its biggest of the entire crop year.
"History suggests reductions are very likely, especially with China continuing to buy soybeans at a fervid pace," he said.
So far this marketing year, China has booked nearly 15 million metric tons [550 million bushels] of US soybeans, only 4 million tons [147 million bushels] fewer than Beijing bought all of 2008/09.
Soybean futures skyrocketed once again overnight, closing with cash-contract gains of nearly 17 cents. Cash corn and wheat futures also ended 1-3 cents higher.
"Rain in the Corn Belt that is slowing harvest this week, and outside markets will be supportive," said Doane Agricultural Services. "Crude oil was higher overnight pushing up to $80, and gold was up strongly, hitting new highs while the dollar weakened."
National cash price indices maintained by the Minneapolis Grain Exchange stand at $9.70 3/4 for soybeans, reflecting an average basis of -58 3/4 cents relative to yesterday's settlement of January CBOT futures. Domestic cash prices also average $3.64 for corn (-38 cents basis December CBOT), $4.89 1/4 for hard red winter wheat (-84 3/4 cents basis December KCBT wheat), $4.59 1/2 for soft red winter wheat (-$1.15 1/4 basis December CBOT wheat) and $5.79 1/4 for hard red spring wheat (-2 3/4 cents basis December MGE wheat).
CROP WEATHER
Rain continued to fall on most of the central/eastern Corn Belt Wednesday.
"It is a real wet mess right now for Missouri, southern Iowa, western Indiana--and all but far northern Illinois--as those areas have seen tremendous amounts of rain since Sunday. Radar is suggesting plenty of one to three inch totals," said Freese-Notis Weather. "While all of that rain has occurred, not far away there are areas of the Corn Belt that have seen no rain, and thus widespread harvesting has continued."
The Dakotas, northern Iowa, Minnesota, northern Nebraska, extreme northern Illinois and Michigan have yet to see any precipitation so far this week.
"Thus, even with the big rains in the heart of the Corn Belt we should see harvest progress numbers next Monday be a decent amount higher than the figures released on Monday," said the service, estimating the national corn harvest at potentially 65-69% complete. "We will continue to see a lot of corn be harvested through the early weekend, for especially areas west of Interstate 35, while areas to the east will have to deal with areas of light rain and drizzle for the next two days."
-By Gary Wulf; Dow Jones Newswires; Gary.Wulf@dowjones.com
(END) Dow Jones Newswires
November 18, 2009 09:56 ET (14:56 GMT)
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