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DJ US Cash Grain Review: Soy Prices Return To Pre-Harvest Highs81 days ago
SUPERIOR, Neb. (Dow Jones)--The U.S. cash corn market stagnated, even as domestic soybean prices scored 2 1/2 month highs this week. Farm-gate wheat prices also built up solid gains, highlighted by a leap of 5% in the value of soft red winter varieties.
Averaging about $9.85 per bushel, national elevator bids for soybeans soared 60 cents this week, rebounding to pre-harvest price levels last recorded in early September.
With virtually the entire U.S. soy harvest now safely under cover, strong export demand was credited for causing most of the week's big bean bounce.
"Chinese [soybean] demand seems insatiable at this point and, until South American production comes online this spring, the U.S. market will be relied upon to meet that demand," said Country Hedging analyst Brian Liedl.
Weekly export sales of U.S. soybeans approached 50 million bushels, with much of that huge total destined for China.
Although this year's soybean exports are projected by USDA to be up about 40 million bushels over 2008/09, the current sales pace is almost 350 million bushels ahead of that forecast.
In a counterintuitive move, export basis bids for soybeans actually declined by between 4 cents and 10 cents at U.S. ports this week, even though interior soybean basis strengthened by an average of 3/4 cent.
"All interest is on getting corn out of the fields. Even terminals that are being offered significant incentives for immediate-delivery soybeans are passing, as every available truck in the country is moving corn," said West Bend, Iowa, commodity trade adviser Karl Setzer. "This [is] causing soybean basis to tighten much faster than in a normal post-harvest setting."
The surge in country movement of corn naturally led to domestic basis declines, which averaged 3/4 cent, and offset a fractional gain in December CBOT futures.
"Corn continues to struggle with poor demand, as well as indications that grain is overpriced in the world market," said Setzer.
Export basis bids for corn were steady to 4 cents weaker, but by contrast, barge basis bids for SRW wheat at Louisiana Gulf ports climbed 5 cents.
Allendale analyst Joe Victor attributes strength in the wheat market to "poor quality wheat conditions within Brazil, a smaller-than-expected crop in Argentina and delayed soft red winter plantings in Illinois," which may portend a drastic decline in domestic production of that type of wheat next summer.
Export basis bids weakened by 3-4 cents for hard wheat this week, although domestic HRW/HRS premiums were little changed.
December wheat futures at U.S. grain exchanges moved higher this week by 8 1/4 cents for spring wheat, 16 1/4 cents for hard red winter wheat and 20 3/4 cents for SRW wheat.
"Chicago [SRW] wheat futures are trading at a premium to KC and are closing in on Minneapolis," noted Benson Quinn Commodities analyst Kevin R. Kjorsvik. "Besides the uncertainty of SRW acreage, other factors--such as the proposed variable storage rate that would raise carrying charges in Chicago, as well as the funds preference for the more liquid Chicago contract--should keep Chicago futures supported against its hard wheat futures counterparts."
Locally heavy rain enveloped the western Gulf Coast, southern Plains and Pacific Northwest Friday, while dry weather favored row crop harvesting and winter wheat planting in the lower Mississippi Valley, Southeast, Midwest and central/northern Great Plains.
"In the Corn Belt, dry weather is returning to central/eastern portions of the region, although fieldwork remains limited by soggy soils," said USDA agricultural meteorologist Brad Rippey.
Showers and thunderstorms associated with a Gulf storm system will spread northeastward over the weekend.
"Storm-total rainfall could reach 1 to 2 inches in the Gulf and Atlantic Coast states," warned Rippey. "By early next week, another round of precipitation can be expected in the Midwest, trailed by a surge of cold air."
-By Gary Wulf; Dow Jones Newswires; Gary.Wulf@dowjones.com
(END) Dow Jones Newswires
November 20, 2009 15:37 ET (20:37 GMT)
By Gary Wulf
Of DOW JONES NEWSWIRES
CROP WEATHER
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