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DJ US Cash Grain Review: Market Succumbs To Seasonal Sway77 days ago
SUPERIOR, Neb. (Dow Jones)--U.S. cash grain markets bowed to broad seasonal trends Tuesday, resulting in a general downdraft for basis, and a sharp schism in futures.
Spot soybean futures finished day-trading 4 cents higher, despite losses of over 11 cents in corn and 23-24 cents per bushel in all classes of wheat.
"Since 1975, January soybeans have rallied on the day before and the day after Thanksgiving 74% of the time, making this period one of the most reliable seasonal trades in the world of commodities. These two strong days have made the holiday-shortened week a historically strong period," said Rich Balvanz of AMS Commodities. "Gains the past three years have been exceptional. Neither corn nor wheat has responded particularly well during the same period."
Cyclical pressure produced by fall harvest also pressured cash corn/soybean basis Tuesday, becoming particularly noticeable on the Gulf export market, where spot price-premiums for both commodities plunged as much as 4-6 cents.
Export basis for spot supplies of soybeans have now fallen to their lowest level in well over a year at Louisiana Gulf ports, leaving barge bids below their previous 3-year average. Basis offers for spot deliveries of interior soy to Gulf ports were $2.25 cents above average in early July and still as much as 70 cents higher than the median level, as recently as late September.
"Beans have defied gravity impressively for much of the year," says eHedger analyst Justin Kelly. "However, the first harvest of the likely record-large South American soybean crop will begin in late January, so it will not be too long before China has another potential supplier of beans to shop from."
So far this marketing-year China has booked nearly 550 million bushels of U.S. soybeans, which is only about 150 million less than China bought all last year.
"What is concerning, is that China has only taken delivery of 4 million tons [147 million bushels] of soybeans this year, which could allow them to cancel several bookings if they desired," warns Iowa commodity trade advisor Karl Setzer.
Daily readings of average domestic basis for all classes of grain--save for sorghum and soft red winter wheat--had also declined entering Tuesday's day-trading session.
Rain showers were complicating fieldwork operations in the Midwest Tuesday.
"On the Plains, mild, mostly dry weather continues to promote late-season fieldwork, including corn, cotton, sorghum, and sunflower harvesting," said USDA meteorologist Eric Luebehusen.
A slow-moving storm will generate rain/wet snow over the central/eastern Corn Belt and Great Lakes in coming days, while a strong upper-air low diving south out of Canada throws light snow across the northern Plains and western Corn Belt.
-By Gary Wulf, Dow Jones Newswires; Gary.Wulf@dowjones.com
(END) Dow Jones Newswires
November 24, 2009 15:19 ET (20:19 GMT)
By Gary Wulf
Of DOW JONES NEWSWIRES
CROP WEATHER
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