January 23, 2004

US Interior Soybean Basis Bouncing Back

Spot soybean basis strengthened by as much as 5 cents a bushel at some grain terminals in the U.S. interior market Wednesday, responding to this week's marked decrease in country movement. Improved export demand firmed soft red winter wheat premiums, although spring wheat basis continued to decline.

"Corn has been easy to come by lately, but farmer selling of (soy)beans has dropped off this week," said one Midwest merchandiser.

Primary interior grain terminals surveyed by the Chicago Board of Trade report total soybean receipts for the week-to-date of only 3.1 million bushels, down from more than 4.6 million during the first half of last week.

Sales of 3.7 million bushels of U.S. SRW wheat to China, and rumors of wheat buying interest from Mexico, also helped to push SRW wheat basis up by 1c to 2c Wednesday, although heavy country movement caused some terminal markets in the northern Plains to pull back hard red spring wheat premiums by as much as 2c.

Deliveries of HRS wheat to the bellwether market of Minneapolis totaled 139 carlots again Thursday morning, nearly triple that of year-ago levels.

Spring wheat basis currently languishes at marketing-year lows, with slack demand from domestic flour mills and foreign buyers also blamed for poor premiums.

U.S. grain futures were mixed in overnight action on the Chicago Board of Trade, leaving cash contracts up by 2 1/2c for soybeans, up 1/4c for corn, and down 1/2c for SRW wheat. Oats and rice were untested during e-CBOT screen trading.

Support for corn and soybeans resulted from decreased farmer selling, a 30% increase in U.S. corn exports this season, a weak U.S. dollar, plus drought in Argentina and South Africa - normally one of the world's largest corn exporting nations.

Soybean traders remain focused on the possibility that the U.S. government will eventually respond to heightened concern about bovine spongiform encephalopathy, or mad-cow disease, by banning meat, bone and blood meal from all livestock feed rations, immediately creating a new market for protein-rich soymeal.

Cash price indexes maintained by the Minneapolis Grain Exchange presently place elevator-level bids for U.S. grain at approximate averages of: $2.56 1/2 for corn (up 1 1/2c Wednesday), $8.12 1/4 for soybeans (up 14 1/4c), $3.72 3/4 for hard winter wheat (down 2 3/4c), $3.72 for SRW wheat (down 3 1/2c), $3.76 1/2 for spring wheat (down 3 1/4c), $3.71 1/2 for soft white wheat (up 1 1/4c) and $3.88 3/4 for durum (up 2 1/2c).