January 29, 2009

 

Improved prospects for sales of US wheat to South America bolstered export basis bids for soft red winter wheat at US Gulf ports Wednesday (January 28), pushing spot premiums up by 5-10 cents per bushel.

 

"There were already indications today that Brazil may have to turn to the US for additional supplies of wheat later this year, if Argentine exports remain closed," said Benson Quinn Commodities. "Some analysts believe they will need to import up to 1 million tonnes [36.74 million bushels] of wheat from the US and/or Canada."

 

After suffering through a historic drought, officials in Argentina have closed export registrations to assure adequate domestic supplies of wheat, leaving neighbouring Brazil - the world's single largest wheat importer - searching for alternative sources of supply.

 

Cost-insurance-freight, or CIF, basis for most other types of US grain was steady Wednesday.

 

Hard red spring wheat bids from ports in the Pacific Northwest are now quoted over May, rather than March, MGEX futures.

 

"There remains concern about dwindling Duluth stocks, coupled with slow farmer selling, which could lead to a tight situation going into the March delivery period," said ADM Investor Services analyst Kevin Kjorsvik. "Consequently, some mills as well as the [Pacific Northwest] market have moved their bids over to the May. We could see spot basis move as early as next week, if the [March-May] spread continues to move out."

 

US grain futures were higher Wednesday, registering cash-contract gains of approximately 7 cents for corn/soy and 11 cents for wheat.

 

"Updated forecasts that took some of the rain out of the forecast for Argentina provided support," said Doane Agricultural Services. "Crude oil futures and the stock market were higher, while the dollar index was lower. Dry condition in the southern Plains remains an underlying bullish factor [for wheat]."

 

Precipitation was waning in the Plains on Wednesday, although the Joint Ag Weather Service at USDA noted, "winds remain a problem in northern areas, as blowing and drifting snow and subzero wind chills hamper outdoor activities, particularly transportation."

 

Snow and freezing rain was also gradually ending in the Ohio Valley, as rain swept into the Southeast.

 

"Much of the Midwest will stay cold for the remainder of the week, but a warming trend should develop over the Great Plains," said USDA agricultural meteorologist Mark Brusberg.