April 27, 2010

Soy cash premiums rise after price drop, slows farmer sales

Cash premiums for soy shipped to export terminals near New Orleans widened relative to Chicago futures after a drop in prices from a three-month high, which discouraged US farmers from selling inventories.

The spot-basis bid, or premium, for deliveries this month was US$0.40 to US$0.46 a bushel above May futures on the CBOT, compared with US$0.41 to US$0.42 on April 23, USDA data show. A week earlier, premiums were US$0.36 to US$0.38.

"There was not much interest in selling soy" after CBOT futures slipped from the day's high, said Bryce Stremming, a risk consultant for Mid-Co Commodities Inc. in Bloomington, Illinois. "There is just enough demand" to support the spot-basis bids, he said.

Soy futures for May delivery fell US$1.25, or 0.1%, to US$9.9875 a bushel on the CBOT, after earlier touching US$10.095, the highest since January 12.

US government officials inspected 8.029 million bushels for export in the week ended April 22, less than half of the 16.362 million inspected a week earlier, USDA data show. China accounted for 30% of the total, down from 44% a week earlier.

Brazil and Argentina are the world's biggest growers and shippers after the U.S., and they will produce a record 121.5 million tonnes combined this year, up 35% from 2009, the USDA said earlier this month. Brazil will finish its harvest this month, followed by Argentina in May.

World inventories on September 30 are forecast to reach 62.963 million tonnes, up 47% from 42.821 million a year earlier, USDA said on April 9. Stockpiles would be above the record of 62.957 million reached in 2007.

"The world is awash in soy and demand is going to continue to shift away from US supplies," Stremming said.