US corn and soy premiums rise on lower price

Cash premiums for corn and soy shipped to export terminals near New Orleans widened relative to Chicago futures after a slump in prices discouraged US farmers from selling inventories left over from last year's crops.

The spot-basis bid, or premium, for corn delivered in May was 45 cents to 48 cents a bushel above July futures on the CBOT, compared with 44 cents to 48 cents earlier, government data show. The soy premium rose 60 cents to 65 cents a bushel above July futures from 60 cents to 62 cents.

Corn futures for July delivery fell 6.75 cents, or 1.8%, to US$3.6425 a bushel in Chicago, the largest decline since May 17. The grain climbed in the previous three sessions on demand from China, the world's second-largest consumer.

Soy futures for July delivery dropped 10 cents, or 1.1%, to US$9.305 a bushel on the CBOT, the ninth decline in 10 sessions. Earlier, the price touched US$9.275, the lowest level for a most-active contract since March 15.

The average price for soy delivered to New Orleans fell 0.9% to US$9.93 a bushel, the lowest level since May 17. Corn bids fell 1.5% to US$4.1075 a bushel.

The cost of moving grain along the upper Illinois River to New Orleans fell to 325% of the 1976 published tariff rates, compared with 340% earlier, analysts said. That would reduce transportation costs by about 1.5 cents a bushel.

Corn bids will likely stay firm into June on speculation that China, the second-biggest consumer of the grain, will buy more from the US, analysts said.

China already has booked almost one million tonnes of the feed grain from the US and will probably buy more, according to Alvaro Cordero, the manager of international operations-marketing at the US Grains Council.

In a sign of domestic demand, China has held six weekly auctions of corn reserves to reduce record prices. Today, the government sold 99% of the grain offered. About 979,600 of the 993,300 tonnes were sold at RMB1,724 (US$252) a tonne, analysts said.