December 1, 2010
CBOT soy and corn premiums rise on slowed farmer sales
Cash premiums for CBOT soy and corn shipped to export terminals near New Orleans this month increased against futures as farmer sales slowed after prices fell last three weeks.
The spot-basis bid, or premium, for soy delivered in November was US$0.74-US$0.78 a bushel above January futures, compared with US$0.70-US$0.76 on Monday (Nov 29), according to USDA data. The average bid for spot month delivery was the highest in three months. Corn premiums rose to US$0.54-US$0.58 a bushel above December futures, compared with US$0.51-US$0.52.
"Farmer selling is as close to zero as it can right now," said an analyst. "Exporters have to keep buying and shipping because there is as much, if not more, to ship as compared to last year."
Soy futures for January delivery rose by US$0.08 or 0.6%, to close at US$12.43 a bushel on CBOT. The price is still down 7.8% since reaching a 26-month high at US$13.485 on November 12.
Corn futures for December delivery fell by US$0.0825 or 1.5%, to close at US$5.30 a bushel on CBOT. The contract has fallen 12% since reaching US$6.035 on November 9, the highest since August 2008.
Dry weather threatening crops in South America, and declining US reserves of corn and soy before next year's harvest will eventually boost futures as cash bids rise, the analyst said.
US soy inventories before next year's harvest will be 30% less than forecast in October, and corn reserves may drop to the lowest since 1996, the USDA said on November 9.
US farm exports will jump to a record US$126.5 billion in the year started October 1 as soy sales surge and drought spurs more purchases of American wheat, according to the USDA.
Corn and soy crops in Brazil and Argentina will be smaller than the US government's forecast because dry weather delayed planting, said another analyst.
"The big story is that global supplies are falling and demand is rising every year," the first analyst said. "Buyers are quietly paying up to secure inventories."
