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January 25, 2011

Cash grain inventories adequate; weak interior basis

U.S. interior cash-basis levels remain soft as adequate inventories in the cash supply pipeline capped basis movement. The supply chain has ample supplies, with large deliveries of forward booked sales in the first few weeks of the year alleviating the need for aggressive end user pricing, a cash connected Chicago Board of Trade floor broker said.

The rapid advancement of grain and oilseed prices to over two-year highs in January enticed farmers into selling additional supplies, placing excess supplies in the pipeline, he added. Producers sold sizable amounts of grain last fall for delivery in January, and the delivery of the inventories has pressured basis levels at interior elevators and river terminals.

However, farmgate prices did receive mild support from cold, snowy conditions in the central U.S. that limited farmer movement of supplies. The export basis for grains was flat to lower, while the soybean basis climbed at the Louisiana Gulf Monday. Strong export sales in the past week, and a higher than expected amount of soybeans inspected for export lifted CIF basis bids for soybeans.

The export basis, or the difference between cash prices and futures, rose by as much as seven cents a bushel for soybeans at the Louisiana Gulf, according to U.S. government data. The increase extended Friday's turnaround from recent weakness. Basis held steady for corn and was unchanged to up three cents for soft red winter wheat.

U.S. Department of Agriculture reported 25.874 million bushel of corn were inspected for export in the week ended January 20, below analysts' estimates that range from 30 million to 36 million. Soybeans inspected were 42.082 million above the high end of a range of estimates that span from 25 million to 35 million. Read more...

This blog is written by Martin Little The Global Miller, published and supported by the GFMT Magazine from Perendale Publishers.

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