January 21, 2011

Soft cash grain basis; stocked pipeline

U.S. cash basis levels are expected to remain soft, continuing to feel pressure from an adequately stocked
cash supply pipeline. The market isn't seeing a great deal of activity beyond already contracted movement of supplies, as end-user buying remains subdued while the market digests fresh supplies already filtering into the pipeline in recent weeks, a cash connected broker at the Chicago Board of Trade said.

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. Cash basis is static at best, as shipments are slow right now, but weather could kick start things in the near future, analysts at FCStone, a brokerage firm, said in a market note.

Commercial inventories of U.S. cash grain held steady last week while soybeans supplies increased, leaving elevators, terminals, ports and warehouses surveyed by the U.S. Department of Agriculture filled to 70 percent of total holding-capacity. The agency said, although overall stated stockpiles held steady, soybean inventories increased by three percent in the past week, while visible supplies dropped by two percent for corn, and one percent for grain sorghum. 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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