Corn Premiums Drop on Increased Farmer Sales; Soybeans Gain

Cash premiums for corn shipped this month to terminals near New Orleans narrowed relative to Chicago futures on rising deliveries to elevators for shipment down the Mississippi River. Soybean premiums rose.

The spot-basis bid, or premium, for corn delivered in March at Gulf of Mexico ports fell to 48 cents to 52 cents a bushel above May futures from 51 cents to 52 cents yesterday, U.S. Department of Agriculture data show. The soybean basis was 64 cents to 68 cents a bushel above May futures, up from 64 cents to 66 cents.

“A large amount of corn was booked for delivery in March, and that grain is flowing into the shipping pipeline,” said Dave Marshall, a marketing consultant for Toay Commodity Futures Group LLC in Nashville, Illinois. “Farmers and merchants sold most of their soybean inventories earlier because of fears of big crops in South America. Now, it is getting difficult to source supplies.”

Corn futures for May delivery fell 8.75 cents, or 1.2 percent, to close at $7.28 a bushel on the Chicago Board of Trade. The price rose 0.8 percent this week, the fifth straight gain.

Soybean futures for May delivery advanced 2 cents, or 0.2 percent, to close at $14.14 a bushel. The price gained 2.8 percent this week.

The cost of moving grain by barge along the Mississippi River from St. Louis to New Orleans today rose to 500 percent of the 1976 published tariff rates from 400 percent a week earlier, Marshall said. That’s the equivalent of adding about 13 cents to 14 cents to the cost of shipping grain to export terminals, he said.

“Heavy rain is raising water levels along both the Mississippi and Ohio rivers to near flood stages,” boosting the cost of shipping, Marshall said.

(Source: http://www.bloomberg.com/news/2011-03-04/corn-premiums-drop-on-increased-farmer-sales-soybeans-gain.html)