Corn, Soybeans Premiums Rise on Demand for Tightening Supplies

Cash premiums for corn and soybeans shipped this month to terminals near New Orleanswidened relative to Chicago futures as farmers withheld inventories amid rising prices and as demand rose.

The spot-basis bid, or premium, for corn delivered in March at Gulf of Mexico ports rose to 52 cents to 53 cents a bushel above May futures from 51 cents to 52 cents yesterday, U.S. Department of Agriculture data show. The soybean basis for delivery in the first half of this month rose to 66 cents to 68 cents a bushel above March futures from 63 cent to 70 cents.

“Farmers are just not selling because they are waiting for higher prices,” said Garret Toay, a grain analyst at Toay Commodity Futures Group LLC in Clive, Iowa. “Basis will rise the next month to get farmers and grain elevators to sell.”

Corn futures for May delivery rose 4.5 cents, or 0.6 percent, to close at $7.355 a bushel at 1:15 p.m. on the Chicago Board of Trade, after falling as much as 0.8 percent. The most-active futures gained 30 percent in the past three months, touching $7.4425 on Feb. 22, the highest since July 2008.

Soybean futures for March delivery rose 10.25 cents, or 0.8 percent, to close at $13.675 a bushel in Chicago. On Feb. 9, the price reached $14.5575, the highest since trading in the contract began in October 2008.

U.S. corn stockpiles on Aug. 31 will total 675 million bushels, down 60 percent from a year earlier and down from a January forecast of 745 million, the USDA said on Feb. 9. That represents 5 percent of projected annual usage and would equal a record low in 1995. Soybean reserves will fall to 4.2 percent of estimated demand before this year’s harvest, the USDA said.

“As we work down supplies, it is getting more difficult to buy corn and soybeans,” Toay said. “Farmers may be down to 25 percent of last year’s crop left to sell, and soybean supplies are down to gambling stocks.”

(Source: http://www.bloomberg.com/news/2011-03-01/corn-soybeans-premiums-rise-on-demand-for-tightening-supplies.html)