Corn Premiums Widen as U.S. Supplies Fall; Soybean Basis Drops

ash premiums for corn shipped in April to terminals near New Orleans rose relative to Chicago futures after the U.S. government said domestic inventories fell to a four-year low. The soybean basis declined as demand shifted to supplies from South America.

The spot-basis bid, or premium, for corn delivered next month at Gulf of Mexico ports was 50 cents to 58 cents a bushel above May futures, compared with 50 cents to 55 cents yesterday, U.S. Department of Agriculture data show. The average cash-corn price rose to the highest since June 2008. The soybean basis fell to 47 cents to 60 cents a bushel from 48 cents to 60 cents.

“People need corn, and farmer deliveries in April are smaller than they were from December to March,” said Dave Marshall, a farm marketing adviser for Toay Commodity Futures Group LLC in Nashville, Illinois. The “soybean harvest is just hitting its stride in South America, and that means there’s over a billion bushels of soybeans that will be competing with U.S. supplies over the next six weeks.”

Corn futures for May delivery rose 42.75 cents, or 6.2 percent, to $7.36 a bushel on the Chicago Board of Trade, the biggest gain since June.

Soybean futures for May delivery fell 16.5 cents, or 1.2 percent, to $13.9375 a bushel, snapping a three-day rally.

On March 1, corn inventories dropped 15 percent from a year earlier to 6.523 billion bushels, the USDA said yesterday. Supplies held by farmers fell 26 percent from a year ago and represented 52 percent of total U.S. stockpiles, the smallest since 1973, Marshall said.

Soybean consumption in the quarter ended Feb. 28 fell 3.8 percent to 1.029 billion bushels, the USDA said. Farmer inventories on March 1 fell 17 percent from a year earlier.

“Farmers have sold more of last year’s crop” than people expected, Marshall said. “Supplies are going to be very tight” before the harvest begins in September, he said.

(Source: http://www.bloomberg.com/news/2011-04-01/corn-premiums-widen-as-u-s-supplies-fall-soybean-basis-drops.html)