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Cash corn continues to climb, Argentina dryness key

12/21/2010 @ 9:42am

Cash corn prices continue to climb, revisiting levels last seen in mid-July of 2008. National-average farmgate prices are currently approaching $5.60 per bushel.

"Private analysts have been indicating that the early planted corn in Argentina is moving into the early stage of pollination, with the weather becoming more critical to the plant, and thus the risk-premium appears to be on the rise," said a Benson Quinn Commodities analysis.

Argentine weather was somewhat warmer and drier than expected over the weekend, and forecasters warn that pattern may extend through next week. Argentina is a key competitor to the U.S. on the world corn export market.

Interior basis premiums for almost all U.S. grains firmed up Monday -- rising by an average of 1/4 cent for corn/hard red winter wheat, 1/2 cent for soft red winter wheat, and 1 1/4 cents per bushel for hard red spring wheat.

"With the amount of [spring] wheat that has been sold over the past few weeks you'd think that basis would be suffering greatly. However, nearby basis is somewhat interesting, as rail issues are holding up grain from moving," said North Dakota merchandiser Kayla Hoffman. "This means buyers can buy wheat -- but it's difficult to get wheat from origin to destination. So buyers are willing to pay up, for wheat that can quickly meet their needs."

Domestic soybean and grain sorghum basis each declined by an average of 1/4 cent Monday.

U.S. grain futures were stronger overnight -- by about 2-4 cents a bushel for wheat/oats, and around 1 cent for corn/soybeans. Analysts look for all grains to open as much as 3-4 cents higher, when day-trading resumes at 0930 CST, however.

"Support stems from concern over tight U.S. [corn] supplies, dryness in Argentina, and the need for additional corn acres in 2011," said Doane Agricultural Services.

National cash price indices maintained at the Minneapolis Grain Exchange last closed at $12.63 1/2 for soybeans, reflecting an average basis of -51 3/4 cents relative to settlement of January Chicago Board of Trade futures. Farmgate prices also now average $5.58 3/4 for corn (-40 3/4 cents versus March CBOT), $7.05 for hard red winter wheat (-$1.21 vs. March Kansas City Board of Trade), $6.89 3/4 for soft red winter wheat (-79 3/4 cents vs. March CBOT) and $8.21 1/4 for hard red spring wheat (-38 1/4 cents vs. March MGE).

US CROP WEATHER

Snow was falling on the Great Lakes and central to northern Plains Tuesday, while light rain showers dotted the Southeast, on this first day of winter.

"A winter warm spell continues in Texas, where today's high temperatures will again approach, reach, or exceed 80 degrees Fahrenheit," said USDA meteorologist Brad Rippey. "A portion of the central and southern Plains' winter wheat crop remains stressed by developing drought."

Drought is also a growing concern in Florida and Georgia.

"By Thursday, a developing storm over the nation's mid-section will produce light but beneficial precipitation on the central and southern Plains, while snow will overspread the western Corn Belt," forecast Rippey. "Toward week's end, rain will develop in the Southeast, while snow will stretch from the Midwest into the Mid-Atlantic states."

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