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Cash grain movement growing

Jeff Caldwell 08/01/2011 @ 3:53pm Agricultural content creator and marketer.

CHICAGO (Dow Jones)--U.S. cash corn and soybean basis levels are steady Monday, with an increase in country movement offsetting strength in the futures market.

Basis is the difference between cash prices and futures market prices.

The increase in cash movement is attributed to commercial traffic, as terminals start to make room for the upcoming harvest, said Karl Setzer, analyst with MaxYield Cooperative in West Bend, Iowa.

End users including processors and ethanol plants aside from the eastern Midwest aren't showing an interest in aggressively pushing for grain, with inventory needs covered into the fall harvest.

"Every day we get closer to harvest is one less day a buyer needs to push bids for coverage," Setzer said.

Soybean basis levels are moderating, with slower demand from crushing plants and slowing demand for soymeal limiting pushes for soy supplies.

Scaled-back operations at processors and soy crushing plants are revealing basis slippage at some western Midwest plants. Soy crushers either have enough inventories on hand to cover near-term needs or are shutting down for annual plant maintenance until cheaper supplies are available from the upcoming harvest.

Spot soymeal basis bids range from 8 cents to 20 cents under Chicago Board of Trade August futures in Iowa, and range from 10 cents under to 5 cents above August futures in central Illinois, according to data from the U.S. Department of Agriculture.

Despite a slight decline in the corn basis, supplies remain tight in various locations, with processors and ethanol plants still paying large premiums above futures market prices to secure inventories.

Processors and ethanol plants remain the highest bids in Midwest markets, with spot corn basis bids at selected ethanol plants in the eastern Midwest leading the high basis bids. In western Indiana, the basis ranged from 60 cents to 77 cents over September futures; in eastern Indiana, the basis ranged from 75 cents to 85 cents over September futures; and in Ohio, the basis ranged from 80 cents to 85 cents over September futures, according to data from the USDA.

Ethanol plants that haven't secured enough inventories to carry them into the fall harvest aren't willing to aggressively trim bids, particularly with uncertainty surrounding yield potential in the eastern Midwest.

Crop Weather

The Telvent DTN ag weather forecast raises additional concerns for southern and eastern Midwest areas. Corn and soybeans during the month of July have been stressed by above-normal high and low temperatures and areas of deficient rainfall over some southern and eastern areas. The weather pattern heading into early August isn't expected to be as hot or dry across the Midwest; however, some concerns over above-normal temperatures and areas of dryness are expected to continue in parts of the southern and eastern Midwest, Telvent added.

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