Firm basis to spark wheat marketings
CENTRAL CITY, Neb. (Dow Jones)--Generally slack country movement held U.S. cash grain basis firm again Wednesday, apart from harvest-induced pressure that pushed domestic spring wheat premiums down by an average of 3/4 cent per bushel.
With wheat futures on U.S. exchanges within 75 cents of all-time record highs set in 1996, some market analysts have recently been advising growers to actively sell their 2007 production, and hedge future wheat crops, as well.
"Wheat is currently trading at the highest price in history for this time of year," said analyst Bob Utterback. "We believe all wheat producers must be looking at multiple-year sales now."
Interior basis was on the rise for all other commodities Wednesday, featuring average gains of almost 2 cents a bushel for soybeans.
"During most of the summer, soybean basis levels have been in the tank, but there are signs that the situation is changing," said Ag Management Services market consultant Rich Balvanz, who Tuesday noted that spot soybean basis in the Cedar Rapids, Iowa, processor market had reached its highest level in over a month. "AMS expects soybean basis levels will continue to improve."
Domestic basis for corn and winter wheat also edged about 1 cent higher Wednesday, supported by slow farmer selling.
"Producer replacement (of corn) has remained light to non-existent," said Benson Quinn Commodities analyst Jon Michalscheck Tuesday.
Grain futures were quiet in overnight trading, leaving cash corn, oats and hard red winter wheat contracts within 1 cent of unchanged. Nearby contracts rose 1 1/2 cents for SRW wheat, 2 1/2 cents for soybeans and 3 1/2 cents for HRS wheat.
"Higher than normal temps are expected to continue in the Corn Belt into next week," said analyst Alan Brugler. "That speeds up (crop) maturity, but also tends to hurt yields in areas where there isn't enough moisture to keep up with plant respiration needs."
National cash price indices maintained at the Minneapolis Grain Exchange currently stand at $7.39 1/2 for soybeans, indicating an average basis level of -94 1/2 cents relative to Aug contracts at the CBOT. Domestic cash prices also average $3.08 for corn (-17 3/4 cents basis Sep CBOT corn), $5.72 3/4 for HRW (-56 1/4 cents basis KCBT Sep wheat), $5.54 1/2 for SRW (-75 1/2 cents basis CBOT Sep wheat) and $5.61 3/4 for HRS (-65 1/4 cents basis Sep MGE wheat).
The Joint Agricultural Weather Facility housed at USDA said hot, mostly dry weather persists in the Pacific Northwest, to the benefit of small grain harvest, although isolated showers were keeping combines out of wheat fields in northern portions of the Great Plains Wednesday.
Scattered rains were also lingering on the central/southern Plains, maintaining adequate to locally excessive soil moisture reserves for summer crop development.