Slow farmer selling continues to underpin prices, but with end users unwilling to aggressively push for supplies beyond near-term needs, basis levels are not strengthening.

An increase in farmer sales followed last week's government reports that indicated abundant grain stocks, said Karl Setzer, analyst with MaxYield Cooperative in West Bend, Iowa.

Buyers are also much less concerned with tight grain stocks than they were earlier in the marketing year.

"Commercial grain flow and the delivery of precontracted corn and soybeans are giving crush facilities and ethanol manufacturers all of the inventory they need at this time," Setzer added.

Processors, ethanol plants and livestock feeders don't have an incentive to book supplies beyond near-term needs with less threatening supply outlooks and expectations for farmer selling to pick up in January, analysts added.

Farmers are expected to increase sales activity after the start of the calendar year for tax purposes.

Meanwhile, strong domestic demand for corn continues to underpin basis levels amid strong ethanol margins and positive livestock margins.

Basis is the difference between cash and futures market prices.

Processors and ethanol plants in the eastern Midwest continue to report price premiums for corn supplies. The basis ranged from 13 cents under to 23 cents over March futures, according to data from the USDA.

Otherwise, soybean basis for export is under pressure from slower export demand.

U.S. Department of Agriculture reported 29.749 million bushels of soybeans were inspected for export last week, below analyst's expectations that ranged from 35 million to 40 million bushels.

Midday barge basis levels for December shipment of soybean to the Louisiana Gulf ranged from 58 cents to 73 cents over March futures, down one cent from Friday, according to data from the USDA.

-By Andrew Johnson Jr, Dow Jones Newswires; 312-347-4604; 
   andrew.johnsonjr@dowjones.com

(END) Dow Jones Newswires

December 12, 2011 13:50 ET (18:50 GMT)