Owing to less demand for freight capacity last week, "average shuttle [train freight] rates were $248 below tariff, down $48," reported the U.S. Department of Agriculture Thursday.

The movement of U.S.-grown grain to the world export market slowed during the past week. Wheat sales totaled 5.4 million bushels, corn bookings were 17.3 million bushels, and soybeans reached 18.2 million bushels, which was 1% down from the prior four-week average as demand from China slowed in last half of December.

"Thirty-eight ocean-going grain vessels were loaded in the Gulf in the week ended Jan. 6, down 17% from last year," observed the USDA.

The cost of shipping grain on the high seas between Gulf ports and Japan averaged $53 per metric ton, up $1 from the previous week. Freight rates from the Pacific Northwest to Japan averaged $29 per ton, down $1 from the previous week.

Export-basis premiums applied to prices paid for most classes of grain rose Thursday; by as much as 11 cents for corn, 13 cents for soft red winter wheat, and one cent per bushel for soybeans.

"Basis levels for most grains were weaker at the Gulf...on slowing export demand. However, interior basis levels are soft, as commercials have more ownership of cash supplies, limiting farmer selling on the recent rally in the markets, said Dan Basse, president AgResource Company, an advisory firm based in Chicago.

Basis represents the differential between local cash grain prices and benchmark futures. Basis can be a premium or discount to futures, depending on local supply and demand factors, such as levels of production and consumption, the cost of grain transportation, the availability of storage and variations in grain quality. Generally, freight costs and storage capacity have the biggest impact on cash basis at any given location.

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

(END) Dow Jones Newswires

January 13, 2011 16:21 ET (21:21 GMT)