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Cash Grains: Gulf export basis firms

09/23/2010 @ 3:54pm

CENTRAL CITY, Neb. (Dow Jones)--Cash grain basis was unchanged to higher on the Louisiana Gulf export market Thursday, while reports indicated interior cash prices struggled.

New Orleans-area exporters said basis premiums were up by as much as 8 cents a bushel for corn and by 2 cents a bushel for soybeans. Basis refers to the spread between national futures and local cash market prices, and is a measure of supply and demand for grain in any given area.

"Grain exporters seem content to sit on their current stocks and wait for more new-crop grain to flow to them," said Karl Setzer, commodity trade adviser for the West Bend, Iowa-based MaxYield Cooperative.

The domestic cash grain market was "collapsing across the corn belt," with cash corn prices falling $1.15 under Chicago Board of Trade corn futures in southern Minnesota, Setzer said. On Wednesday, national cash price indices maintained at the Minneapolis Grain Exchange closed near $4.45 1/4 for corn, reflecting an average basis of about -59 3/4 cents relative to settlement of CBOT December corn futures.

Some terminals are still sitting on abundant supplies of old-crop corn, or what's left from the previous harvest, Setzer said. Farmers are currently harvesting the latest crop and bringing more supplies online. A decline in demand added pressure to cash corn prices, he said.

Weekly U.S. corn export sales, issued Thursday, were disappointing at 561,800 tons. Traders had expected sales of 550,000 to 800,000 tons.

Lackluster demand pressured corn and wheat futures at the CBOT, while soybean futures crawled higher on strong export sales.

Crop Weather

A "lengthy period of drying" is expected to promote corn and soybean harvesting next week after rain delays in certain spots this week, according to an updated forecast to T-Storm Weather. Heavy rain continues across the northwestern half of corn and soybean areas through Thursday night, while the southeastern growing area should stay mostly dry, the private weather firm said.

Conditions for harvesting should gradually improve in most areas during the next seven to 10 days, T-Storm Weather said. Only a few showers and seasonable to cool weather are expected this weekend.

The USDA will issue an update on harvest activity Monday in its weekly crop progress report. As of Sunday, 18% of corn was harvested, above the five-year average of 10%, and 8% of soybeans were harvested, above the five-year average of 6%, according to the government.


-By Tom Polansek, Dow Jones Newswires; 312-341-5780; tom.polansek@dowjones.com
(END) Dow Jones Newswires
September 23, 2010 16:30 ET (20:30 GMT)
Copyright (c) 2010 Dow Jones Company, Inc.

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