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28 Aug 2008 15:28 EDT DJ US Cash Grain Review: Firm Basis, Slow Sales Theme Continues
DOW JONES NEWSWIRES
Midwest country movement remained at a virtual standstill Thursday as Chicago Board of Trade grain futures fell, thus offering no marketing incentive and maintaining firm basis levels on corn and soybeans, merchandisers said.
CBOT grain and soybean prices fell on profit-taking and news of beneficial rains falling across parts of the Midwest, with lower crude oil prices also encouraging selling interest, traders said.
Basis, the difference between the cash price and the nearby CBOT futures contract, strengthened in recent weeks as futures fell on speculative liquidation pressure, while at the same time processors attempted to secure supplies, said Kevin McNew, analyst and president of CashGrainBids.com.
"The trend has been in the last month to see pretty strong basis, especially in the western corn belt we've seen 30 to 35-cent basis gains on corn in Iowa. So it's pretty clear that guys in the Midwest are scrambling to get their needs met," he said.
Soybean basis as the Louisiana Gulf continues to firm as end-user demand remains steady amid a need for shrinking supplies ahead of the fall harvest, another analyst said.
Barge traffic is recovering from a 26-day shutdown of the upper Mississippi River and later on a sharp decline in water levels due to hot, dry conditions. Repairs to Lock 27 near St. Louis have also slowed traffic, with 37-hour delays reported on Wednesday, the U.S. Agriculture Department said.
Barge grain traffic for the week to Aug. 23 was up, however, to 638,000 tons, up 15% from the previous week and 19% higher than the year-ago period.
A total of 47 U.S. ocean-going grain ships were loaded in the week to Aug. 21, up 2% from the year-ago period. The USDA said 55 vessels are due in ports within the next 10 days, a 28% decline from last year.
Soybean basis at the Louisiana Gulf was steady to 10 cents a bushel higher, while corn was flat to 1 cent firmer and soft red winter wheat held steady.
Corn export sales for the week to Aug. 21 totaled 846,800 metric tons, which included 303,000 tons for the 2007-08 crop year and 543,800 tons for 2008-09, the USDA reported Thursday. Sales exceeded most trade estimates.
For soybeans, exports totaled 143,100 tons compared to trade estimates between 50,000 and 400,000 tons. Wheat sales were a net 366,900 tons, down 60% from the previous week and 51% below the prior four-week average, the USDA said.
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