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17 Sep 2008 15:44 EDT DJ US Cash Grain Review: Trade Wanes, Though Prices Gain
By Gary Wulf
Of DOW JONES NEWSWIRES
CENTRAL CITY, Neb. (Dow Jones)--Trade volume continues to wane across the U.S. cash grain sector, as buyers and sellers withdraw from a futures market beset by intense volatility.
With most cash contracts of grain futures trading in daily ranges of 3-5%, Midwestern terminals surveyed by the USDA reported aggregate cash receipts of corn/soybeans/soft red winter wheat of just 285,000 bushels Wednesday, representing a decline of 66% from already-depressed volume levels of one week ago.
With country movement almost down to bare minimums, domestic basis levels were steady or stronger for most classes of cash grain again Wednesday.
"Corn and soybean basis gained ground this past week, with U.S. average gains of 5 cents a bushel for both crops," reported Kevin McNew of Cash Grain Bids Inc. "In corn, basis levels were mostly stronger along the river system and the western corn belt."
McNew said basis gains of 6-8 cents a bushel were common in these regions, with many ethanol plants in Nebraska, Iowa and South Dakota pushing spot premiums up by more than 10 cents.
Export basis was weaker at the U.S. Gulf on Wednesday, 1 cent for corn, 5 cents for soybeans and as much as 10 cents for SRW wheat after Egypt opted to buy 7.3 million bushels of wheat from Russia and Ukraine in an overnight tender.
"That news may be considered bearish, since many thought quality issues, with regards to the Ukrainian wheat, might switch interest to other sources, such as the U.S.," said Wachovia Securities analyst Bill Nelson.
Total export inspections for that class of wheat were more than cut in half during the past week to just 1.8 million bushels in all. Exports of all U.S. grain, at less than 56.3 million bushels, were off 36% from a year ago.
U.S. grain futures mounted a recovery Wednesday, closing with cash-contract gains of close to 7 cents for oats, 15 cents for soybeans, 22 cents for corn and 27-36 cents for wheat.
"Upside potential from current levels remains very significant and much more than current popular rhetoric suggests," said independent analyst Duane Lowry. "Based on continued and solidifying anecdotal reports from the country, it would appear that we should brace for a 'disappointing' slant to yield rhetoric and declining national yield projections. And, of course, with firming price action will come the increasing excitement of corn's need to aggressively position itself for the 2009 acreage battle."
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