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06 Nov 2008 09:55 EST US Cash Grain Outlook: Mixed Basis; Blizzard Raging In Dakotas
By Gary Wulf
Of DOW JONES NEWSWIRES
CENTRAL CITY, Neb. (Dow Jones)--Domestic basis markets were mixed once again Thursday, perpetuating a two-way trend that has predominated throughout the U.S. interior during much of the past week.
"For the week, corn basis drifted lower by 2 cents a bushel, while soybeans were 2 cents higher," said Kevin McNew of Cash Grain Bids Inc. "Corn basis was generally weaker this week, as harvest tended to pick up pace in the upper Midwest and the western Corn Belt."
The USDA said Tuesday that commercial inventories of cash corn had grown by nearly 12 million bushels during the past week, as farmers picked new-crop corn at a near-record pace, and rapidly filled available storage.
Many farmers have already concluded soybean harvest, causing a sharp decrease in country movement of that oilseed ... relieving pressure on the nation's river-transportation network, where barge freight rates recently reached all-time highs.
"Once we get past harvest, barge rates will come down substantially, which should lift basis levels around key river markets," added McNew. "We would expect [soybean] basis levels to improve 30-40 cents a bushel over the next few months, as barge rates start to return to normal."
Domestic wheat basis was generally stronger again Thursday, posting daily premium pushes that averaged 1 3/4 to 3 1/2 cents for hard/soft red winter wheat.
"Demand for wheat is likely much stronger than projected by USDA in its supply and demand tables, both domestically and on the export front," said Farm Progress market analyst Arlan Suderman.
U.S. grain futures were modestly mixed overnight, producing small cash-contract gains for oats/soybeans/spring wheat and minor declines for corn/winter wheat.
"Bearish fundamentals and weakness in the Dow will keep [corn] traders on the sidelines, particularly until demand firms back up," said Doane Agricultural Services. "Rains through the Midwest further hampering the slow harvest will be mildly supportive."
National cash price indexes maintained at the Minneapolis Grain Exchange currently stand at $8.34 for soybeans, indicating an average basis of -60 3/4 cents relative to the Wednesday settlement of November CBOT soybean futures. Domestic cash prices also average $3.55 for corn (-35 1/4 cents basis December CBOT corn), $5.08 for hard red winter wheat (-68 3/4 cents basis KCBT December wheat), $3.59 1/2 for soft red winter wheat (-$1.77 1/2 basis CBOT December wheat) and $6.37 1/4 for hard red spring wheat (-6 3/4 cents basis MGEX December wheat futures).
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