Soybean, Corn Premiums Rise as Price Drop Curbs Sales by Farmers

Jan. 25 (Bloomberg) -- Cash premiums for soybeans and corn shipped this month to terminals near New Orleans rose relative to Chicago futures as a drop in prices discouraged U.S. farmers from selling stockpiles left over from last year’s harvest.

The spot-basis bid, or premium, for soybeans delivered in January at Gulf of Mexico ports rose to 48 to 60 cents a bushel above March futures, compared with 48 cents yesterday, U.S. Department of Agriculture data show. Corn premiums widened to 38 cents to 42 cents a bushels over March futures from 36 cents to 38 cents.

“Grower sales were shut off by the drop in futures,” said Scott Stoller, a grain merchandiser for Michlig Agricenter Inc. in Manlius, Illinois. “Farmers finished selling what they needed earlier this month, and now they will wait to sell again in late March or early April, when spring planting bills are due.”

Soybean futures for March delivery tumbled 30 cents, or 2.1 percent, to close at $13.745 a bushel on the Chicago Board of Trade, after touching $13.7025, the lowest since Jan. 12. Prices are up 46 percent from a year ago, and touched a 29-month high of $14.325 on Jan. 13.

Corn futures for March delivery fell 11.25 cents, or 1.7 percent, to close at $6.44 a bushel on the CBOT. Prices are up 75 percent in the past year, and last week touched $6.67, the highest since July 17, 2008.

Barge Costs

Premiums also rose as the cost of moving grain by barge to New Orleans is gaining, Stoller said. Barge costs are up because an increase in demand for coal is reducing the number of vessels available to move grain, he said.

The cost of moving grain or coal from Peoria, Illinois, to exporter terminals at the Gulf of Mexico rose 38 cents, or 1.8 percent, to $22.03 for 2,000 pounds in the week ended Jan. 19 compared with a week earlier, data from the USDA show. Prices are up 17 percent from a year earlier.

“The rising barge-freight rate is pushing up the basis,” Stoller said. “Exporters still need to get some soybeans to finish up shipment programs next month.”

(Source: http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aSoulcxJCE80)