Corn Premiums Drop as U.S. Harvest Boosts Supply; Soybean Basis Increases

Cash premiums for corn shipped to export terminals next month near New Orleans fell relative to Chicago futures as higher prices encouraged U.S. farmers to boost sales of newly harvested crops. Soybean premiums rose.

The spot-basis bid, or premium, for corn delivered in September fell to 42 cents to 50 cents a bushel above September futures in Chicago, down from 46 cents to 52 cents on August 27, U.S. Department of Agriculture data show. A week ago, the basis was 55 cents to 64 cents. Soybean premiums were 55 cents to 70 cents above November futures, compared with 56 cents to 58 cents on Aug. 27.

“The corn harvest is coming on fast,” said Diana Klemme, a vice president at Grain Service Corp., a risk-management consultant and broker in Atlanta. “Soybean sales are light. There is still some bidding for soybeans.”

Corn futures for September delivery rose 4.5 cents, or 1.1 percent, to close at $4.255 a bushel at 1:15 p.m. on the Chicago Board of Trade. Earlier, the price reached $4.2925 the highest level for the contract since Jan. 12, on bets that hot, dry weather will reduce crop yields.

“These prices are encouraging farmers to sell,” Klemme said. “There is plenty of corn around and not many areas need to pay up for supplies.”

Soybean futures for November delivery fell 3.5 cents, or 0.3 percent, to $10.225 a bushel. The price rose 2.2 percent last week on concern that hot weather in August will reduce Midwest yields.

Crop Conditions

The condition of U.S. corn and soybeans was unchanged last week, the government said today.

The corn crop was rated 70 percent good or excellent as of yesterday, the same as a week earlier, the USDA said today. An estimated 17 percent of the crop was mature, up from 8 percent a week ago.

The agency said that 64 percent of the soybean crop was rated good or excellent, unchanged from a week earlier. Soybeans were dropping leaves on 8 percent of the acreage in the top 18 producing states as of Aug. 29, up from 3 percent a year earlier and 7 percent on average in the prior five years, the department said.

The average corn yield will be 165.2 bushels an acre, down from 165.6 bushels a week earlier, as conditions deteriorated in nine of the top 18 producing states, David Salmon, the owner of Weather Derivatives in Belton, Missouri, said in a report. Salmon’s forecast for the soybean yield was unchanged at 43.7 bushels.

To contact the reporter on this story: Jeff Wilson in Chicago at jwilson29@bloomberg.net

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