Cash premiums for corn shipped to export terminals near New Orleans this month increased against futures as farmers withheld supply, betting tight supply will revive the rally in prices. Soybean premiums were steady.
The spot-basis bid, or premium, for corn delivered in December was 54 cents to 60 cents a bushel above December futures, compared with 54 cents to 58 cents yesterday, U.S. government data show. Soybean premiums were unchanged at 74 cents to 78 cents a bushel above January futures. The average bid is the highest since reaching a 26-month high on Nov. 11.
“There was a terrific amount of grain sold at harvest this year, so there is little farmer interest in selling until prices rise to higher targets,” said Dave Marshall, a farm marketing adviser for Toay Commodity Futures Group LLC in Nashville, Illinois. “The crops were higher quality than last year, increasing the incentive to hold supplies.”
Corn futures for December delivery jumped 21.75 cents, or 4.1 percent, to close at $5.5175 a bushel on the Chicago Board of Trade, the biggest gain since Oct. 20. Before today, the contract had fallen 12 percent since touching $6.05 on Nov. 9, the highest since August 2008.
Soybean futures for January delivery rose 40 cents, or 3.2 percent, to close at $12.83 a bushel on the CBOT, the biggest gain since Nov. 9. The price reached a 26-month high at $13.485 on Nov. 12.
Futures rose and export premiums were firm today because of concern that the La Nina weather pattern will reduce production in Brazil and Argentina, the biggest exporters of corn and soybeans after the U.S., Marshall said. Crop yields will be determined from the second half of December through February.
About 50 percent of Argentina’s soybean region is affected by below-normal moisture, according to report from Chicago-based forecaster T-Storm Weather LLC. That’s a higher percentage than at the same time in 2008, when a La Nina event eventually cut soybean output by a third, Marshall said.
“The market can’t ignore the dry weather pattern developing in South America,” Marshall said. “Demand will keep the U.S. export markets firm for the next three months until weather risks subside.”
La Nina is a global weather pattern caused by cooling equatorial waters in the Pacific Ocean.
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