Corn, Soybean Premiums Fall as Farmer Sales Overwhelm Demand

Cash premiums for corn and soybeans shipped this month to terminals near New Orleans declined relative to Chicago futures as farmers increased sales after prices reached 28-month highs this week.

The spot-basis bid, or premium, for corn delivered in December at Gulf of Mexico ports fell to 40 cents to 42 cents a bushel above March futures compared with 42 cents yesterday, U.S. Department of Agriculture data show. Soybean premiums dropped to 66 cents to 78 cents a bushel over January futures, down from 67 cents to 78 cents.

“The current farmer selling is overwhelming the demand,” said Roy Huckabay, an executive vice president for the Linn Group in Chicago.

Corn futures for March delivery rose 0.75 cent, or 0.1 percent, to $6.24 a bushel on the Chicago Board of Trade. The grain climbed for the ninth straight session, the longest rally since April 2008. Earlier, the price reached $6.265, the highest since August 2008.

Soybean futures for January delivery fell 9.75 cents, or 0.7 percent, to $13.66 a bushel on the CBOT, the first decline in eight sessions. Yesterday, the price touched $13.8525, the highest ever for the contract.

Both commodities rose this week on speculation that hot, dry weather will reduce yields in Argentina, Huckabay said. The country is the second-biggest corn exporter and the largest shipper of animal feed and cooking oil made from soybeans.

In 2011, corn output in Argentina may fall to 20 million metric tons, down from 22.5 million harvested this year, and 25 million estimated by the USDA earlier this month, Huckabay said. Continued dry weather into early February may cut soybean production in the country to 43 million tons from 54.5 million estimated this year, he said.

“The heat in Argentina and southern Brazil is creating stress that is worse than the market is currently expecting,” Huckabay said. “Production problems will not let the basis dip much more.”

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

To contact the editor responsible for this story: Patrick McKiernan at pmckiernan@bloomberg.net

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