Soybean, Corn Premiums Rise as Exporters Bid for Tight Supply

Cash premiums for soybeans and corn shipped to export terminals near New Orleans this month increased against futures as farmer sales slowed after prices fell the last three weeks.

The spot-basis bid, or premium, for soybeans delivered in November was 74 cents to 78 cents a bushel above January futures, compared with 70 cents to 76 cents yesterday, U.S. Department of Agriculture data show. The average bid for spot month delivery was the highest in three months. Corn premiums rose to 54 cents to 58 cents a bushel above December futures, compared with 51 cents to 52 cents.

“Farmer selling is as close to zero as it can be right now,” said Diana Klemme, the director of the grain division for Grain Service Corp., a consulting and brokerage company in Atlanta. “Exporters have to keep buying and shipping because there is as much, if not more, to ship than last year.”

Soybean futures for January delivery rose 8 cents, or 0.6 percent, to close at $12.43 a bushel on the Chicago Board of Trade. The price is still down 7.8 percent since reaching a 26-month high at $13.485 on Nov. 12.

Corn futures for December delivery fell 8.25 cents, or 1.5 percent, to close at $5.30 a bushel in Chicago. The contract has fallen 12 percent since touching $6.035 on Nov. 9, the highest since August 2008.

Adverse Weather

Dry weather threatening crops in South America and falling U.S. reserves of corn and soybeans before next year’s harvest will eventually boost futures as cash bids rise, Klemme said.

U.S. soybean inventories before next year’s harvest will be 30 percent less than forecast in October, and corn reserves may drop to the lowest since 1996, the USDA said on Nov. 9.

U.S. farm exports will jump to a record $126.5 billion in the year started Oct. 1 as soybean sales surge and drought spurs more purchases of American wheat, according to the USDA.

Corn and soybean crops in Brazil and Argentina will be smaller than forecast by the U.S. government because dry weather delayed planting, said Michael Cordonnier, the president of forecaster Soybean & Corn Advisor Inc. in Hinsdale, Illinois.

“The big story is that global supplies are falling and demand is rising every year,” Grain Service’s Klemme said. “Buyers are quietly paying up to secure inventories.”

Before it's here, it's on the Bloomberg Terminal. LEARN MORE