US Cash Grain Outlook: Soybean Prices Hit 3 1/2 Month High

SUPERIOR, Neb. (Dow Jones)--Farmgate soybean prices sat astride a 3 1/2 month high Thursday, averaging over $10.06 a bushel throughout the U.S. for the first time since early September. Elevator bids for cash corn--and many classes of wheat--stood at one to two week highs, as well.

"Sales to China remain at a blistering pace, as their appetite for U.S. soybeans has not slowed," said Ed Duggan of Top Third Ag Marketing on Wednesday, after the U.S. Department of Agriculture announced a 4 1/4 million bushel sale of soybeans to the world's preeminent soybean importer.

Meanwhile, cash corn prices have been receiving support from fears that last week's blizzard caused significant field losses to unharvested U.S. corn acreage.

MF Global analyst Rich Feltes said, "Our best contacts in Illinois/Iowa report 10-15 bushel per acre losses from [the] early December Midwest blizzard," which indicates total losses of 35-55 million bushels nationwide.

Domestic basis values were mixed Thursday--largely fluctuating by an average of less than 1 cent per bushel--although interior spring wheat premiums had plunged another 1 3/4 cents, resulting in a dip of 7 1/2 cents during the past week.

"The cash spring wheat market is feeling the effect of the slow export demand, as the domestic market is being flooded with cash wheat, driving down basis levels," said Kevin Kjorsvik of Benson Quinn Commodities, who added that storage "space is very limited in the domestic market."

U.S. grain futures were weaker overnight, closing out electronic trading with cash-contract declines of about 5-10 cents for corn, soybeans and wheat.

"Futures should open lower this morning, with most commodities seeing selling thanks to a suddenly stronger dollar," said Farm Futures market analyst Arlan Suderman. "Volume appears to be winding down ahead of the holidays, as investors/traders take profits, and square positions."

National cash price indices maintained by the Minneapolis Grain Exchange closed Wednesday at $10.06 1/4 for soybeans, reflecting an average basis of -53 1/4 cents relative to the day's settlement of January Chicago Board of Trade futures.

Domestic cash prices also averaged $3.57 for corn (-53 1/4 cents basis March CBOT), $4.36 3/4 for hard red winter wheat (-93 3/4 cents basis March Kansas City Board of Trade), $4.27 1/4 for soft red winter wheat (-$1.10 basis March CBOT) and $5.21 1/2 for hard red spring wheat (-22 3/4 cents basis March MGE).

CROP WEATHER
Grain belt radar screens were fairly quiet Thursday, aside from some light snow/freezing rain in the Upper Midwest, and widespread rain along the Texas-Louisiana Gulf Coast.

Freese-Notis Weather said Thursday "will be one of the warmer days that we have seen in quite a while" in the Midwest, with many Corn Belt locations exceeding the freezing mark.

The warmth will actually be detrimental to farmers with corn remaining to be picked, however, melting snow and muddying farm fields to the point where heavy harvest machinery is unable to operate.

Cooler weather will return to the Corn Belt Friday, accompanied by 1-4 inch of snow in southeastern Iowa, plus points south and east through Saturday. Forecasters warn that the same system will intensify and eventually produce deep snow in Virginia, North Carolina, Maryland, Delaware, southern New Jersey, and southern Pennsylvania.

-By Gary Wulf, Dow Jones Newswires; Gary.Wulf@dowjones.com

(END) Dow Jones Newswires
12-17-09 0939ET
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