Domestic basis premiums for US cash grains were showing little response, despite a continued erosion in futures prices Wednesday.
"The cash [basis] market is holding steady at best in many regions," said Iowa commodity trade advisor Karl Setzer.
"Even buyers who are in need of grain in the Midwest are unwilling to push for deliveries, as they know weather conditions will prevent them from taking place. Exporters can see a large volume of South America grain is ready to hit the world market."
Prices being paid for most classes of US cash grain currently languish at their lowest levels in more than 2-3 months.
"The grains are in need of 'white knight'," said Top Third analyst Mark Gold. "If China continues on its present economic policy, the U.S. dollar may remain strong. Long-term trend-lines in the crude oil have been broken. Washington may be changing the rules of investment, which could certainly curtail outside trading in commodities."
Feed grain futures perpetuated a two-week decline again overnight, closing with cash-contract losses of 6 1/2 cents per bushel (0.68%) for soybeans, 2 3/4 cents (1.19%) for oats, and 1 1/4 cents (0.34%) for corn.
"Prospects for record crops in South America remain a bearish influence," said Doane Agricultural Services. "China continues to be a large customer for U.S. soybeans, although demand is likely to soon shift to South America. Also, there is concern that further monetary tightening in China will constrict their demand for commodities."
Wheat futures were firm overnight, closing with cash-contract gains of up to 1 cent (0.20%) for soft red winter wheat.
"The [wheat] market most likely will remain slow, as it seems buyers got good coverage last week, and producers are disinterested in selling at these levels," said Country Hedging analyst Brian Liedl.
National cash price indices maintained by the Minneapolis Grain Exchange closed Tuesday at $8.96 1/4 for soybeans, reflecting an average basis of -51 1/4 cents relative to the days settlement of March CBOT futures.
Domestic cash prices also averaged $3.22 1/4 for corn (-40 cents basis March CBOT), $4.08 1/2 for hard red winter wheat (-91 cents basis March KCBT), $4.00 1/2 for soft red winter wheat (-93 1/2 cents basis March CBOT) and $4.99 1/4 for hard red spring wheat (-11 cents basis March MGE).
CROP WEATHER
Calm weather conditions dominated much of the central US Wednesday, aside from light snow in the western Corn Belt, and light freezing rain in the northern Delta.
"Things are pretty quiet...all across the nation's midsection, but by this time tomorrow we will see the radar start to 'light up' over the southern Plains, as a crippling winter storm gets underway," said Freese-Notis Weather.
The storm is forecast to generate heavy snow and freezing rain across much of Texas/Oklahoma on Thursday and Friday, producing 18-24 inch snow depths in some areas. That snow/ice/rain is expected to reach the Delta and Southeast by the end of the week, as well.
"The winter wheat crop in that region will benefit from this moisture, but it will be a storm that will paralyze transportation, cause widespread power outages, and stress cattle in the big feedlot operations," said the service.
The Midwest will miss out on the bulk of the precipitation from this storm, although temperatures will plunge to levels 10-15 degrees Fahrenheit below normal.
-By Gary Wulf; Dow Jones Newswires; Gary.Wulf@dowjones.com
(END) Dow Jones Newswires
01-27-10 0952ET
Copyright (c) 2010 Dow Jones & Company, Inc.
