KANSAS CITY (Dow Jones)--U.S. cash corn and soybean basis firmed Tuesday as producers remained tight-fisted with their on-farm stocks after cash grain markets had recently crumbled to three-month lows.
"As the markets have moved down, particularly in corn, the [cash grain] movement has really slowed down, so basis levels have a firm undertone," said Don Roose, analyst and president of U.S. Commodities in West Des Moines, Iowa.
Interior corn and soybean basis held mostly steady to firm Tuesday morning, while wheat basis as select locations across the country was mostly steady.
Chicago Board of Trade corn futures are called to open higher, as prices bounce off their lows in a technical recovery, traders said. While large grain and soybean supplies remain key issues for the markets, prices are expected to rise as traders buy back previously sold positions and as they begin to find value with prices near their lows.
CBOT corn is called 2-3 cents a bushel higher, soybeans are seen 3-5 cents higher and wheat futures are called 7-9 cents higher.
Quality issues such as poor test weights are a concern in both the domestic and export corn markets, according to Roose.
"This is being watched very, very closely, and it is an issue out here, so good quality corn is at a premium," he said.
Weather conditions this week are mostly clear for the Midwest, which will aid grain transportation to the elevators from the farm. As long as weather isn't a factor, farmers may want to expedite corn marketing in February due to the quality concerns.
In export news, Japan is seeking 85,000 tons of wheat, including 65,000 from the U.S., in a routine tender to be concluded Thursday for delivery April 1 to 13.
National cash price indices maintained by the Minneapolis Grain Exchange closed Monday at $8.61 1/4 for soybeans, reflecting an average basis of -48 1/2 cents relative to the days settlement of March CBOT futures.
Domestic cash prices also averaged $3.22 for corn (-37 cents basis March CBOT), $3.99 for hard red winter wheat (-88 1/2 cents basis March KCBT), $3.86 3/4 for soft red winter wheat (-88 cents basis March CBOT) and $5.02 for hard red spring wheat (-3/4 cent basis March MGE).
CROP WEATHER
No significant weather threats to the soft red winter wheat belt are expected in the next five to seven days, said Joel Burgio, meteorologist with DTN Weather.
In the central and southern Plains, the Texas Panhandle and southwestern Kansas have a chance of light snow on Wednesday into Thursday. No cold significant weather threats are seen for the hard red winter wheat belt, though the six- to 10-day outlook is "somewhat colder," he said.
-By Tom Sellen, Dow Jones Newswires; 913-322-5177; tom.sellen@dowjones.com
(END) Dow Jones Newswires
02-02-10 0951ET
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