Cash bids for U.S. corn were higher Friday, rising in unison with futures as the market continued to digest government stock data showing smaller inventories of U.S. corn supplies.
The market is effectively pushing prices higher in an effort cool consumption of corn inventories that are projected at precariously low end-of year levels, a cash-connected CBOT broker said.
Corn inventories are projected at the lowest levels in 15 years, a feature limiting farmer selling of supplies.
Producers are becoming quite bullish, and what grain isn't booked probably won't be until later in the marketing year, particularly in the face of strong global demand, analysts said.
Meanwhile, the export market is mixed, as even though there has been spike in corn demand, elevated shipping costs are limiting what can be paid for the grain.
The cash corn basis has remained firm in recent weeks, supported by strong demand from processors and exporters. Fresh export demand and concerns new crop plantings may not replenish tight projected end of year supplies is supporting the market.
An increase in barge freight rates amid high water levels on the Mississippi River aides the higher basis theme, a cash-connected CBOT broker said.
The corn market continues to face a situation where commercials are large holders of cash supplies, forcing end users to bid up basis levels to get supplies flowing in the cash pipeline.
The soybean export basis is under pressure from lower basis levels at ports in Brazil and talk of China rolling back cargoes of previous purchases in export markets amid poor domestic crush margins, analysts said.
Gulf midday barge freight basis reported by USDA Friday said the spread for spot soybean bids ranged from 48 cents to 60 cents over May CBOT futures down 3 cents from Thursday, and corn bids ranged from 43 cents to 55 cents over May futures, down 2 cents from Thursday.
The export basis, or difference between cash prices and futures, was unchanged to up 5 cents for wheat, unchanged for corn, and flat to up 2 cents for soybeans at the Louisiana Gulf, according to U.S. government data.
The uncertainty of weather heading toward spring plantings in the Midwest and its impact of final acreage totals will keep a very cautious view on selling this year, particularly in the face of volatile price action.
