US farmers grabbed the highest grain prices in a fortnight to offload some of their massive stocks of corn and soyabeans early last week as they sought cash to pay for spring expenses like seed and farmland rent, trade sources said. By the end of the week, those sales had helped replenish supplies at many Midwest elevators and processors, as well as at Gulf Coast export terminals. The supplies outstripped tepid demand, cash grain traders said, and premiums slipped back.
"Every single little rally we get on the board is met by a wave of farmer selling, which brings prices right back down. And there's still plenty out there to sell," said a cash grain merchant in Minnesota. US farmers have been sitting on huge stockpiles of grain for months hoping for higher prices, and many are now lowering their expectations as the next planting season nears and crop prices remain near multi year lows.
An accelerating South American harvest has blunted US export demand while domestically, weak processing margins have kept demand subdued. Farmers that had initially aimed to sell corn at $4 a bushel and soyabeans at $9 a bushel sold for less as stubbornly low prices heaped more pain on the struggling farm economy.
"Thirty to 40 percent of rural America in some degree is in a level of financial difficulty at this level of prices," said Jim Bower of Bower Trading. Benchmark Chicago Board of Trade corn and soyabean futures began the week at two-week highs of $3.69-1/4 a bushel and $8.87-1/2 per bushel, respectively. But they then fell for four straight sessions amid a string of bearish news, including fresh US Department of Agriculture projections for continued plentiful stocks and tepid demand.
Overwhelming supplies prompted dealers at a corn plant in Blair, Nebraska, to cut their spot basis - the differential to futures - by 3 cents from last Friday, despite futures falling 11 cents. A Sioux City, Iowa, soyabean processor dropped its basis by 4 cents, even as futures fell 23-1/4 cents. Cash premiums for spot barge shipments of corn at Gulf terminals fell by 3 cents this week due to a glut of grain at the port. Spot soyabean bids fell 5 cents this week and notched a fresh five-year low. Gulf-bound corn barge shipments over the past four weeks are up 13 percent from a year ago, while soyabean shipments are up 20 percent, according to US Army Corps of Engineers data.