InfoSAWIT, CHICAGO – The spot price basis for corn and soybeans shipped via barges to terminals on the Gulf Coast of the United States showed mixed movements on Friday (January 5). A sharp decline in futures contract values provided some support, but prices remained pressured by increasing supply along export routes and stable to weakening transportation costs, according to traders' reports.
The surge in cash grain prices earlier this week prompted some farmers to sell their harvests to river elevators serving barge shipments, thereby increasing supply availability, traders noted.
As reported by InfoSAWIT from Reuters, weak export demand is holding back price increases, as global buyers tend to wait for new harvest supplies from Brazil. The country is expected to record a record soybean harvest and become the second-largest corn producer in the world.
According to the latest data from the U.S. Department of Agriculture (USDA), U.S. corn exports last week reached 776,992 metric tons, the lowest in the last 14 weeks. Meanwhile, soybean exports only reached 484,699 tons, the lowest level in nearly six months. Both figures fell below market expectations.
Barge freight rates on the Illinois and mid-Mississippi Rivers remained unchanged on Friday, although they dropped by 25 points compared to the previous rates. Navigation on the Illinois River was also reported to be slow due to ice restrictions, adding challenges to transportation.
CIF and FOB Prices for Corn and Soybeans
Soybeans CIF: Barges loaded in January were priced at 81 cents above the March CBOT contract (SH25), up 2 cents from the previous day.
Corn CIF: January barges fell 1 cent to 66 cents above the March CBOT contract (CH25).
Soybeans FOB: Export premiums for January shipments were not quoted, while February offers fell 3 cents to around 95 cents above the March contract.
Corn FOB: January shipment offers from the Gulf remained stable at 86 cents above the March contract.
Increased Global Competition
The U.S. grain market is now facing pressure from increased production in Brazil, which could provide cheaper alternatives for global buyers. On the other hand, cold weather conditions in the Midwest are also slowing domestic distribution.
With weak global demand and continuously increasing supply, corn and soybean prices in the U.S. are expected to experience volatility in the coming weeks. (T2)