| CHICAGO, Sept 16
CHICAGO, Sept 16 U.S. grain dealers will need to
boost their cash market bids to buy corn and soybeans this fall
as growers try to hold as much of their projected record
harvests on farms as possible.
Analysts and grain dealers said basis bids need to rise to
entice farmers to sell as a futures market slump has growers
facing losses on new sales. Soybean bids have risen each October
during the past three years, while cash market strength in corn
has been spotty during the recent bumper harvests.
Commercial needs, though short of the massive production
expectations, are huge. The U.S. government has forecast record
usage of both corn and soybeans in the 2016/17 marketing year.
Farmers required to fulfill immediate cash flow needs will
likely move their soybeans first as strong export demand has
limited the drop in oilseed prices.
"If you are a farmer and for a truckload of beans you get
$8,000 and (for) a truckload of corn you get $2,400, what are
you going to sell first?" said Glenn Hollander, a Chicago-based
grain merchandiser for Hollander & Feuerhaken.
Corn futures plunged 22.1 percent during the summer,
compared to a 12.6 percent drop in soybeans. To spark any
selling interest in corn, the basis needs to lead the way.
"If the farmer holds onto his corn for dear life, the
domestic processor and the ethanol people are going to have to
bid up for corn," Hollander added.
During the past three years, soybean basis bids have risen
by an average of 4.7 cents during October, according to a
sampling of elevators and processors around the U.S. Midwest.
The average corn basis, which also includes bids from
ethanol plants, rose by 14.6 cents in October 2015, with the
biggest gains coming at river elevators.
But the glut of corn outstripped demand at commercial
operators in previous years, with the average corn bid falling
by 1.9 cents in October 2014 and by 4.0 cents in October 2013.
This year, any basis gains are likely to be temporary as big
sowings of both crops are expected in South America, which could
lead to further increases in the already mammoth supplies in
"I think you will see some regional recovery in basis," said
Bob Utterback, president of Utterback Marketing in Indiana. "But
the real question will be how the basis will be in February,
March time frame."
(Reporting by Mark Weinraub; Editing by Paul Simao)