Bloomberg reports that Soybean, Corn Premiums Rise as Farmers Slow Sales of Inventory.
(emphasis mine) [my comment]
Soybean, Corn Premiums Rise as Farmers Slow Sales of Inventory
July 06, 2010, 5:40 PM EDT
By Jeff Wilson
July 6 (Bloomberg) -- Cash premiums for soybeans shipped to export terminals near New Orleans rose relative to Chicago futures after farmers halted sales of dwindling inventories of last year' s crop. Corn premiums widened after futures fell.
The spot-basis bid, or premium, for soybeans delivered this month was 75 cents to 89 cents a bushel above August futures, compared with 74 cents to 83 cents on July 2, U.S. Department of Agriculture data show. The corn premium rose to 38 cents to 41 cents a bushel September futures from 38 cents to 40 cents on July 2.
“Farmers are not selling soybeans” after rains delayed planting and stunted early development of this year' s crop, said Tim Emslie, a research manager at Country Hedging Inc. in Inver Grove Heights, Minnesota. “We did see a little corn selling early, but that dried up after futures fell.”
Soybean futures for August delivery fell 4 cents, or 0.4 percent, to $9.405 a bushel on the Chicago Board of Trade. The oilseed climbed 1.5 percent in the previous two sessions after the USDA said that inventories as of June 1 dropped to the lowest level since 2004.
Soybean futures rallied 5% in the last two days. This rally is being driven by the growing shortages in the physical market.
My reaction: Remember that the fall harvest is over two months away. I expect the soybean rally to continue and intensify quickly.