CHICAGO Jan 8 (Reuters) - Cash premiums for spot shipments of corn and soybeans to processors around the U.S. Midwest rose to four-month peaks on Wednesday as buyers scrambled for supplies after stormy and frigid winter weather slowed deliveries.
Basis bids for barge loads of soybeans delivered to export elevators at the Gulf Coast also hit the highest levels since September as ice clogged rivers in the central Midwest while export demand for the oilseed remained strong.
A bitter cold snap that sent temperatures to record or near-record lows in the nation's midsection early this week has loosened its grip slightly, but shipping challenges remained.
"We're thawing out a little, but it's going to take a while to get back to normal. Logistics are a mess," said a grain merchant.
Heavy snow that preceded the extreme cold prevented some farmers from accessing their grain storage bins while icy, snow-covered roads impeded truck deliveries to processors.
Midwest rivers which have not been closed for the season remained open to navigation, but ice buildup created numerous bottlenecks that have slowed barge shipments from the central farm belt to the Gulf Coast. Some 60 percent of all U.S. corn, soybean and wheat exports exit the country via the Gulf.
"The cash market is firming as country movement has come to a standstill across the interior market," said Karl Setzer, analyst at MaxYield Cooperative in West Bend, Iowa.
There is "a simple unwillingness to liquidate any inventory at today's values," he added.
Cash soybean premiums at the closely tracked processor in Decatur, Illinois, home of Archer Daniels Midland Co, jumped 5 cents late on Tuesday and 5 more cents on Wednesday, while corn premiums surged 15 cents at midweek. Both were at their highest levels since September.
The bitter winter weather combined with a downturn in Chicago Board of Trade futures resulted in farmer sales and deliveries grinding to a virtual halt.
But demand for soymeal has declined because of lower prices for dried distillers' grain (DDGs) - a byproduct of corn-ethanol that has high protein content and competes with soymeal. The slower demand has kept a lid on cash prices despite the slow soybean transportation.
A power outage early Tuesday shut down a Bunge Ltd soy processing plant in Decatur, Indiana. Power was restored on Wednesday afternoon and crews were checking for any damages to equipment, a company spokeswoman said.
A Cargill Inc soy plant in Sidney, Ohio, was partially shut down earlier this week because of frozen equipment, the company said.
Barge shipping delays and surprisingly strong late-season export demand, with China booking 465,000 tonnes in the past two days, fueled the gains in the river market, traders said.
Basis bids for spot soybean barges delivered to the Gulf, including insurance and freight costs, jumped to $1.32 per bushel above CBOT March futures on Wednesday, the highest spot bid since early September.
Exporters indicated they would be willing to pay premiums of 3 to 6 cents a bushel over the posted spot bid for afloat barges near the Gulf or barges loaded south of the problem areas on the Illinois and mid-Mississippi rivers.
With the upper Mississippi River closed for the winter, exporters rely on shipments from elevators along the Illinois River, which typically remains open year-round. But ice has formed faster than normal given low water and frigid weather.
Traffic was restricted to one-way for 10 miles near Peoria, Illinois, because ice has narrowed the shipping lane. Barge shippers were breaking up surface ice to keep the channel open, but the ice floes were stacking up and refreezing in larger blocks at locks and dams, known in river parlance as gorging, said U.S. Coast Guard spokesman Colin Fogarty.
"It really becomes a problem at the locks and dams. You have such a big tonnage of ice and it's hard to break up so if it gets really bad they can't even open the lock and dam doors," Fogarty said.
The Army Corps of Engineers was restricting the width of barge tows passing through Illinois River locks due to the ice buildup so larger tows need to be broken into pieces, which more than doubles the locking time. Some locks required assistance from helper boats for getting in an out of lock chambers.
Low water on the Mississippi River near St. Louis compounded the barge shipping woes as barges need to be loaded with less grain so they sit higher on the water. Shippers are also reducing the size of tows because barges parked along the shore are nearer to the shipping channel due to low water.
The Coast Guard temporarily closed the Mississippi River on Wednesday from mile marker 93 to 94 near Jacob, Illinois, because two boats had grounded, the latest of numerous groundings in recent weeks due to low river levels.