* Spot CIF corn basis jumps 7 cents amid thin supply
* Domestic basis at record highs at many locations
* Ethanol output booming, Asian import demand seen rising
By Karl Plume
CHICAGO, June 13 The scramble for scarce stocks
of U.S. corn heated up on Wednesday, as exporters at the Gulf
Coast bought corn barges at the highest price in a month,
suggesting renewed competition for domestic users whose basis
bids were already near record-high levels.
The move may mean the end for a two-tiered market that had
developed over the past month as basis bids in the export market
eased amid slow overseas demand while red-hot domestic demand,
particularly from the ethanol sector, lifted interior bids.
"We've turned a corner recently. The global corn trade is
starting to pick up. It's started trading in Asia at a discount
to Australian wheat," said Terry Reilly, analyst with Citigroup.
"You can't really source the cheapest corn in the world from
Ukraine right now so traders are looking to India and the United
States and that's supporting the CIF market," he said.
Weeks of limited farmer sales have kept available supplies
the marketing pipeline razor thin and some Gulf exporters were
short corn, traders said.
Spot barges of corn at the Gulf Coast traded as high as 89
cents a bushel over Chicago Board of Trade July futures
including cost, insurance and freight (CIF), up 6 cents from
late Tuesday and the highest in a month.
Cash grain traders said basis values were likely to stay
elevated for up to two months as the market scrambles for
whatever corn becomes available before the next harvest.
"I don't think you're going to see basis levels come down
any time soon," said one corn dealer. "It's just too tight."
End-of-season stocks are projected by the U.S. Department of
Agriculture to shrink to a 16-year low.
Corn users in the interior United States have been
aggressively bidding for weeks, with basis values at many
locations at historical highs and climbing.
Demand from the ethanol sector has been particularly strong,
with plants in some areas outbidding the Gulf by 10 to 20 cents
a bushel for spot shipments.
Ethanol makers raised production by 16,000 barrels per day
last week to 920,000 barrels per day, according to Energy
Information Administration data.
Spot basis bids for corn in Decatur, Illinois, were 53 cents
over CBOT July futures, hovering just below an all-time high of
60 over posted in mid-May. In Cedar Rapids, Iowa, the spot basis
was 54 cents over, the highest on record, Reuters data showed.
(Reporting by Karl Plume; Editing by David Gregorio)