By Karl Plume and Michael Hirtzer
CHICAGO Jan 8 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
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
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
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,"
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.