Soybean Cash Premiums Narrow on Barge-Rate Drop, Farmers Sales

March 26 (Bloomberg) -- Cash bids for soybeans at export terminals near New Orleans narrowed their premium to Chicago Board of Trade futures as lower shipping costs boosts the amount of the grain available to exporters.

The basis, or the cash-price spread with futures including storage and shipping costs, narrowed to 55 cents to 59 cents above the CBOT’s May contract from 59 to 61 cents yesterday, U.S. Department of Agriculture data show. The cost of moving grain by river from Chicago to New Orleans has dropped 52 percent in February and March to $15.66 per short ton (907 kilograms), USDA data show.

“As barge freight gets cheaper, they don’t have to pay as much to get the beans,” said Kent Jessen, a director of merchandising at Heartland Co-op in West Des Moines, Iowa. “When barge freight gets cheaper, the Gulf will cheapen up a bit. We’ve definitely seen lot more cash movement in soybeans in the last two weeks.”

Farmers sold 953,711 bushels of soybeans to Illinois River loading facilities from Chicago to St. Louis yesterday, up 47 percent from 648,216 bushels shipped a week earlier, the CBOT reported today on its Web site.

Soybean futures for May delivery fell 7 cents, or 0.7 percent, to $9.44 a bushel. Chinese oilseed processors requested the government impose stiffer import taxes on soybeans. The most-active contract still has climbed 8.3 percent this month.

More soybeans have been moving to U.S. ports because farmers need cash for fertilizer or to pay rent on land before planting the next crop, Jessen said.

“We had a good futures rally, so farmer movement needs to take place before they get planting, and some have money issues,” Jessen said. “They all made agreements for high- priced cash rent, and the bank is not going to loan them all that money.”