Soybean Cash Premiums Narrow as Sales Rise in South America

April 1 (Bloomberg) -- Cash bids for soybeans at export terminals near New Orleans narrowed their premium relative to futures on the Chicago Board of Trade as farmers in Brazil and Argentina increased sales, reducing demand for U.S. supplies.

The so-called spot-basis bid, or premium, for soybeans in New Orleans was 51 cents to 52 cents a bushel above the price of May futures, compared with 50 cent to 54 cents yesterday, U.S. Department of Agriculture data show. The spread was down from 58 cents to 59 cents a week earlier.

Soybean futures for May delivery were unchanged at $9.52 bushel. Yesterday, the price surged 5.3 percent, the most since Oct. 29.

“We had big farmer selling of beans in Brazil and Argentina yesterday,” said Charlie Sernatinger, a market analyst at Fortis Clearing Americas LLC in Chicago. “Domestic cash beans are weaker, and the Gulf beans have a big air pocket between bids and offers.”

Exports by Brazil, the second-biggest soybean shipper behind the U.S., surged 88 percent to 2.64 million metric tons in March from a year earlier, the Trade Ministry said today in a report.

U.S. farmers hold half of the soybean supplies left from last year’s harvest, which may limit improvement in basis levels without adverse weather affecting crops this year, said Tim Abel, a commodity risk consultant for Mid-Co Commodities Inc. in Bloomington, Illinois.

Inventories Drop

U.S. inventories as of March 1 fell 9.2 percent to 1.302 billion bushels from a year earlier, the USDA said yesterday. Farmers held 657 million bushels, or 50 percent of the total, up from 41 percent a year ago.

Farmers have been limiting sales as lower transportation rates are signaling ample supplies of barges.

The cost of moving grain by river from Chicago to New Orleans has fallen in the past week by $1.27 to $14.39 per short ton (907 kilograms), the lowest since May 2007, USDA data show. Shipping from St. Louis fell $1 to $8.10 per short ton. Barge companies are running as much as 25 percent below breakeven, Abel said.