By Michael Hirtzer
CHICAGO, April 8 (Reuters) – U.S. corn farmers could be
tempted to sell to stretched processors if government data on
supplies due on Thursday helps push cash prices over a
$4-per-bushel psychological barrier.
With futures prices slipping, Archer Daniels Midland Co
and Ingredion Inc are both offering premiums
for cash corn at the highest levels since September to ensure
enough supplies to keep on crushing to make products such as
ethanol and dextrose, grain brokers said.
Processors are unwilling to push premiums much higher as
grain stocks remain lofty, suggesting a rally in futures will be
needed to push outright prices to a level where farmers will
sell.
“Farmers are being a real tight holder, including me,” said
Cory Ritter, who grows corn and soybeans in central Illinois.
“When the market gets a bump, we’ll reward it.”
On Wednesday, CBOT corn fell for the third straight session
to $3.79-1/4 per bushel and the contract is hovering near
multi-year lows <0#C:>.
Premiums have risen steadily and in Decatur, Illinois, where
ADM has a massive processor, bids for corn were 14 cents per
bushel above futures. Outside Chicago, where Ingredion has a
corn mill, bids were 8 cents above futures, the brokers said.
Cash bids are typically made at a differential to the
futures price which is known as the basis.
ADM declined to comment. Ingredion did not respond to a
request for comment.
The USDA is expected to raise its forecast for end-season
stocks on Thursday.
If the figures are below expectations, that could trigger a
rally in CBOT futures that, combined with the cash
premiums, sparks selling by farmers.
“You’ll see farmers sell at $4,” said broker Mike Hall, who
advises commercial grain elevators.
Without a rally, farmer sales may not resume until June -
when their new crop is planted and pollinated, and they feel
confident about harvest prospects.
“Right now, there’s a premium but when you get into May and
June slots, the (corn) bid is well below the five-year average,”
Hall said.
(Reporting by Michael Hirtzer; Editing by Bernard Orr)