U.S. farmers jump on futures rally to sell corn, soybeans

[February 04, 2015]  By Christine Stebbins
 
 CHICAGO, Feb 3 (Reuters) - U.S. Corn Belt farmers on Tuesday actively sold corn and soybeans for the first time this year amid a healthy increase in futures prices, cash merchandisers said.

"There were a lot more sales than what I've seen in a couple weeks," said J.R. Kennedy, general manager with Snittjer Grain Co in Wellsburg, Iowa.

On Tuesday, Chicago Board of Trade March corn closed up 16 cents at $3.85-3/4 a bushel and March soybeans closed up 27-1/2 cents at $9.87.

"We've been buying beans today with this rally. It's been quiet up until now," another Iowa grain merchandiser said.

Corn and soybean futures fell to multi-year lows amid the record harvest last fall before recovering. But prices slid another 6 percent in January on government estimates showing the world is flush with grain after years of drought.

Merchants had kept their cash basis premiums firm. So when futures spiked, many farmers called in to book sales.
 

"Farmers have been selling corn and beans today. Most of it is what's in storage here," an Ohio merchandiser said.

Farmers are usually eager to sell grain as soon as the new tax year starts on Jan. 1, setting up their finances for winter discussions with bankers, land owners and suppliers about costs for the coming planting season.

But this year many held back more grain than usual, relying on the extra storage built and cash reserves from recent boom years to wait out a price rally.

Jim Reed, a grain farmer on the Illinois Corn Marketing Board, said on Monday he had only sold about 40 percent of his 2014 harvest: "We're holding on to see if there's some kind of a rally moving forward into the spring planting season."

Farmers still hold roughly two-thirds of remaining free stocks of grain left in the country, giving them the upper hand in affecting the current pipeline supply.

They will be tracking Chicago futures closely in February as the monthly average futures prices will become the price guarantees written into 2015 crop insurance policies.

Kennedy said Tuesday's sales show a pent-up eagerness of farmers now to price into a rally.

"It wasn't tremendous amount yet. A lot of calls, people thinking about it," he said. "If there was another uptick tomorrow, we'll see some more farmer movement." (Reporting by Christine Stebbins; Editing by Steve Orlofsky)

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