US river logistics ease to bring pressure to CIF Gulf corn prices
Improving logistics along the key river supply routes into the US Gulf are bringing downward pressure to physical differentials in the main export hub, trading sources said Tuesday.
Both premiums and outright values have risen in recent days as the main river network saw traffic slowing on a build-up of ice.
According to USDA data, US Gulf corn bids have moved up, peaking on January 17 at $4.02/bu – representing a 49 cent premium over the front month March CBOT corn futures contract.
The weekly grains transportation report, published January 18, highlighted the issues that ice had brought to the Mississippi, Ohio and Illinois rivers, as grain barge tonnages for the first two weeks of January fell 63% versus the same period of 2017 – to 496,000 mt.
US export inspections for the week ending January 18 shows 320,638 mt of corn slated to move out through the US Gulf, mostly to South and Central American destinations, as the hub took nearly half of the total corn volumes inspected for export that week.
But, with ice starting to break up and movement becoming easier, prices have eased.
As of January 22, CIF bid indications had fallen to $3.94/bu, equating to a 42 cent premium over the CBOT front month contract.
“We have seen CIF slip a bit… and logistics are maybe trending a little better,” one market source said of the move, adding that the early part of January was often the worst period for logistics.
“The logistical problems with trucks and trains are now getting cleaned up, the barges are about to move… All of this is having a slightly negative effect on US basis levels,” said Charlie Sernatinger of ED&F Man in a note.
As yet, FOB differentials for cargoes heading out of the US Gulf remain well supported, with 59 vessels loading between January 11 and 21, according to the USDA’s transportation report.
Agricensus assessed the FOB US Gulf differential for February loading at a 58 cent premium to the front month CBOT contract Tuesday, up from 54 cents over on January 11.