CHICAGO, (Reuters) – Wet corn is piling up in the U.S. Midwest, boosting premiums for dry grain and raising costs for exporters who already have been undercut in global markets by cheaper Argentine supplies, traders said on Tuesday.
The slowest U.S. corn harvest in three years was beset by rains and cool weather during the past two months that prevented later-planted crops from drying naturally in the fields. Corn supplies going into the harvest were the largest since 1988 and space in on-farm storage and dryers is at a premium.
“We’re getting to the point where guys’ bins are full and you don’t have anywhere to put it to blow air on it,” FuturesOne broker Matthew Wiegand said of grain dryers.
Wet corn may spoil if it is stored too long, and moldy grain is unusable for food or feed.
Exporters at the Gulf Coast were paying premiums of 3 to 4 cents per bushel for corn with 14.5 percent moisture loaded in the Midwest in barges, over wetter corn. Market specifications typically allow for corn with 15 percent moisture.
A grain shipper in Iowa along the Mississippi River said his elevator was running its dryer more than ever this year since it was built in 2010. Premiums for 14.5 percent moisture corn normally are about 2 cents.
“Blending (corn in) barges is an art,” he said. “14.5 percent and below is pretty much always worth more to exporters, but they aren’t always willing to pay a premium for it.”
The low-moisture premiums come on top of bids for corn barges arriving at the Gulf this week of 39 cents per bushel over Chicago Board of Trade December corn futures. Those bids, which account for grain costs, insurance and freight (CIF), have climbed 17 cents in a month. Corn futures settled unchanged at $3.45 per bushel.
Bids in the U.S. corn barge market help set the price in CBOT futures, with many of the CME Group’s designated corn delivery points located at elevators along the Illinois River.
The rising costs made U.S. corn even less competitive in export markets. Corn shipped from the Gulf Coast was priced at about $156 per tonne, compared to Argentine corn at roughly $155 per tonne, according to Thomson Reuters data.
Shipments of U.S. corn during the season that started on Sept. 1 totaled 6.6 million tonnes as of Nov. 16, down from 11.7 million tonnes during the same time period in 2016.