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Grain Futures Outlook: Cash Prices Rise, Basis NarrowsJune 2nd, 2008Cash prices for corn, soybeans and wheat rose after Friday's market close, but actual basis levels were mixed to down. Soybean basis levels fell the sharpest of the complex, down $3.25 to-$79.25 from the Chicago Board of Trade's July contract compared to-$76 at market open Friday morning. The average cash price, however, rose to $12.84 3/4. Soymeal continues to gain product share over oil as it finds additionalsupport on concerns that the Argentine strike will shift demand to theU.S., said analyst Kim Rugel of Benson Quinn Commodities. "Soyoil was also seen losing ground to meal on weak global veg oil demand with Malaysian palm oil falling," Rugel said. Doane Agricultural Services notes talk of China increasing U.S. soybeanpurchases. The U.S. Department of Agriculture's crop progress reportwill be released at 4 p.m. EDT. The release will provide the first corn condition report of the crop year. "With most fields off to a slow start this first evaluation is likelyto show conditions are below normal," says Farm Futures Market AnalystArlan Suderman. "If 50% or less of the crop is rated good to excellent, the market'sfears of below average production are likely to be reinforced. However,the forecast for the next two weeks could help the crop catch up some." Suderman also said "demand news is light to start the week." National cash price indexes maintained at the MGE currently stand at$12.84 3/4 for soybeans, indicating an average basis level of -79 1/4cents, relative to July CBOT soybean futures contracts. Domestic cash prices average$5.55 for corn (-44 cents basis July CBOT corn), $7.61 1/2 for hard redwinter wheat (-40 1/2 cents basis KCBT July wheat), $6.13 for soft red winter wheat(-$1.49 basis CBOT July wheat) and $9.63 1/4 for hard red spring wheat(+90 1/4 cents basis MGE September wheat). Crop WeatherThe corn belt can expect temperatures to the warmer side of normal,according to a Freese-Notis forecast, continuing a trend started overthe weekend. "The warmer temperatures are aiding the newly planted corn,"Freese-Notis said. "The warm temperatures will be helping the corn tocatch up in its early growing cycle after the slow planting progress and the unseasonably cool weather." But rain is also continuing to shower the Midwest as well. The northernhalf of the corn belt should receive "plenty of rain the next severaldays," and heavy showers are forecast to hit the western corn belt later in the week," Freese-Notis said. The southern Plains "will see a lot of heat and drier than normalweather with this scenario, which, the firm said, will benefit cropsafter the recent weeks of rain. The firm also noted that the soft-red winter wheat crop is "in excellent shape at this time." - By Rebecca Townsend, Dow Jones Newswires. Click here for your Free Grain Futures Trading eGuide | |