US farmers forced to sell grain at low prices

Facing mounting bills and nervous creditors, US farmers are beginning to sell off their crop stockpile - sometimes at a loss - and easing a months-long logjam prompted by the lowest grains prices in at least five years.

Farmers now looking for cash to pay off debts and buy seeds for next season have been lured to sell by a four percent rise in corn futures over the past two weeks. That rise came after speculators with huge short positions were caught off guard when the US Department of Agriculture (USDA) cut its corn and soybean harvest views on Jan. 12.

Speculators slashed their bearish bets in the CBOT corn market by more than 36,000 contracts in the week ended Jan. 19. They also cut net short holdings by nearly 28,000 contracts in soybeans, according to data released by the Commodity Futures Trading Commission on Friday.

In the eastern Corn Belt, tiny bumps in grain basis bids - the differential with futures that is paid for cash deliveries - have helped generate some selling interest in recent days.

Archer Daniels Midland Co has lifted its spot corn basis bid at its massive Decatur, Illinois, processing plant by 6 cents per bushel over the past two weeks. Given gains in the futures market, cash prices there are up more than 20 cents a bushel.

But the amount of grain that moved into the supply chain is thought to be more of a trickle than a tsunami, say traders. And futures prices have not roared back, they say, in large part because of persistent concerns among grain traders over massive global stocks and tepid demand growth.

Soybean prices, up about 1 percent over the last two weeks, are facing headwinds as the harvest of another bumper South American crop ramps up.

Benchmark March futures for corn on the Chicago Board of Trade ended on Friday at $3.70-1/4 per bushel while March soybeans closed at $8.76-1/2 a bushel.