Weekly Basis 01/22/2022

The Dow Jones Industrial Average settled at 34,265.37, down 1,646.44 points for the week.

Crude oil is at $84.86 late Friday, up 59 cents for the week.

The dollar index is at 95.63, up 0.46 for the week.

March (H) corn settled Friday at $6.16¼, up 20 cents for the week.

Dayton, Ohio Cargill is paying $6.16 for corn, even with the March futures, which is a steady basis with a week ago. Their fall delivery basis is steady at 30 under the December futures.

Poet at Iowa Falls is paying $6.16 for corn, even with the March futures, which is a 5 cent firmer basis than a week ago. Their fall 2022 delivery basis is steady at 30 under the December futures.

The March to July corn carry went from -3¾ to -7¾; 4 more cents of inversion. Very Bullish!

The CFTC’s Commitment of Traders Report (COT) is issued every Friday afternoon. It reports open interest as of the close of business the previous Tuesday.

The big spec funds cut 15,379 contracts from their corn position to leave them net long 224,828 contracts of corn. The index funds cut 3,418 contracts from their long position to leave them long 442,156 contracts of corn.

Corn open interest decreased 33,213 contracts to 1,828,316 contracts.

Eastern Corn Belt ethanol crush margin is $1.61 today compared to $1.66 last week and $1.15 a year ago. The price of corn subtracted from the value of processed products = ethanol crush margin.

March (H) soybeans settled at $14.14¼, up 44½ cents for the week.

Sidney, Ohio Cargill is paying $14.14 for beans, even with March (H) futures, which is a steady basis with a week ago. Their fall delivery basis is steady at 20 under the November.

Iowa Falls Cargill is paying $13.39 for beans, 75 under the March (H) futures, which is steady with a week ago. Their fall delivery basis is steady at 40 under the November.

The March to July soybean carry gained 3¼ cents to close at 13 cent carry. Negative influence on the price outlook because the market increased the return to storage.

The big spec funds cut 13,970 contracts from their position to leave them net long 71,317 contracts. The index funds added 11,650 contracts to their position to bring them net long 205,264 contracts of beans.

Soybean open interest increased by 7,505 contracts to 841,473 contracts.

The soybean crush margin was $3.93 yesterday, compared to $4.15 last week and $1.63 a year ago. Crush margin = value of the oil and meal extracted from a bushel of beans minus the cost of a bushel of beans.

CBOT July soft red winter wheat was up 37 cents this week to settle at $7.74¼. The local elevator is paying $7.39 for new crop wheat, 35 under the July wheat which is a steady basis with a week ago. King Milling in Lowell, Michigan is paying $7.61, 13 under the July for new crop, which is steady with a week ago.

The big spec funds cut 3,032 contracts to their soft red winter wheat (CBOT) position to leave them net short 42,144 contracts. The index funds added 4,533 contracts to their position to bring them net long 137,820 contracts of wheat.

Soft red winter wheat open interest increased by 13,184 contracts to 468,778 contracts.

KC July wheat was up 46¾ cents to settle at $7.98½.

The big spec funds cut 5,347 contracts from their hard red winter wheat position to leave them net long 11,824 contracts. The index funds added 1,726 contracts to their position to bring them net long 54,949 contracts of hard red winter wheat.

Hard red winter (KC) wheat open interest decreased by 2,898 contracts to 239,872 contracts.

September (U) 2022 spring wheat was up 41½ cents this week to settle at $8.96¾.

The Baltic Dry Bulk Index settled at 1,474, down 399 points for the week.

What you should have noticed:

The Dow down 1,646 points in just four days? Are you kidding me? That is what withdrawal from drugs… I mean, easy money, will do for an economic outlook.

Money flowing out the stock market is not going to go to 1.5% bank certificates of deposits or government bonds pay 1%. Looks like investors think commodities is a good place to park money.

The world market place (aka futures) is going to charge you 7 cents a bushel to store your corn from March to July, 4 more cents than last week. Are you willing to lose 7 cents a bushel this spring into summer so you can pay insurance, utilities and interest? Does that sound like good many management?

The soybeans crush margin is $2.30 better than a year ago. Is there any doubt why NOPA crush in December was an all-time high for any month?

The big spec funds were net sellers in three of the four commodities for the second consecutive week. That is bad news if you are a farmer! However, remember the Commitment of Traders Report (COT) Report is as of the close of business on Tuesday, which was not only the lowest price day for the week, it was the lowest price day since January 3rd for corn, December 30 for soybeans and last Friday for wheat. What do you think the specs were doing Wednesday, Thursday and Friday? We will see next week if you are right.

OK, Tuesday was the recent low day for corn, wheat and beans. Given the previous lowest price day before Tuesday was December 30 for soybeans, January 3 for corn and January 14 for wheat. Based upon the dates of the previous low price days, wheat has a different price outlook than corn and beans. Is it bullish or bearish?

Ocean freight rates are reasonable again!