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Weekly Basis 02/05/2022

The Dow Jones Industrial Average settled at 35,089.74, up 364.27 points for the week.

Crude oil was at $92.19 late Friday, up $4.91 for the week.

The dollar index is at 95.47, down 1.76 for the week.

March (H) corn settled at $6.20½, down 15½ cents for the week.

Dayton, Ohio Cargill is paying $6.21 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, 4 under the March futures, which is a 4 cent weaker basis than a week ago. Their fall 2022 delivery basis is steady at 30 under the December futures.

The March to July corn carry was steady at -2, neutral for the week, but bullish for the trend.

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 added 12,792 contracts to their corn position to bring them net long 289,313 contracts of corn. The index funds cut 6,761 contracts from their long position to leave long 435,629 contracts of corn.

Corn open interest increased by 75,727 contracts to 1,979,521 contracts.

Eastern Corn Belt ethanol crush margin is $1.24 today compared to $1.31 last week and $1.10 a year ago. The price of corn subtracted from the value of processed products = ethanol crush margin.

March (H) soybeans settled at $15.53½, up 83½ cents for the week.

Sidney, Ohio Cargill is paying $15.53 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 $14.79 for beans, 75 under the March (H) futures, which is steady with a week ago. Their fall delivery basis is 35 under the November, which is a 5 cent firmer basis than a week ago.

The March to July soybean carry settled at 0 cents of carry, losing 3½ cents. Bullish!

The big spec funds added 42,832 contracts to their position to bring them net long 132,483 contracts. The index funds added 807 contracts to their position to bring them net long 191,922 contracts of beans.

Soybean open interest increased by 122,677 contracts to 1,006,519 contracts.

The soybean crush margin was $3.25 yesterday, compared to $3.09 last week and $1.67 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 down 20¼ cents this week to settle at $7.61¾. The local elevator is paying $7.27 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 $7.49, 13 under the July for new crop, which is steady with a week ago.

The big spec funds added 13,462 contracts to their soft red winter wheat (CBOT) position to bring them net short 46,462 contracts. The index funds added 1,445 contracts to their position to bring them net long 139,667 contracts of wheat.

Soft red winter wheat open interest decreased by 5,978 contracts to 492,052 contracts.

KC July wheat was down 13¾ cents to settle at $7.90¾.

The big spec funds cut 1,388 contracts from their hard red winter wheat position to leave them net long 14,424 contracts. The index funds cut 520 contracts from their position to leave them net long 55,535 contracts of hard red winter wheat.

Hard red winter (KC) wheat open interest increased by 4,085 contracts to 246,168 contracts.

September (U) 2022 spring wheat was down 10¾ cents this week to settle at $8.81¼.

The Baltic Dry Bulk Index settled at 1,425, up 123 points for the week.

What you should have noticed:

The Dow is back above 35,000.

Crude oil blasted higher… $40 higher than this week a year ago.

The dollar index blasted lower. It should have helped wheat more than it did.

The spec funds can buy a lot wheat contracts before anyone would say they are “too long”. That is not the case with corn and beans. But then, the seasonal trend is down on wheat, up on corn and up on beans after Wednesday.

Ethanol crush is back above a year ago as the crush products and corn values came together the past week.

It is remarkable that the soybean crush margin firmed despite soybeans being up 83 cents.

The big spec funds were net buyers of row crops and net sellers of the wheats.

Soybean open interest increased by more than 10% for the week (as of Tuesday). A tremendous increase and they were buying. But the old crop soybean contract high price was made Wednesday and sideways Thursday and Friday. Probably somebody will say too many longs… However, the open interest is about 340,000 contracts less than last spring when the highs were made. On the other hand, the big specs long position is already 45,000+ contracts more than they were when last year’s highs were made.

Ocean freight rates are still reasonable!

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