Weekly Basis 02/19/2022

The Dow Jones Industrial Average settled at 34,079.18, down 658.88 points for the week.

Crude oil was at $91.57 late Friday, down $2.61 for the week.

The dollar index is at 96.07, unchanged for the week.

March (H) corn settled at $6.54¼, up 3¼ cents for the week.

Dayton, Ohio Cargill is paying $6.49 for corn, 5 under the March futures, which is a 5 cent weaker basis than a week ago. Their fall delivery basis is steady at 30 under the December futures.

Poet at Iowa Falls is paying $6.47 for corn, 7 under the March futures, which is a 3 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 went from -5¾ to -7¼ this week. 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 added 5,840 contracts to their corn position to bring them net long 259,453 contracts of corn. The index funds cut 6,847 contracts from their long position to leave net long 434,908 contracts of corn.

Corn open interest increased by 64,665 contracts to 2,062,677 contracts.

Eastern Corn Belt ethanol crush margin is $1.52 today compared to $1.28 last week and $1.52 a year ago. The price of corn subtracted from the value of processed products = ethanol crush margin.

March (H) soybeans settled at $16.01½, up 18½ cents for the week.

Sidney, Ohio Cargill is paying $16.04 for beans, 3 over the March (H) futures, which is a 3 cent firmer basis than a week ago. Their fall delivery basis is steady at 20 under the November.

Iowa Falls Cargill is paying $15.27 for beans, 75 under the March (H) futures, which is steady with a week ago. Their fall delivery basis is steady at 35 under the November.

The big spec funds added 776 contracts to their position to bring them net long 140,298 contracts of beans. The index funds added 2,553 contracts to their position to bring them net long 190,352 contracts of beans.

Soybean open interest increased by 46,146 contracts to 1,124,836 contracts.

The March to July soybean carry went from -2 cents last week to –½ this week. Not bullish, but not really bearish. It is still inverted.

The soybean crush margin was $2.87 yesterday, compared to $3.22 last week and $2.01 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 2¼ cents this week to settle at $8.00¾. The local elevator is paying $7.66 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 $7.88, 13 under the July for new crop, which is also steady with a week ago.

The big spec funds added 5,754 contracts to their soft red winter wheat (CBOT) position to bring them net short 55,988 contracts. The index funds added 3,650 contracts to their position to bring them net long 146,811 contracts of wheat.

Soft red winter wheat open interest increased by 24,561 contracts to 511,039 contracts.

KC July wheat was up 13 cents to settle at $8.40¾.

The big spec funds added 748 contracts to their hard red winter wheat position to bring them net long 12,614 contracts. The index funds added 337 contracts to their position to bring them net long 57,435 contracts of hard red winter wheat.

Hard red winter (KC) wheat open interest increased by 8,655 contracts to 249,029 contracts.

September (U) 2022 spring wheat was up 4¼ cents this week to settle at $9.30.

The Baltic Dry Bulk Index settled at 1,886, down 54 points for the week.

What you should have noticed:

Crude oil was smartly lower, yet the corn and beans (biofuel) were higher.

Corn carry went deeper into negative return to storage. That is bullish!

The corn basis weakened in both locations. There might be some corn piles in the Western Corn Belt showing up soon.

The soybean negative carry moved to almost to zero (mildly bearish), but the basis was steady in Iowa and firmed in Western Ohio. Kinda offset each other as far futures outlook.

Open interest increased for all four commodities with the stock market down. Money leaving stocks needs a new home.

Big specs added to their long position in corn, beans and hard wheat. They added to their short position in soft wheat. Hard wheat up 13 cents, soft wheat up 2 cents this week. Hard wheat has been firmer than soft wheat three consecutive weeks. The seasonal trend in wheat is down. Pay attention and don’t sell the wrong one.

Ethanol crush improved nicely this week. The soybean crush lost quite a bit.

Ocean freight rates were slightly lower.