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Weekly Basis 04/01/2022

The Dow Jones Industrial Average settled at 34,818.27, down 42.97 points for the week.


Crude oil was at $99.47 late Friday, down $13.24 for the week.


The dollar index settled at 98.55, down 0.26 for the week.


Corn


July corn settled at $7.21¾, down 13 cents for the week.


Dayton, Ohio Cargill is paying $7.06 for corn, 15 cents under the July, steady with a week ago. Their fall delivery basis is steady at 30 under the December futures.


Poet at Iowa Falls is paying $7.32 for corn, 10 over the July futures, which is steady with a week ago. Their fall 2022 delivery basis is steady at 30 under the December futures.


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 43,364 contracts from their corn position to leave them net long 261,331 contracts of corn. The index funds added 10,792 contracts to their position to bring them net long 485,545 contracts of corn.


Corn open interest decreased by 87,254 contracts to 2,062,031 contracts.


Eastern Corn Belt ethanol crush margin is $2.15 today compared to $2.36 last week and $1.62 a year ago. The price of corn subtracted from the value of processed products = ethanol crush margin.


Soybeans


July soybeans settled at $15.66¾, down $1.21¾ for the week.


Sidney, Ohio Cargill is paying $15.62 for beans, 5 under the July futures, which is a steady basis with a week ago. Their fall delivery basis is also steady at 25 under the November.


Iowa Falls Cargill is paying $14.67 for beans, $1.00 under the July futures, which is steady with a week ago. Their fall delivery basis is also steady at 40 under the November.


The big spec funds cut 18,564 contracts from their position to leave them net long 93,509 contracts of beans. The index funds cut 4,347 contracts to their position to leave them net long 212,902 contracts of beans.


Soybean open interest decreased by 34,020 contracts to 982,306 contracts.


The soybean crush margin is $3.81 today, compared to $3.95 last week and $1.89 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.


Wheat


CBOT July soft red winter wheat was down $1.08¼ this week to settle at $9.84¼.


The local elevator is paying $9.34 for new crop wheat, 50 under the July, which is a 12 cent firmer basis than last week. King Milling in Lowell, Michigan is paying $9.77, 08 under the July, 18 cents firmer than a week ago.


The big spec funds added 1,938 contracts to their soft red winter wheat (CBOT) position to bring them net short 43,192 contracts. The index funds added 1,173 contracts to their position to bring them net long 166,210 contracts of wheat.


Soft red winter wheat open interest decreased by 47,012 contracts to 471,606 contracts.


KC July wheat was down 93¼ cents to settle at $10.13¾.


The big spec funds cut 502 contracts from their hard red winter wheat position to leave them net long 15,786 contracts. The index funds cut 1,643 contracts from their position to leave them net long 63,354 contracts of hard red winter wheat.


Hard red winter (KC) wheat open interest decreased by 4,584 contracts to 204,327 contracts.


September (U) 2022 spring wheat was up 42½ cents this week to settle at $10.40¾.


The Baltic Dry Bulk Index settled at 2,238, down 209 points for the week.


What you should have noticed:


After gaining more than 1,900 points the past two weeks, the Dow only lost 43 points this week. Not so bad.


Open interest decreased substantially in every commodity the week ending Tuesday. Remember that the last week of June when we get the next Quarterly Stocks Report and Actual Planted Acres on the 30th. People simply want to lighten-up their positions before major USDA reports. Since corn, wheat and beans all recently made contract highs and higher than last spring’s highs, lighting-up (liquidating positions) meant selling futures to offset long positions (previously bought). Note also the spec funds and two of the index funds were net sellers. It will happen again in late June and next March. If the market is down the first three weeks of June, “lightening-up” will mean buying short (previously sold) contracts.


Crude oil fell out of bed, but the dollar index hardly moved. Normal relationship is the dollar index is up when crude is down and vice versa. So, next week we will see crude or the dollar index sharply higher.


Soybean basis steady with futures own a buck. That means the crushers and exporters have plenty of beans as one would expect after four weeks above $17, new contract highs and higher than the 2021 highs.

Ethanol crush margin lost 21 cents despite spot. We need to keep a close eye on the crush margin, but note it is still 63 cents higher than a year ago.


The soybean crush lost 14 cents, but it is still nearly $2 better than a year ago. Do not fall for that baloney the demand for soybeans is terrible.


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