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Weekly Basis 04/15/2022

The Dow Jones Industrial Average settled at 34,451.23, down 269.89 points for the week.


Crude oil settled at $106.54, up $8.74 for the week.


The dollar index settled at 100.50, up 0.65 for the week.



Below is corn, soybeans and wheat basis situation this week.


 

Corn


July corn settled at $7.83¾, up 23 cents for the week.


Dayton, Ohio Cargill is paying $7.81 for corn, 3 cents under the July, which is a 7 cent firmer basis than a week ago. Their fall delivery basis is steady at 30 under the December futures.


Poet at Iowa Falls is paying $7.94 for corn, 10 over the July futures, which is a steady basis 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 added 5,107 contracts to their corn position to bring them net long 271,085 contracts of corn. The index funds cut 2,040 contracts from their position to leave them net long 491,696 contracts of corn.


Corn open interest increased by 92,529 contracts to 2,263,395 contracts.


Eastern Corn Belt ethanol crush margin is $2.49 today compared to $1.87 last week and $1.58 a year ago. The price of corn subtracted from the value of processed products = ethanol crush margin.



 

Soybeans


July soybeans settled at $16.65¼, down 2¾ cents for the week.


Sidney, Ohio Cargill is paying $16.60 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 $15.65 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 added 4,286 contracts to their position to bring them net long 97,896 contracts of beans. The index funds cut 1,144 contracts from their position to leave them net long 208,914 contracts of beans.


Soybean open interest increased by 5,374 contracts to 984,410 contracts.


The soybean crush margin is $4.19 today, compared to $3.84 last week and $1.88 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 up 46¼ cents this week to settle at $11.04½.


The local elevator is paying $10.61 for new crop wheat, 40 under the July, which is a steady basis with last week. King Milling in Lowell, Michigan is paying $11.04, even with the July, steady with a week ago.

The big spec funds cut 707 contracts from their soft red winter wheat (CBOT) position to leave them net short 36,974 contracts. The index funds cut 2,293 contracts from their position to leave them net long 161,157 contracts of wheat.

Soft red winter wheat open interest increased by 6,367 contracts to 486,821 contracts.

KC July wheat was up 47¼ cents to settle at $11.57¼.

The big spec funds added 1,504 contracts to their hard red winter wheat position to bring them net long 15,695 contracts. The index funds cut 956 contracts from their position to leave them net long 62,862 contracts of hard red winter wheat.

Hard red winter (KC) wheat open interest increased by 2,157 contracts to 210,439 contracts.

September (U) 2022 spring wheat was up 28½ cents this week to settle at $11.34.

The Baltic Dry Bulk Index settled at 2,137, up 76 points for the week.

What you should have noticed:

Another massive increase in open interest (OI) for corn this week and the new money was buying. Corn open interest is up more than 200,000 contracts the past two weeks, more than 9%.

Ethanol crush margin jumped 62 cents this week with corn up another 23 cents. Bullish.

The soybean crush was up another 33 cents and more than $2 better than a year ago. Do not fall for that baloney the demand for soybeans is terrible.

For the last 35 years, when the dollar had an up week, grains had a down week because US products become more expensive to buy when the dollar’s exchange rate moved higher. The past two weeks the dollar index is up 2.05, a massive move higher in the big picture of world economics. Yet the past two weeks has July corn up 62 cents, beans up 99 cents, soft wheat up $1.23 and hard wheat up $1.44. The dollar and grains moving that much at the same time has not happened for at least 40 years. But in the late 70’s, it was the norm.

Why?

If foreign buyers of US grain expect the dollar to continue higher for the long run, they will buy US grains before the dollar gets even stronger. That is what happens during periods of extreme and expected long term inflation. The last long term inflationary period was the 1970’s, which led directly to the terrible times of the 1980’s. How bad was inflation in the 70’s? In August 1971, inflation was so ‘horrendous”, the US government mandated wage and price controls. Annual inflation at the retail level was 3.1% (yes, 3.1%) and on its way to 13.9% in 1979. A few days ago, the Labor Department said the annual retail inflation rate the past 12 months was 8.5%.


 

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