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Weekly Basis 04/22/2022

The Dow Jones Industrial Average settled at 33,811.40, down 639.83 points for the week.

Crude oil settled at $101.45, down $5.09 for the week. The dollar index settled at 101.13, up 0.63 for the week.


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


 

Corn


July corn settled at $7.89, up 5¼ cents for the week.


Dayton, Ohio Cargill is paying $7.89 for corn, even with the July futures, which is a 3 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 $7.89 for corn, even with the July futures, which is 10 a cent weaker basis than 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 14,893 contracts to their corn position to bring them net long 285,977 contracts of corn. The index funds cut 5,414 contracts from their position to leave them net long 486,281 contracts of corn.

Corn open interest increased by 99,846 contracts to 2,363,241 contracts.

Eastern Corn Belt ethanol crush margin is $2.77 today compared to $2.49 last week and $2.03 a year ago. The price of corn subtracted from the value of processed products = ethanol crush margin.



 

Soybeans


July soybeans settled at $16.88, up 22¾ cents for the week.

Sidney, Ohio Cargill is paying $16.88 for beans, even with the July futures, which is a 5 cent firmer basis than a week ago. Their fall delivery basis is steady at 25 under the November.

Iowa Falls Cargill is paying $15.88 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 5,656 contracts to their position to bring them net long 103,552 contracts of beans. The index funds added 2,806 contracts to their position to bring them net long 211,720 contracts of beans.

Soybean open interest increased by 20,608 contracts to 1,005,019 contracts.

The soybean crush margin is $4.21 today, compared to $4.19 last week and $2.12 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 29¼ cents this week to settle at $10.75¼.

The local elevator is paying $10.33 for new crop wheat, 42 under the July, which is a 2 cent weaker basis than a week ago. King Milling in Lowell, Michigan is paying $11.60, 15 under the July, 15 cents weaker than a week ago.

The big spec funds added 1,072 contracts to their soft red winter wheat (CBOT) position to bring them net short 38,046 contracts. The index funds cut 382 contracts from their position to leave them net long 160,776 contracts of wheat.

Soft red winter wheat open interest decreased by 2,217 contracts to 484,604 contracts.

KC July wheat was down 7¾ cents to settle at $11.49½.

The big spec funds added 334 contracts to their hard red winter wheat position to bring them net long 16,030 contracts. The index funds added 215 contracts to their position to bring them net long 63,076 contracts of hard red winter wheat.

Hard red winter (KC) wheat open interest increased by 1,065 contracts to 211,504 contracts.

September (U) 2022 spring wheat was up 17¼ cents this week to settle at $11.51¼.

The Baltic Dry Bulk Index settled at 2,239, up 102 points for the week.


 

What you should have noticed:

For the third consecutive week, another massive increase in open interest (OI) for corn and the new money was buying. Corn open interest is up 301,210 contracts the past three weeks, an increase of 14.6%... Wow! December 2023 corn was up 21 consecutive trading days ending Tuesday.

Ethanol crush margin jumped 28 cents this week with corn futures up another 23 cents. Bullish.

The soybean crush was up just 2 cents, but up none-the-less and more than $2 better than a year ago.

Open interest in corn and beans were up and prices were up. Open interest in soft winter wheat was down and the price was down. Open interest in KC wheat was up a little and the price was down. The seasonal trend is up for corn ad beans and down for wheat.

In takes no more margin money to spread corn and wheat than it does just be short wheat. Had one done that this week, the corn would have made $1100 per contract and the wheat would have made $1,450.

Which is better?

Tie up $4,510 to be short one CBOT wheat contract & make $1,450

Tie up $4,510 to be long corn & short CBOT wheat & make $2,550

The dollar index had another up week, and corn and beans had another up week. It is not supposed to work that way. that is what inflation will do for you. The past three weeks the dollar index is up 2.68, a massive move higher in the big picture of world economics. Yet the past three weeks has July corn up 67¼ cents, beans up $1.23. The dollar and grains moving that much at the same time has not happened for at least 40 years.


 

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