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Weekly Basis 5/13/22

The Dow Jones Industrial Average settled at 32,196.66, down 702.71 points for the week.


Crude oil settled at $110.43, down $0.19 for the week.

The dollar index settled at 104.56, up 0.90 for the week.


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


 

Corn


July corn settled at $7.81¼, down 3½ cents for the week and December corn was up 28 cents to settle at $7.48¾ after making a new contract high Thursday evening at $7.58½.


Dayton, Ohio Cargill is paying $7.86 for corn, 5 over July futures, which is a 5 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 $7.91 for corn, 10 over the July futures, which is a 5 cent firmer 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 cut 27,498 contracts from their corn position to leave them net long 249,332 contracts of corn. The index funds cut 422 contracts from their position to leave them net long 481,763 contracts of corn.


Corn open interest decreased by 4,310 contracts to 2,168,588 contracts.

Eastern Corn Belt ethanol crush margin is $2.57 today compared to $2.33 last week and $2.15 a year ago. The price of corn subtracted from the value of processed products = ethanol crush margin.



 

Soybeans


July soybeans settled at $16.46½, up 24½ cents for the week and November beans were up 28½ cents to settle at $14.98½. The contract high is $15.55 made the day the war started, February 24th.

Sidney, Ohio Cargill is paying $16.61 for beans, 15 over the July futures, which is a steady basis with a week ago. Their fall delivery basis is steady at 25 under the November.

Iowa Falls Cargill is paying $15.46 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 14,734 contracts from their position to leave them net long 65,867 contracts of beans. The index funds cut 5,367 contracts from their position to leave them net long 189,643 contracts of beans.

Soybean open interest increased by 7,150 contracts to 895,823 contracts.

The soybean crush margin is $3.95 today, compared to $4.31 last week and $2.49 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 69 cents this week to settle at $11.77½.

The local elevator is paying $11.41 for new crop wheat, 36 under the July, which is a 5 cent weaker basis than a week ago. King Milling in Lowell, Michigan is paying $11.67 for new crop wheat, 10 under the July, which is steady with a week ago.

The big spec funds cut 2,237 contracts from their soft red winter wheat (CBOT) position to leave them net short 35,703 contracts. The index funds cut 1,663 contracts from their position to leave them net long 153,752 contracts of wheat.

Soft red winter wheat open interest decreased by 1,804 contracts to 424,000 contracts.

KC July wheat was up $1.11½ to settle at $12.82.

The big spec funds added 1,340 contracts to their hard red winter wheat position to bring them net long 9,473 contracts. The index funds cut 1,775 contracts from their position to leave them net long 64,561 contracts of hard red winter wheat.

Hard red winter (KC) wheat open interest increased by 3,789 contracts to 197,589 contracts.

September (U) 2022 spring wheat was up $1.13¼ this week to settle at $13.20.

The Baltic Dry Bulk Index settled at 3,147 up 473 points for the week.

 

What you should have noticed:

The Dow is nearing the "official" definition of a major correction (more than 20% decline from the recent high). The Dow falling out of bed does not make people feel good about buying anything.

The Tech Guy said a week ago today that there was a very high volume of contracts traded in exactly the same 15 minute period when the low for the day was made on July corn. Then corn rallied somewhat and settled 8¼ cents above the low for that day. That high volume of 15 minutes of trading was the bears all-out assault to break the line of technical support, but the bears failed to overwhelm the willing buyers defending the support line at the low for the day. There was similar battle on Monday and the bears pushed the market lower, only to have the bulls beat them back again and then to new contract highs Thursday evening. December corn gained 55 cents from Monday’s low to Thursday’s evening’s high. Will the bulls claim victory and go home, leaving the bears to have their way?

Corn basis was firmer in Ohio and Iowa; probably a lot of other places as well.

Corn futures price up, open interest down a little bit.

Soybean futures price was up, open interest was up a little bit.

Soft Red Winter Wheat futures price was up, open interest down a little bit.

Hard Red Witner Wheat futures price was up and open interest was up.

Two of those four are a bullish signal and two of the four are a bearish signal. Take a look and figure it out. Hint: Which ones are attracting new money?

Both the Big Spec funds and Index Funds reduced their long positions in corn and beans.

Ocean freight is getting very expensive again.


 

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