Weekly Basis 5/21/22
The Dow Jones Industrial Average settled at 31,261, down 934.76 points for the week.
Crude oil settled at $112.70, up $2.27 for the week.
The dollar index settled at 103.06, down 1.50 for the week.
Below is corn, soybeans and wheat basis situation this week.
Corn
July corn settled at $7.78¾, down 2½ cents for the week and December corn was down 16¾ cents to settle at $7.32.
Dayton, Ohio Cargill is paying $7.84 for corn, 5 over July futures, which is a steady basis with a week ago. Their fall delivery basis is steady at 30 under the December futures.
Poet at Iowa Falls is paying $8.01 for corn, 22 over the July futures, which is a 12 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 added 1,392 contracts to their corn position to bring them net long 250,723 contracts of corn. The index funds added 1,186 contracts to their position to bring them net long 482,949 contracts of corn.
Corn open interest increased by 87,700 contracts to 2,256,288 contracts.
Eastern Corn Belt ethanol crush margin is $2.18 today compared to $2.57 last week and $2.45 a year ago. The price of corn subtracted from the value of processed products = ethanol crush margin.
Soybeans
July soybeans settled at $17.05¼, up 58¾ cents for the week and November beans were up 23¼ cents to settle at $15.21¾.
Sidney, Ohio Cargill is paying $17.20 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 $16.02 for beans, $1.03 under the July futures, which is a 3 cent weaker basis than a week ago. Their fall delivery basis is steady at 40 under the November.
The big spec funds added 16,375 contracts to their position to bring them net long 82,242 contracts of beans. The index funds cut 8,219 contracts from their position to leave them net long 181,425 contracts of beans.
Soybean open interest increased by 24,425 contracts to 920,248 contracts.
The soybean crush margin was not published today or any day this week by USDA.
Wheat
CBOT July soft red winter wheat was down 8¾ cents this week to settle at $11.68¾.
The local elevator is paying $11.34 for new crop wheat, 35 under the July, which is 1 cent firmer basis than a week ago. King Milling in Lowell, Michigan is paying $11.62 for new crop wheat, 7 under the July, which is 3 cents firmer than a week ago.
The big spec funds cut 3,631 contracts from their soft red winter wheat (CBOT) position to leave them net short 32,072 contracts. The index funds added 2,451 contracts to their position to bring them net long 156,203 contracts of wheat.
Soft red winter wheat open interest increased by 59,434 contracts to 483,434 contracts.
KC July wheat was down 29¼ to settle at $12.52¾.
The big spec funds added 2,849 contracts to their hard red winter wheat position to bring them net long 12,322 contracts. The index funds added 579 contracts to their position to bring them net long 65,140 contracts of hard red winter wheat.
Hard red winter (KC) wheat open interest increased by 7,044 contracts to 204,633 contracts.
September (U) 2022 spring wheat was down 41¼ cents this week to settle at $12.78¾.
The Baltic Dry Bulk Index settled at 3,289 up 172 points for the week.
What you should have noticed:
The ethanol crush margin is lower than a year ago for the first time in a very long time; specifically, only one week in January since last August.
Open interest increased in all commodities. More traders entering the market. Given the time of year, weather outlook, war, supply chain problems, inflation, and our government’s management, open interest will probably continue to increase, which does not mean prices will go higher. It just means more people want to try to make money.
Last week corn price was up and open interest was down a little bit. That means shorts were getting out of the market and when they were done liquidating short positons, so would the heavy buying be done. A big indicator as to why corn was down this week.
Last week, soybean futures price was up, open interest was up. That means new traders were coming into the bean, market and they were buying. Ditto this week. Look for higher prices next week also.
Last week, Soft Red Winter Wheat futures price was up, open interest down a little bit. Shorts were covering (liquidating their sold positions. When they were done, fewer buyers = lower prices this week.
Last week, Hard Red Winter Wheat futures price was up and open interest was up; bullish! But nothing is 100% in this business. HRWW open interest and price action last week indicated price should have been higher this week. It was not, but then India decided to export some wheat after all. Politicians wreck more market plans than everything else combined.
Ocean freight is getting very expensive again.
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