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Weekly Basis 7/21/24

It's our weekly US grain market prices analysis and outlook for corn, soybeans and wheat.


The Dow Jones Industrial Average (DJIA) settled at 40,288, +286.63 points for the week.

Crude oil settled at $80.25, -1.93.

The Dollar Index settled at 104.36, +0.28.

The Baltic Dry Index (a shipping freight-cost index) settled at 1,902, -95 for the week.

 

Corn


September futures at $3.90½, -11½¢ for the week.


Basis (U = Sept; e.g. 10U means 10¢ over September futures) (Futures price + Basis = Cash price)

  • The US national average basis is -7U, 2¢ firmer.

  • Dayton, Ohio Cargill’s spot basis is -15U, 2¢ firmer, $3.76 cash price.

  • Iowa Falls Poet’s spot basis is 35U, 5¢ firmer, $4.25 cash price.


COT Report (Commitment of Traders, chart below)

  • Commercial Traders change is -1,988 to 60,677 net long (bought 9.94 mil. bu. more of physical grain than sold).

  • Big Spec Funds change is +10,587 to 343,396 net short.

  • Open Interest change is +36,526 to 2,074,692.


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. We use the Disaggregated version. Open Interest is the number of contracts on the books. You can find our explanation of Open Interest and funds in our blog.


Crush Margin

Corn Ethanol Crush Margin was $2.75, $3.10 two weeks ago and $3.02 a year ago.

The price of corn subtracted from the value of processed products = ethanol crush margin.


 

Soybeans


August futures at $10.97¼, -7¾¢ for the week.


Basis (Q = Aug; e.g. -20Q means 20¢ under August futures) (Futures price + Basis = Cash price)

  • The US national average basis is -45Q, 4¢ weaker.

  • Iowa Falls Cargill’s spot basis is 9Q, 6¢ weaker, $11.06 cash price.

  • Sidney, OH Cargill’s spot basis is 30Q, steady, $11.27 cash price.


COT Report (Commitment of Traders, chart below)

  • Commercial Traders change is +20,369 to 81,262 net long (sold 101.845 mil. bu. more of physical grain than bought).

  • Big Spec Funds change is -13,145 to 185,750 net short.

  • Open Interest change is +60,086 to 1,104,005.


Crush Margin

Soybean Crush Margin was $2.73, $2.56 two weeks ago and $3.86 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


Soft Red Winter Wheat (CBOT)


September futures at $5.42¾, -8¢ for the week.


Basis (U = Sept; e.g. -8N means 8¢ under September futures) (Futures price + Basis = Cash price)

  • The US national average basis is -59U, steady.

  • Heritage Coop. at Mechanicsburg, OH: July basis is -55U, steady, $4.88 cash price.


COT Report (Commitment of Traders, chart below)

  • Commercial Traders change is +8,889 to 5,630 net short (sold 44.445 mil. bu. more of physical grain than bought).

  • Big Spec Funds change is -6,749 to 75,886 net short.

  • Open Interest change is +20,694 to 506,230.




Hard Red Winter Wheat (Kansas City BOT)


September futures at $5.70, +2¼¢ for the week.


Basis (U = Sept; e.g. -40N means 40¢ under September futures) (Futures price + Basis = Cash price)

  • The US national average basis is -47U, 2¢ weaker.

  • Producer AG at Canton, KS: July basis is -10U, steady, $5.60 cash price.


COT Report (Commitment of Traders, chart below)

  • Commercial Traders change is -2,292 to 30,035 net short (bought 11.46 mil. bu. more of physical grain than sold).

  • Big Spec Funds change is -3,085 to 43,896 net short.

  • Open Interest change is +4,651 to 258,571.




Hard Spring Wheat (Minneapolis Grain Exchange)


September futures at $6.09¾, +12¼¢ for the week.


The US national average basis is -50U, steady.


COT Report (Commitment of Traders, chart below)

  • Commercial Traders change is +2,898 to 22,805 net long (sold 14.49 mil. bu. more of physical grain than bought).

  • Big Spec Funds change is -1,638 to 25,361 net short.

  • Open Interest change is +3,549 to 83,560.



 

What you should have noticed


Stock indexes marked new highs at the start of the week and then traded lower losing 2-3%.


Crude oil was sideways most of the week, and then lost $2 on Friday, high chances to continue lower.


Open Interest continued to increase for all commodities, meaning new traders are coming to grain markets and existing ones take bigger positions.


Spec funds closed a small portion of their short corn contracts, commercial traders added to corn long and short side almost the same. On beans and wheat, Spec funds were selling by adding to the short side, Commercials were buying by adding to the long side (except on Hard Winter wheat where both Specs and Commercials were selling).


Corn, soybeans and soft winter wheat futures continued lower. While the hard winter and spring wheat gained by closing higher 3 days in a row and we haven’t seen that since May.


Average basis firmed once more for corn. We already mentioned how strong it firmed since May.

Last year during July the national basis was 42 over September on average and slowly weakening, with futures around $5. This year basis is -12 under Sept on average during July and firming, with futures about $4.


Beans and hard winter wheat basis weakened, others were steady. Some spot bean basis bids are already getting rolled to Nov futures, which may be causing national basis to weaken.


Beans crush margins increased, while decreasing for corn, both are high enough for the demand.


 

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