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Grains Futures Prices

Mon, Jan 20th, 2020
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Futures Market News and Commentary

Beans Bounce A Bit

The 5 3/4 cent gain in the March futures was not enough to erase the 16 1/4 cent loss on the week, however front month soybean futures did finish 5 1/4 to 5 3/4 cents higher on Fridya. Soybean meal futures closed steady, but were $2.90/ton lower wk/wk. March bean oil futures gained 32 points on the day reducing the weekly loss to minus 1 point. The CFTC released their weekly CoT report this afternoon with data from Tuesday 01/14. Within the report soybean spec traders were 6,290 contracts net long, marking the second consecutive week in which they were long on net. Managed money open interest for soybeans was at the lowest level since Jan 29th of last year. Soybean meal saw managed money net short 31,720, which was a strengthening of 3,806 contracts wk/wk. Managed money was 112,911 contracts net long for soybean oil as of Tuesday, with spec trader open interest dropping 1,800 shorts and gaining 249 longs over last Tuesday.

Mar 20 Soybeans closed at $9.29 3/4, up... Read more

Corn Recovers Thursday Losses Before Weekend

Corn futures came all the way back from the Thursday sell off, and even gained some ground with futures closing 13 3/4 to 9 3/4 cents higher. March corn was 3 1/2 cents higher on the week. Rumors of Chinese purchases appeared right on schedule after the Thursday break. The Friday bulls will be looking for official confirmation on Monday. The CFTC released their Commitment of Traders report Friday afternoon showing spec trader positions were net short corn by 78,442 contracts on Tuesday Jan 14th. That was a weekly weakening of their position by 2,445 contracts, and weekly increase of 40,811 in spec trader open interest.

Mar 20 Corn closed at $3.89 1/4, up 13 3/4 cents,

May 20 Corn closed at $3.95 1/4, up 12 3/4 cents,

Jul 20 Corn closed at $4.01, up 12 cents,

Sep 20 Corn closed at $4.00 1/4, up 9 3/4 cents,

--- provided by Brugler Marketing & Management

Wheat Higher on Friday

Wheat closes the week with Friday gains, and MPLS spring wheat led the way. MGE HRS futures were 8 1/2 to 9 3/4 cents higher at the close, which was enough to erase the week’s early losses. Chicago SRW futures, gained 6 cents on the weekly chart after pulling off a 5 1/4 cent rally on Friday. As for KC HRW futures, prices were up 9 1/4 to 9 1/2 on Friday, but the March contract still posted a weekly loss of minus 1/4 cent. The managed money Chicago wheat position was 29,787 contracts net long in the CoT report. That was a 28 week high for managed money’s net position in the Chicago wheat market. As for KC wheat spec traders, the CFTC’s report showed a net position of 7,935 contacts long, which was a 5,119 contract increase over last week, and was the third consecutive week managed money was net long. Spring wheat specs were still net short, but they reduced their position by 794 contracts to 3,515 contracts. Of the weekly export sales from the week ending 01/09, MPLS HRS wheat was m... Read more

Soybean Basis: The Week That Was

This was the week that was for U.S. ag markets, starting with the previous Friday’s (January 10) overhyped USDA monthly Supply and Demand, WASDE, and Quarterly Stocks reports. Of the three, the one receiving the least attention, and possibly rightfully so this year, was the Q1 stocks number (as of December 1) of 3.3 bb that in years gone by would’ve been enough to lock the market limit down at least one day. Why, you ask? If we apply average demand over the remaining three quarters of the marketing the Q1 stocks number would project ending stocks of about 1.1 bb. This past Wednesday was signing day of the phase-one trade agreement between the United States and China, an agreement that prompted an immediate announcement from China’s Vice Premier Liu stating China would import U.S. ag products if market forces were favorable, other commodities could be substituted, and it would not affect the country’s other ag product suppliers (read this as Brazil for soybeans). This contributed to the 16-cent lower weekly close by the nearby March contract. Given the break in futures, it isn’t overly surprising the cmdty National Soybean Basis Index (NSBI, weighted national average) strengthened 1 cent for the week. The U.S. continues to ship soybeans while China waits for Brazil’s next crop, with harvest expected to begin in mid to late February. Until combines start rolling in South America, look for the NSBI to remain stable, though plateauing near this past Friday’s 55 cents under (March) level. Darin Newsom President Darin Newsom Analysis Inc.
Corn Basis: An Early Warning Flag

One key aspect of the market I was anxiously awaiting following the 13-cent sell-off in corn futures Thursday was the calculation of the cmdty National Corn Basis Index (NCBI, weighted national average). Recall from numerous discussions over the past year how the strength of the NCBI has reflected the tighter real supply and demand situation of corn, both domestic and global, often flying in the face of what is released in government reports. Also remember that there is often an inverse relation between basis and futures as grain merchandisers either allow the futures market to do some of the work for them or push back against futures to keep enough supplies coming in to cover demand. That’s why I was interested in Thursday’s NCBI. Would merchandisers push basis after a double-digit meltdown by the futures market? The answer was – No. A look at the NCBI daily chart shows Thursday’s calculation at 14.36 cents under the March as compared to Wednesday’s 14.29 cents under. If I round to the nearest quarter-cent, as I normally do when commenting on basis, the NCBI could be considered unchanged from Wednesday. However, the number was actually fractionally lower. I know, I’m splitting hairs when talking about 7-hundredths of a cent. The bigger picture, though, is the NCBI did not strengthen following a breakdown in the futures market. This could be considered an early warning that the NCBI is possibly peaking, a waving flag we need to be aware of and keep a close eye on if continuing to hold hedges against 2019 production. Darin Newsom President Darin Newsom Analysis Inc.
HRS Wheat Basis: Rolling Over

As I mentioned in Morning Commentary on my website (darinnewsom.com), we need to keep a close eye on the cmdty National Hard Red Spring Wheat Basis Index (HSBI, weighted national average) given the weaker readings we’ve been seeing of late. A look at the HSBI (actual symbol on cmdtyView: MWBAUS.CM) daily chart shows a recent peak of roughly 37 cents under (March) posted on January 2. Since then the HSBI has been threatening a move to a minor (short-term) downtrend, with this past Tuesday’s (Jan. 14) calculation coming in near 41 cents under. This was mere fractions below the previous trough posted on Dec. 30, meaning Wednesday’s calculation could decide the fate of the minor trend. If we see the HSBI weaken further this Wheat and/or Whiskey Wednesday, the short-term downside target becomes 45 cents under. This is calculated by taking the double-bottom low of 41 cents under and measuring the nearly 4 cents up to the interim peak of about 37 cents under. It’s interesting to note the HSBI posted an outlier spike low of 47 cents under on November 26, during its previous strong uptrend. From a retracement analysis point of view, the initial target of a new minor downtrend is all the way back at 54 3/4 cents under. This marks the 38.2% retracement level of the previous uptrend from 82 3/4 cents under (September 2, 2019) through the Jan. 2 high near 37 cents under. Those holding short hedges in March futures: Don’t lose track of basis trends at this point. Darin Newsom President Darin Newsom Analysis Inc.
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