Grains Futures Prices
- More Activity in the Atlantic & Gulf of Mexico. The Corn & Ethanol Report 09/18/2020
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Futures Market News and Commentary
Soy futures close the week comfortably in the black. At the closing bell, soybeans were 10 1/4 to 16 cents higher. Nov beans were 4.77% higher from Fri-Fri on a 47 cent rally. Soymeal futures closed the day with $6.5 to $7/ton gains. October soymeal futures closed 5.47% higher from Friday to Friday. Bean oil rallied 4.82% on the week, and closed the Friday session with 19 to 32 point gains. Chinese importers booked 132,000 MT of U.S. soybeans for 2020/21 delivery. USDA also announced a 100k MT sale of soymeal to unknown on Friday. The weekly Commitment of Traders report had soybean spec traders at 191,774 contracts net long. That was a 10.3% increase on the week on net new buying. Commercial short paper increased 33,857 contracts to the largest on record @ 625.9k. That left commercials at the 8th strongest net short on record of 324,798 contracts. In Soybean meal, managed money extended their net long 11,578 contracts to 43,697. Bean oil spec traders were reported at 94,564 contract... Read more
On Friday, front month wheat futures closed double digits in the black. CBT SRW wheat futures closed 14 1/4 to 18 3/4 cents higher, which for Dec added to a 33 cent move for the week. KC HRW futures were 15 1/2 to 16 3/4 cents higher at the close. KC wheat futures were the strongest gainer on the week, rallying 7% from Friday to Friday. MGE HRS wheat was 3.57% higher on the week, helped by 9 3/4 to 10 cent Friday gains. The CoT report showed managed money was 15,112 contracts net long in CBT wheat. Long liquidation with new selling reduced the net long 35% on the week (through Tuesday). In KC HRW, spec traders were 10,192 contracts net long. That was a 1,269 contract increase wk/wk. Managed money open interest increased 845 contracts in MGE wheat reducing the net short to 3,008 contracts. That is the closest they have been to being bullish since 2018.
Dec 20 CBOT Wheat closed at $5.75, up 18 3/4 cents,
Dec 20 KCBT Wheat closed at $5.04 1/4, up 16 3/... Read more
At Friday’s closing bell corn futures were 2 3/4 to 4 cents higher. On the week, Dec corn rallied 2.71% on a dime advance. Chinese importers booked another 210,000 MT of U.S. corn for 2020/21 delivery, announced via the daily reporting system. The US national average cash corn price is at a 6 month high. The CFTC weekly data release showed corn spec traders were 25,062 contracts more net long than the previous week, at 58,556 contracts on September 15. That came via short covering and new buying. Managed money OI was down 5,608 contracts. Commercial OI was up 61,858 contracts on the week, as the net short grew 22,952 contracts.
Dec 20 Corn closed at $3.78 1/2, up 3 1/4 cents,
Mar 21 Corn closed at $3.87 1/2, up 3 1/2 cents,
May 21 Corn closed at $3.92 3/4, up 4 cents,
Jul 21 Corn closed at $3.95 1/2, up 3 3/4 cents,
--- provided by Brugler Marketing & Management
Let me begin by telling those of you in Chicago that no, this is not a discussion on the 2020 edition of the Northside baseball team, regardless of the recent no-hitter thrown by the Cubs’ pitcher. Rather, this is a look at one of the ways I like to use the cmdty National Corn Price Index (NCPI, weighted national average cash price) to track national average basis over the course of corn’s September through August marketing year. The acronym I’ve developed for this idea, CUB, stands for Continuous September (U, in commodity terminology) Basis. As the name suggests, basis being continuously calculated against the September futures contract removes the peaks and valleys spreads and rolling hedges can leave on a standard chart. Over the decades, when I’ve talked charts with merchandisers they almost always say the same thing, “Those aren’t any good unless you show where the spreads were.” I get it, which is why I developed this method of tracking basis. As we take our first few steps in the 2020-2021 marketing year, the first week of September saw the CUB Calculation come in at 53.63 cents under (NCPI minus September 2021 issue). This put it near the previous 4-year high of 51.76 cents under, confirming my idea old-crop (2019-2020) ending stocks are being overestimated by USDA for the fourth consecutive marketing year, meaning beginning stocks are also overestimated. The second week of September saw CUB come in at 49 cents under, also hugging the high end of the previous 4-year range. It will be interesting to watch the path this read on basis takes as the marketing year progresses. Darin Newsom President Darin Newsom Analysis Inc.
I’ve been keeping a close eye on the cmdty National Soybean Basis Index (NSBI, weighted national average) as the 2020-2021 marketing year got under way this month for a number of reasons. First, with the Cost of Carry table on my cmdtyView system a great example of The Chili Pepper Progression, it has turned from green (varying degrees of carry) to red (inverted), we would expect the NSBI to stay strong despite the rally in November futures into the upper 30% of its price distribution range (based on weekly closes only back through the 2014 contract). Sure enough, Monday afternoon’s calculation of 57.16 cents under November futures has the NSBI sitting just off this week’s high mark for the previous 5-years of 48.41 cents under and well above the previous 5-year average of 73.67 cents under. Recently I’ve been concerned about a possible bubble forming in the soybean market, a situation that if popped could lead to collapse in general. The best tools we have for watching bubbles are the cmdty National Basis Indexes for the various markets. As of this writing, the 2020-2021 version of the NSBI looks similar to what we saw a year ago when the month of September found the NSBI sitting low heading into harvest. However, as the marketing year progressed, basis powered upward an onward reaching a high of 38.4 cents under (August futures) on July 24, a mark that equated to 35.2 cents under November futures on July 23. The key will be what the NSBI is able to do as 2020 harvest gets under way over the next month, with light commercial selling seen in futures spreads to start this week. Darin Newsom President Darin Newsom Analysis Inc.
As I talked about in this space last week, the cmdty National Soft Red Winter Wheat Basis Index (SWBI, weighted national average) is in a downtrend on its weekly chart. Last Friday’s calculation of 29.88 cents under December futures, down another 1.71 cents for the week. The SWBI is testing support at 29.91 cents under, the 50% retracement mark of the previous uptrend from 54.51 cents under (week of November 11, 2016) through the high of 5.31 cents under (week of January 6, 2020). Since that week, though, the SWBI has been moving lower (weakening). SRW basis will become key now as the latest CFTC Commitments of Traders report (legacy, futures only) showing the noncommercial side of the Chicago market decreased their net-long futures position by 7,133 contracts as of Tuesday, September 8. Still, the reported net-long of 35,812 contracts is the second largest since week of March 31, 2020. What’s the connection between this and the SWBI? If the report net-futures position continues to reflect continued buying while national average basis is weakening, the conclusion is a bubble is forming in the market. And when a bubble bursts, it usually isn’t bullish for whatever market it happens in. Wheat has seen this situation before, most notably during the 2006 to 2008 free-for-all when noncommercial traders were buying all the ag futures they could, regardless of fundamentals. Basis collapsed, leading to the policy of Variable Storage Rates we continue to deal with today. Keep an eye on the SWBI (and all the other indexes) as they are valuable tools when it comes to spotting bubbles forming. Darin Newsom President Darin Newsom Analysis Inc.