Grains Futures Prices
- Additional Prognostication (January 18 UPDATE on 1/15 post )
...from Degreed Meteorologist "Dr. Weather" (AKA Jim Roemer)
- ONE44 Soybean Update
The beans have hit our long term target of 1410.00
- Soybean (ZS) Gains for 10th Week in Last 11
Soybean (ZS) saw a bit of profittaking Friday but still gained for the 10th week in the last 11, and formed its 14th green weekly in the last 16 weeks....
Futures Market News and Commentary
The wheat complex closed the Tuesday session mostly higher. Nearby SRW wheat prices closed down by 3 to 3 1/4 cents. The deferred contracts were up 1/2 to 2 3/4 cents at the close. September wheat futures are 13 1/4 cents behind spot March for SRW. HRW prices ended the session 3/4 to a penny higher. Sept HRW futures are a 5 1/2 cent premium to spot March. Spring wheat futures were also fractionally to 1 1/4 cents higher – save for a 1/2 cent drop in December. Sept HRS futures were 15 1/2 cents above March at the close. USDA reported 276,898 MT of wheat exported on the week ending 1/14. That was down from 281,087 MT last week, and was 46% below the same week last year. Indonesia was the top destination on the week, with 107,861 MT. Accumulated wheat exports were up to 15.569 MMT, compared to the 15.986 MMT pace set LY. Japan issued an international tender for 100k MT of optional origin wheat. Algeria is also in the market for 50k MT of wheat. Philippines issued a tender for 100k MT o... Read more
Bean trading on Tuesday left the board 23 1/2 to 31 3/4 cents lower after a volatile session. Front month soymeal futures ended the session $10.80 to $12.70 in the red. BO prices ended the day down by 15 to 49 points. The board soy crush ratio was a penny and a half stronger as the soybeans pulled back, to 64 cents/bu. USDA announced 132,000 MTs of new crop soybeans sold to China under the daily reporting system. Weekly Export Inspections data showed 75.63 mbu of soybeans exported on the week ending 1/14. That was up from 68mbu LW and from 44.4 mbu the same week last year. China was the top destination for the week’s shipments with 62% of the total. Weekly data had the MY accumulated soybean exports at 1.578 bbu. The European Commission data showed MYTD soybean exports were 8.04 MMT through Jan 17. That is up from 7.66 MMT last MY. Early Brazilian bean harvest is underway, with 0.4% of the planted area harvested. AgRural said that trails last year’s pace of 1.8%. A slow start to har... Read more
Tuesday corn closes were 4 1/4 to 7 3/4 cents in the red. USDA announced private export sales to Japan (128k MT) and Israel (100k MT) this morning, both for 2020/21 delivery. USDA’s weekly Export Inspections report showed 34.517 mbu of corn shipped on the week ending 1/14. That was down on the week but more than double the 15.6 mbu LY. Mexico was the top destination for the exported corn, but Japan and Colombia were also shipped +100k MT each. MYTD corn shipments were reported at 680 mbu through the first 20 weeks. The Export Inspections report showed 159,495 MT of sorghum was exported on the week. Of that, 490 MT was for Japan, and the rest destined for China. Taiwan is tendering for 65k MT of optional origin corn. AgRural reported that 3.4% of Brazil’s first crop corn is picked. That compares to 2.5% harvested at this time last year.Mar 21 Corn closed at $5.26, down 5 1/2 cents,May 21 Corn closed at $5.28 1/4, down 6 1/2 cents,Jul 21 Corn closed at $5.25, down 7 cents,... Read more
Those of you who are fans of the National Football League (American football) will get the reference in the title, with the defending champion Kansas City Chiefs squeaking out a win Sunday to advance to the Conference Championship round next weekend. A look at the cmdty National Basis Indexes (weighted national averages) for the three major wheat markets shows something similar with Minneapolis (HRS) considered neutral-to-bearish, Chicago (SRW) neutral, and the Kansas City basis index still holding in bearish territory. How long this might last is the question. Last Friday (January 15) saw the cmdty National HRW Wheat Basis Index (HWBI) calculated at 35.1 cents under the March Kansas City futures contract. This was 2.5 cents weaker than the previous Friday’s calculation of 33.6 cents under, though still within sight of the previous 5-year high of 31.2 cents under from 2020. The problem is, using the seasonal study on our cmdtyView system, we see the 2020-2021 marketing year trend for the HWBI is down while the 2019-2020 marketing year trend was up at this point. In fact, by the time last marketing year got to the first week of February the HWBI was at 26 cents under March futures before backing off slightly to 29 cents under at the roll to May futures. Certainly a key difference is futures price, with the cmdty National HRW Wheat Price Index calculated last Friday at nearly $6.08, with the same week the previous marketing year finding the HWPI priced at $4.63. The strength of basis is a good teammate to the weakness of the carry in the March-May futures spread, closing last week at only 3 cents and covering 23% calculated full commercial carry. The bottom line is despite a weaker basis calculation, HRW remains fundamentally bullish. At least for another week. Darin Newsom President Darin Newsom Analysis Inc.
The soybean market’s real fundamentals, as opposed to USDA’s recently released imaginary version remain extremely bullish. Last Friday saw the cmdty National Soybean Basis Index (NSBI, weighted national average) calculated at 44.2 cents under March futures, 0.3 cent stronger than Thursday’s calculation though down 0.4 cent for the week. Despite that last point, the NSBI held above trendline support dating back to its bullish turn early this past September. Additionally, the NSBI came in above the previous 5-year high for another week, this time calculated at 49.2 cents under March futures. The bottom line is despite slight weakness, the NSBI remains strong while futures climb to the highest price levels since June 2014. While basis is the key, futures spreads are the next fundamental read we need to keep an eye on, and it’s here where a fascinating story is being told. This past week saw the January contract expire holding a 6-cent inverse to March, far different from when the November issue expired at a 6.5-cent carry to January. The March-May spread saw some pressure last week, closing at a 2-cent inverse, with the selling not surprising given this is the spread most affected by South American harvest. But a look out to the May-July spread, after the next South American crop has been harvested and the world has turned its attention to demand as opposed to supply, and we see an inverse that reached 15.25 cents before closing Friday at 13.75. This suggests, at least until we see a clear trend change, there is growing concern over South America’s next harvest, putting the spotlight on tightening US supplies. Stay tuned. Darin Newsom President Darin Newsom Analysis Inc.
Yes, I know, the internet has been abuzz this week with corn market bulls going on, and on, and on about USDA’s latest Supply and Demand report. Let’s set the tone up front: USDA’s January numbers were just as ridiculous and hard to believe as any other of its set of guesses over at least the last four years. Okay, now that that’s out of the way, let’s dive into a quick discussion of corn’s REAL fundamentals as opposed to USDA’s imaginary version. We know from tracking the cmdty National Corn Price Index (NCPI, weighted national average cash price) and correlating the marketing year average to a real stocks-to-use calculation that USDA has overestimated US corn stocks the previous four marketing years. Also, those of us who follow futures spreads for a read on real supply and demand know the market has been at least neutral-to-bullish going back through 2018-2019, moving solidly bullish late this past summer as the cmdtyView Cost of Carry table went through the Chili Pepper Progression (changing from green/carry to red/inverted). As we also know, this has led to noncommercial traders pushing their net-long futures position to near record levels. Now, though, the times they may be a-changin’. This past week has seen the March-May futures spread break below support on its daily chart at 3.25 cents carry, projecting a possible extension to 5 cents carry and possibly 7.25 cents carry. However, this could still cover a bullish level of calculated full commercial carry, meaning 33% or less. More concerning is the downturn by the cmdty National Corn Basis Index (NCBI), calculated at 21.7 cents under March futures Thursday afternoon, a test of the low at 21.8 cents under from December 1. Keeping in mind what a good friend of mine calls Grains’ Golden Rule, “First basis, then spreads, then futures”, and my idea of the Rubber Band Disposition, we could see the rubber band snap, leading to noncommercial long liquidation as this group moves to get back in line with its real fundamentals. Darin Newsom President Darin Newsom Analysis Inc.