<\/p>\n<\/a>Grains<\/u> –
\nThe index rebalance looms large this week.\u00a0 I believe the rebalance efforts \u201cofficially\u201d start tomorrow but I think we\u2019d be fooling ourselves if we didn\u2019t think some of the necessary actions have already been taken.\u00a0 We also have to remember that this is very well-advertised meaning a lot of players are front-running the activity.\u00a0 These players might provide an offset during the actual index period.\u00a0 Below is a breakdown of the latest estimates for activity I\u2019ve seen, but keep in mind this is a moving target and nobody really knows for certain.<\/p>\n
Chicago Wheat +30,000
\nKC Wheat +15,000
\nCorn +65,000
\nSoybeans +5,000
\nSoyoil \u20132,000
\nSoymeal +5,000<\/p>\n
I do find it interesting to point out that right before a major buying effort starts this week (in most cases) the COT data on Friday showed that swap dealers and index traders mostly reduced their net long positions in wheat, corn, and soybeans.<\/p>\n
Wheat spreads have turned a bit interesting in recent days.\u00a0 Some of this might be due to money flow issues relating to the index rebalancing and there is still a lot of time left during the VSR calculation period so anything can happen.\u00a0 Still, it is interesting to note that so far during the VSR calculation the WH-K spread has averaged roughly 50% of full carry.\u00a0 If the running average of full carry is 50% or less at the end of the calculation period (ends 2\/24) then\u00a0 the storage charge will decrease from $0.00365\/bu\/day to $0.00265\/bu\/day.\u00a0 Its been a long time since we\u2019ve even talked about the potential for a lower storage rate in wheat so I find this somewhat interesting.\u00a0 As noted, there is a long way to go so we\u2019ll see what happens, but this is something to keep an eye on.<\/p>\n
<\/p>\n
DISCLAIMER<\/u><\/strong>:<\/strong> Grains – The index rebalance looms large this week.\u00a0 I believe the rebalance efforts \u201cofficially\u201d start tomorrow but I think we\u2019d be fooling ourselves if we didn\u2019t think some of the necessary actions have already been taken.\u00a0 We also have to remember that this is very well-advertised meaning a lot of players are front-running the […]<\/p>\n","protected":false},"author":4,"featured_media":1676,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[13],"tags":[],"yoast_head":"\n
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