I pulled the Cost of Carry tables for corn, soybeans, and the three wheat futures markets at the end of April. As I’ve talked about in frequently, and again in Monthly Analysis of the individual markets, futures spreads remain bullish across the board.

(Green spreads are showing carry. Red spreads are inverted.)

Key Takeaways:

  • Kansas City (HRW) Wheat
    • The July-September spread closed at a carry of 6.5 cents and covering 35% calculated full commercial carry (cfcc).
      • This is just outside the bullish threshold of 33% or less
    • The July22-to-May23 forward curve closed at an inverse of 0.5 cent
      • As compared to the end of April’s close at an inverse of 7.75 cents
    • Commercial traders acknowledged late rains across the US Southern Plains may have increased production potential a bit
  • Chicago (SRW) Wheat
    • The July-September spread closed at a carry of 10.0 cents and covering a neutral 56% cfcc
      • The previous month this spread closed at 2.5 cents carry and a bullish 16% cfcc
      • Weather was near ideal across the US Midwest SRW growing area this past spring
    • The July22-to-May23 forward curve closed at a carry of 15.0 cents and covering a bullish 17% cfcc
      • The previous month’s close was a 5.0-cent inverse
      • Indicating commercial traders are still looking for increased demand during 2022-2023
  • Minneapolis (HRS) Wheat
    • The new-crop September-December spread closed at an inverse of 12.75 cents, as compared to the previous month’s inverse of 4.0 cents
    • The bottom line is a large part of the 2022 crop did not get planted
  • Soybeans
    • For what its worth (which isn’t much), the old-crop July-August futures spread closed at an inverse of 63.0 cents
      • April’s close by the same spread was 49.0 cents
      • April’s close for the May-July spread was 23.5 cents inverse
      • Both indicating the 2021-2022 supply and demand situation continued to tighten during May
        • Fitting with what we see in national average basis with the Barchart National Soybean Basis Index calculated at 34.4 cents under July futures on May 31
        • And cash indexes telling us available stocks-to-use are at or near record tight levels (see Monthly Stocks-to-Use for June 2022)
    • New-crop November-January closed at a carry of 4.75 cents and covering 18% cfcc
      • as compared to the April close at a carry of 0.75 cent and 3% cfcc
    • The Nov22-to-July23 forward curve closed at an inverse of 3.0 cents
      • versus the previous month’s inverse of 17.5 cents
      • The crop was planted
  • Corn
    • The July-September spread closed at an inverse of 28.5 cents as compared to the previous month’s close at a 45.5-cent inverse
      • Old-crop fundamentals remain bullish
    • The new-crop Dec22-to-July23 forward curve closed at a carry of 0.5 cent, as compared to April’s close at a carry of 1.5 cents
      • In other words, despite the crop getting planted during May, the commercial side grew more bullish
      • This tells us a couple of key things
        • First the commercial side is concerned about the lateness of the crop, and
        • Second, there is no margin for error with the 2022 crop given how tight old-crop available stocks-to-use are becoming
      • At some point, this should bring noncommercial buying back to the market
        • Similar to what we’ve seen in crude oil