The fear of short traders being squeezed may create a temporary rally in the nearby corn and soybean contracts that is larger than recent fundamental data would imply is warranted. This scenario could occur because this season's abnormally strong basis means that long traders are far less intimidated by the prospect of delivery. In other words, because the cash price is higher than the futures price in many areas, end-users with long positions would have no complaints if they are delivered the more expensive cash product.Traders also should be aware that an unanticipated squeeze on any market is likely to result in increased margins. Increased margins can mean that traders are forced to juggle their position sizes, which would only add to...
What You Need to Know Today: Cattle futures extended their sharp selloff Friday as weakening cash cattle prices, deteriorating feedlot profitability, and reduced packer demand continued to weigh on the market. The inability of futures to sustain a rally following last week's bullish Cattle on...
As predicted, the Federal Reserve held rates steady at the last meeting before the midterm elections, likely in part because of the election (see WPI 19 October and 22 September). The decision comes at the tail end of a midterm election cycle that has been marked by the two parties campaigning...
Key Takeaways: WPI’s new EU rapeseed crushing margin models point to weaker processing returns over the next four months due to higher rapeseed procurement costs and weaker product values. Statistical forecasts call for German crushing margins to decline from €181/MT to €...
From WPI Consulting
Communicating importance of value-added products
Facing increasing pressure to quantify the value of export promotion efforts to investors, a U.S. industry organization retained WPI to develop a quantitative model that better communicated the importance of exports. The resulting model concluded that value-added meat exports contributed $0.45 cents per bushel to the price of corn, increasing support for that sector’s financial support of WPI’s client. In addition to serving the red meat industry with this type of analysis, WPI has generated similar deliverables for the U.S. soybean and poultry/egg industries.