01-08 End of Day: Market Extracts Weather Premium with Beneficial Moisture Expected.
All prices as of 2:00 pm Central Time
| Corn | ||
| MAR ’24 | 455 | -5.75 |
| JUL ’24 | 478 | -5.75 |
| DEC ’24 | 489.25 | -4.75 |
| Soybeans | ||
| MAR ’24 | 1245.5 | -10.75 |
| JUL ’24 | 1261.75 | -8 |
| NOV ’24 | 1202 | -6.5 |
| Chicago Wheat | ||
| MAR ’24 | 596.25 | -19.75 |
| JUL ’24 | 617.75 | -17.25 |
| JUL ’25 | 654.25 | -10 |
| K.C. Wheat | ||
| MAR ’24 | 615.25 | -12.75 |
| JUL ’24 | 622.75 | -12.5 |
| JUL ’25 | 653.75 | -13.75 |
| Mpls Wheat | ||
| MAR ’24 | 702.5 | -9.5 |
| JUL ’24 | 721.25 | -7.25 |
| SEP ’24 | 730.5 | -6.75 |
| S&P 500 | ||
| MAR ’24 | 4789.75 | 55 |
| Crude Oil | ||
| MAR ’24 | 71.17 | -2.69 |
| Gold | ||
| APR ’24 | 2054.5 | -15.2 |
Grain Market Highlights
- Despite decent export inspections, the lack of fresh bullish news and favorable South American weather enabled traders to push front month corn to its lowest price since December 2020. Likely adding to an already large fund short position that now exceeds 200,000 contracts.
- Weekly export inspection numbers that came in below expectations added to the negativity in the soybean market where the March contract printed a fresh 6-month low for the move.
- Soybean meal and oil settled in opposite directions, with meal continuing its slide on slowing feed demand and an improved Argentina crop. Soybean oil reversed to close higher on the day after making fresh lows for the move. The reversal in bean oil added support to soybeans.
- The prospect of beneficial moisture with this week’s winter storm and export inspections for wheat that remain behind the USDA’s forecasted pace, pressured all three wheat classes lower in today’s session, led by Chicago.
- To see the updated US 5-day precipitation forecast, 6-10 day temperature and precipitation outlooks, and Brazil’s 1-week forecast total precipitation, courtesy of NWS, NOAA, and NDMC scroll down to other Charts/Weather Section.
Note – For the best viewing experience, some Grain Market Insider content is best viewed with your phone held horizontally.
Corn
Action Plan: Corn
Calls
2023
No New Action
2024
No New Action
2025
No New Action
Cash
2023
No New Action
2024
No New Action
2025
No New Action
Puts
2023
No New Action
2024
No New Action
2025
No New Action
Corn Action Plan Summary
- No new action is recommended for 2023 corn. After posting a high in October, front month corn futures have steadily drifted sideways to lower with a general lack of bullish news and an estimated carryout around 2.1 billion bushels. If the January USDA report fails to provide a bullish catalyst to the market, it remains at risk of continuing to languish in the same pattern. During last summer’s June rally, Grain Market Insider recommended making sales when Dec ’23 was around 624. For now, Grain Market Insider will continue to hold tight on any further sales recommendations for the next few weeks with the objective of seeking out better pricing opportunities. If the market has not turned around by then, Grain Market Insider may sit tight on the next sales recommendations until spring.
- No new action is recommended for 2024 corn. Since late February ’22, Dec ’24 has been bound by 485 ¾ on the bottom and 602 on the top. During this time, Dec ’24 has held up better as bear spreading has allowed Dec ’24 to maintain more of its value versus old crop prices as traders attempt to price in a larger 2023 carryout with more uncertainty remaining for the 2024 crop. Moving forward, the risk for 2024 prices is the same as for 2023 prices, which is a continuation of a sideways to lower trend without a bullish catalyst. Grain Market Insider is watching for signs of a change in the current trend to look at recommending making additional sales and buying Dec ’24 call options. This past spring, Grain Market Insider recommended buying Dec ‘23 560 and 610 call options ahead of the summer rally and having those in place helped provide confidence to pull the trigger on recommending 2023 sales into that sharp rally, knowing that if corn kept rallying and went to 700 or 800 that the call options would protect those sold bushels.
- No Action is currently recommended for 2025 corn. Grain Market Insider isn’t considering any recommendations at this time for the 2025 crop that will be planted two springs from now. It will probably be late winter or early spring of 2024 before Grain Market Insider starts considering the first sales targets.
To date, Grain Market Insider has issued the following corn recommendations:
Market Notes: Corn
- It was a disappointing day in the corn and grain markets in general as selling pressure continued to push March corn futures to new contract lows. March futures lost 5 ¾ cents on the session and is trading below the key 460 price level.
- Managed and speculative funds have been building their short position in the corn market. As bullish news is lacking, funds in last week’s Commitment of Traders’ report pushed their net short position to over 200,000 short contracts, challenging the largest short position for the marketing year.
- Weekly export inspections for corn were within expectations at 857,000 mt (33.7 mb). Total inspections for the marketing year have reached 504 mb, up 28% from the previous year and are running slightly ahead of the needed pace for the USDA target.
- South American weather is still the biggest factor pressuring the markets. For corn, Argentina weather is favorable, and production looks to return to normal levels after two years of drought. Brazil is seeing a wetter long-term forecast, which is pressuring the soybean market; that is putting pressure on corn futures.
- Friday, the market looks toward the key USDA Quarterly Grain Stocks and WASDE reports to be released on Friday, January 12. Quarterly Grain Stocks will look at the usage of corn for the first quarter of the marketing year. As demand has improved in exports, ethanol production, and feed usage, the number could be larger than market expectations.
Above: Since the end of December, the March corn contract has slid lower with only minor reversals. After breaking through 460, the market may retreat further toward the 415 support level without bullish influence. The market currently shows signs of being oversold, which can be supportive if a bullish catalyst arises to turn prices back higher. If one does enter the market, nearby upside resistance could be found around 470 and again near 481, with heavy resistance between 495-500.
Soybeans
Action Plan: Soybeans
Calls
2023
No New Action
2024
No New Action
2025
No New Action
Cash
2023
No New Action
2024
No New Action
2025
No New Action
Puts
2023
No New Action
2024
No New Action
2025
No New Action
Soybeans Action Plan Summary
- No new action is recommended for 2023 soybeans. Front month soybeans recent downside breakout of the 1290 – 1400 range indicates that there is risk that prices may continue to retreat toward 1180, as forecasts for improved South American weather lessen the potential for the record large global carryout to be reduced. Given the potential of a downside breakout, Grain Market Insider recently recommended adding to sales as the current price level is still historically good. It’s been disappointing how the market has been unable to push higher despite the South American production concerns. Because of that, Grain Market Insider’s concern is that, if the weather pattern doesn’t remain adverse, the path of least resistance could be lower. Grain Market Insider will continue to look at additional sales opportunities, as well as potential re-ownership strategies.
- No new action is recommended for the 2024 crop. The Nov ’24 contract recently broke through the downside of the 1233 – 1320 range that has been in place since the end of July. With this downside breakout and considering the bullish influence of adverse South American weather which appears to be improving, Nov ’24 runs the risk of retreating towards 1150 unless another bullish catalyst enters the market. If prices find support and turn back higher, Grain Market Insider recently recommended buying Nov ’24 1280 and 1360 calls to give you confidence to make sales against anticipated 2024 production and to protect any sales in an extended rally. Grain Market Insider will also continue to watch for any sales opportunities.
- No Action is currently recommended for 2025 Soybeans. Grain Market Insider isn’t considering any recommendations at this time for the 2025 crop that will be planted two springs from now, and it may be some time before conditions are conducive to consider making any recommendations. Be patient as we monitor the markets for signs of improvement.
To date, Grain Market Insider has issued the following soybean recommendations:
Market Notes: Soybeans
- Soybeans ended the day lower but rebounded off the lows earlier in the morning by about 9 cents. While both soybean meal and oil began the day lower, both recovered slightly with soybean oil ultimately posting a gain despite the selloff in crude oil.
- Soybeans are extremely oversold at this point, and non-commercials hold a net short position of 11,629 contracts, which could trigger some short covering ahead of Friday’s WASDE report. It is expected that the USDA will decrease Brazilian soybean production, but the question will be by how much.
- Weekly export inspections for soybeans were a little bit soft for last week with a total of 24.8 mb for the week ending Thursday, January 4. Total inspections are now at 880 mb for 23/24, which is down 21% from the previous year.
- Private analysts are expecting Brazilian soybean production to come in closer to 150 mmt which is far lower than the USDA’s previous guess of 161 mmt, but the recent timely rains could be improving yields. Argentina’s crop has benefitted from good weather, and it should produce enough soybeans to make up for Brazil’s losses.
Above: Soybeans have steadily retreated after leaving a 6-cent gap between 1290 ¾ and 1296 ¾. The market is showing signs of being extremely oversold, which can be supportive if bullish information enters the market to turn prices around. If prices do turn back higher, resistance rests around the price gap and again near the 50-day moving average. Otherwise, the next major support level comes in near the November ’21 low of 1181.
Wheat
Market Notes: Wheat
- Wheat closed lower in all three classes, with Chicago leading the way down. Bear spreading was noted in Chicago, with heavier selling pressure on the front months compared to the deferred. This may be related to the winter storm that is forecasted to bring good moisture to winter wheat areas over the next couple of days that may offer improved conditions.
- Weekly wheat export inspections of 18 mb bring the total 23/24 inspections to 372 mb. That is below the USDA’s estimated pace, and the total is also down 16% from last year. Export sales last week were poor but are still running slightly above the USDA’s estimated pace, in part due to China’s purchases a few weeks ago. There continues to be talk that they are looking to purchase more US wheat, but so far those are just rumors.
- Crude oil prices do not usually have a direct impact on the wheat market. However, they can affect the grain complex as a whole. And with crude at one point today down over 3.50 per barrel, it offered weakness to grain futures during today’s trade.
- From the beginning of the season July 1 until January 8, Ukrainian grain exports at 19.4 mmt have fallen 18% year on year according to their agriculture ministry. Of that total, 7.8 mmt are wheat, which is down 9% year on year. The ministry added that Ukraine’s own Black Sea corridor has shipped about 15 mmt of goods since it opened, with about 10 mmt of that being ag products.
Action Plan: Chicago Wheat
Calls
2023
No New Action
2024
No New Action
2025
No New Action
Cash
2023
No New Action
2024
No New Action
2025
No New Action
Puts
2023
No New Action
2024
No New Action
2025
No New Action
Chicago Wheat Action Plan Summary
- No new action is currently recommended for 2023 Chicago wheat. Between late July and the end of November, front month Chicago wheat trended lower, driven mostly by weak US demand and lower world wheat prices. During that time, and as managed funds established most of their short position of nearly 120,000 contracts, the market became extremely oversold. Since then, as the market rallied to a high of 649 ½, China made several US SRW wheat purchases, and funds covered more than 23,000 short contracts. During that runup, Grain Market Insider recommended making an additional sale to take advantage of the elevated prices in case the rally was temporary since US wheat prices remain elevated relative to other world exporters, despite the increase in demand. If the market remains strong and continues to rally, Grain Market Insider will consider potential re-ownership strategies to protect current sales and add confidence to make additional sales at higher prices.
- No new action is recommended for 2024 Chicago wheat. From the end of July, the July ’24 contract has slowly stepped its way down to a low of 586 in sympathy with the front month contract where managed money established a large short position during that time. Since then, July ’24 rallied alongside the March ’24 contract, as the funds covered over 30k contracts of their nearly 130k short contract position. While bearish headwinds remain, the funds continue to carry a large short position and seasonals remain supportive for the addition of weather risk premium, which are two factors that could fuel further short covering and another leg up in prices. At the end of August, Grain Market Insider recommended purchasing July 590 puts to prepare for further price erosion. Back in June, Grain Market Insider recommended two separate sales that averaged about 720 to take advantage of the brief upswing. If the market receives the needed stimulus to move prices back toward this summer’s highs, Grain Market Insider is prepared to recommend adding to current sales levels and possibly even purchasing call options to protect those sales. Otherwise, the current recommended put position will add a layer of protection if prices erode further, and Grain Market Insider will be prepared to recommend covering some of those puts to offset much of the original cost and move toward a net neutral cost for the remaining position.
- No action is currently recommended for 2025 Chicago Wheat. Grain Market Insider isn’t considering any recommendations at this time for the 2025 crop that will be planted next fall. It will probably be mid-winter before Grain Market Insider starts considering the first sales targets.
To date, Grain Market Insider has issued the following Chicago wheat recommendations:
Above: March Chicago wheat continues to challenge support around the 50 and 100-day moving averages. If more bullish influence enters the market, prices could push higher to test overhead resistance near 650. If not, and prices begin to retreat, the next level of major support comes in near 556.
Action Plan: KC Wheat
Calls
2023
No New Action
2024
No New Action
2025
No New Action
Cash
2023
No New Action
2024
No New Action
2025
No New Action
Puts
2023
No New Action
2024
No New Action
2025
No New Action
KC Wheat Action Plan Summary
- No new action is recommended for 2023 KC wheat crop. After posting an 80-cent rally in late November and early December, front month KC wheat has languished and drifted lower while retracing about 50% of the upward move. Managed funds continue to carry a significant short position, and even though bullish headwinds like weak US demand and low world wheat prices remain, this could fuel a return to higher prices as winter weather risks add volatility to the market. Grain Market Insider’s strategy is to look for price appreciation this winter, as weather becomes a more prominent market mover, and may consider suggesting additional sales if prices become over-extended.
- No new action is recommended for 2024 KC wheat. At the end of August, the July ’24 contract broke out of roughly a one-year trading range and stepped down to a 609 ¼ low in late November, largely driven by managed fund selling in the front month on weak US export demand and lower world wheat prices. Since then, the funds covered part of their large short position which also rallied prices in the July ’24 contract. While bearish headwinds remain, managed funds continue to hold a sizable, short position, and price seasonals remain positive for adding weather risk premium. These are two factors that could fuel additional short covering and rally prices in the months ahead. Back in August, Grain Market Insider recommended buying Jul’24 KC wheat 660 puts to protect the downside following the range breakout. As the market recently got further extended into oversold territory and the July contract showed signs of support near 630, Grain Market Insider recommended exiting 75% of the originally recommended position. Moving forward, Grain Market Insider is prepared to recommend exiting the last 25% on any further supportive market developments.
- No action is currently recommended for 2025 KC Wheat. Grain Market Insider isn’t considering any recommendations at this time for the 2025 crop that will be planted next fall. It will probably be mid-winter before Insider starts considering the first sales targets.
To date, Grain Market Insider has issued the following KC recommendations:
Above: March KC wheat rejected an attempt to move higher near 650 and turned lower to test the bottom end of the recent range around 619. If the market continues to retreat, the next area of support remains near 595 and 575. Overhead, nearby resistance comes in around 650 and again between 675 – 680.
Action Plan: Mpls Wheat
Calls
2023
No New Action
2024
No New Action
2025
No New Action
Cash
2023
No New Action
2024
No New Action
2025
No New Action
Puts
2023
No New Action
2024
No New Action
2025
No New Action
Mpls Wheat Action Plan Summary
- No new action is currently recommended for the 2023 New Crop. For much of the 2nd half of last year, driven mostly by fund selling and slow US export demand, front month Minneapolis wheat slowly stair-stepped lower until hitting the November low. During this time, managed funds also established a record net short position. Since then, with the market mostly sideways, the November low of 697 ½ has held, and prices have pierced the 50-day moving average just once. Although bearish headwinds remain, the large fund net short position could fuel a short-covering rally if a bullish catalyst enters the scene to move prices to close above the 50-day moving average. Back in June, Grain Market Insider made a sales recommendation during the July rally near 820, and with that sale in place, Grain Market Insider’s strategy is to look for price appreciation this winter with an eye on considering additional sales around 725 – 775, and again north of 800. If at that point the market remains strong and continues to rally, Grain Market Insider will consider potential re-ownership strategies to protect current sales and add confidence to make additional sales at higher prices.
- No new action is recommended for 2024 Minneapolis wheat. After trading to a peak of 871 ¾ last August, the Sept ’24 gradually retreated to a low in November in concert with the front month as managed funds built a record large net short position mostly on weak US export demand. And while Sept ’24 has failed to close above the 50-day moving average since late August, the 726 ¼ November low remains intact. Although bearish headwinds remain, the large fund net short position could fuel a short-covering rally if prices move higher and close above the 50-day moving average. Back in August, Grain Market Insider recommended buying July ’24 KC wheat 660 puts to protect the downside following a 1-year range breakout in KC wheat, and in November recommended exiting 75% of the originally recommended position as July ’24 KC wheat showed signs of support around 630. While in the same time frame, Grain Market Insider also recommended making an additional sale as the Sept ’24 Minneapolis contract broke long time 743 support. For now, Grain Market Insider remains prepared to recommend exiting the last 25% of the open puts on any further supportive market developments.
- No action is currently recommended for the 2025 Minneapolis wheat crop. Grain Market Insider isn’t considering any recommendations at this time for the 2025 crop that will be planted two springs from now. It will probably be mid-winter before Grain Market Insider starts considering the first sales targets.
To date, Grain Market Insider has issued the following Minneapolis wheat recommendations:
Above: After making a new contract low on November 27, the March contract found buying interest from its oversold status and record fund short. Since then, the market posted a bearish reversal on December 6, showing significant resistance in the 750 area. If prices can break through upside resistance, they could run toward 790. If prices retreat, nearby support could be found around 718, with further support near the recent low of 697 ½.
Other Charts / Weather
US 5-day precipitation forecast courtesy of NOAA, Weather Prediction Center.
Brazil 1-week forecast total precipitation courtesy of the National Weather Service, Climate Prediction Center.
Argentina 1-week forecast total precipitation courtesy of the National Weather Service, Climate Prediction Center.