01-12 End of Day: Bearish USDA Numbers Press Markets Lower to End the Week.
The CME and Total Farm Marketing offices will be closed Monday, January 15, 2024, in observance of Martin Luther King Jr. Day
All prices as of 2:00 pm Central Time
| Corn | ||
| MAR ’24 | 447 | -10.75 |
| JUL ’24 | 468.25 | -10.75 |
| DEC ’24 | 481.75 | -8 |
| Soybeans | ||
| MAR ’24 | 1224.25 | -12.25 |
| JUL ’24 | 1244.25 | -11.75 |
| NOV ’24 | 1201.5 | -5.5 |
| Chicago Wheat | ||
| MAR ’24 | 596 | -7.75 |
| JUL ’24 | 618.5 | -6.25 |
| JUL ’25 | 656.75 | -2.5 |
| K.C. Wheat | ||
| MAR ’24 | 615.25 | -0.75 |
| JUL ’24 | 623.25 | -2.25 |
| JUL ’25 | 653.75 | 0 |
| Mpls Wheat | ||
| MAR ’24 | 699.5 | -0.5 |
| JUL ’24 | 717.5 | -1 |
| SEP ’24 | 726.75 | -0.75 |
| S&P 500 | ||
| MAR ’24 | 4814.75 | -0.75 |
| Crude Oil | ||
| MAR ’24 | 72.74 | 0.65 |
| Gold | ||
| APR ’24 | 2070.6 | 31.6 |
Grain Market Highlights
- Net increases in 23/24 US corn ending stocks and South American production pressed March corn 16 ¾ cents lower to fresh contract lows before rebounding 6 cents into the close.
- USDA soybean projections that came in above expectations across the board for both US production and ending stocks, as well as both Brazil and Argentina production, slammed March soybeans to a low of 1203 before they recovered to close 11 ¼ cents off the low.
- Both soybean meal and oil saw wide ranges on both sides of unchanged before closing lower on the day. Meal posted a new low for the move before rebounding to close just $0.10 lower, while soybean oil posted a bearish reversal and closed with a 0.47 cent loss.
- A generally bearish USDA report weighed on the wheat complex despite lower US ending stocks and planted acreage estimates. Chicago contracts led the way down with all three classes settling lower on the day but well off their respective lows.
- To see the updated US 6 – 10 day temperature and precipitation outlooks, and 2-week precipitation forecasts as a percent of normal for Brazil and Argentina, courtesy of the NWS, NOAA, and CPC, scroll down to other Charts/Weather Section.
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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
- Grain markets saw strong selling pressure as a bearish USDA WASDE report reflected strong global and US corn supplies. The report brought increased yield adjustments for US production this past growing season. March corn futures traded to new contract lows, down 10 ¾ cents on the session. For the week, March corn futures lost 13 ¾ cents.
- The USDA raised US corn yield this past season to 177.3 bushels/acre, up 2.4 bushel from the December projection. This, taking away a small reduction in harvested acres raised corn production 107 mb over the December report. After demand adjustments, US corn ending stocks were raised 31 mb, and above market expectations. This projected carryout is 802 mb higher than last year.
- The USDA made changes in their forecast for South American production for this growing season. The USDA lowered projected Brazil corn production to 127 mmt, down 2 mmt from December, and left Argentina corn production unchanged. Both moves reflect the current weather situation in each country. Yesterday, the Rosario Grain Exchange raised the Argentina crop to a projected 59 mmt, which would be a record for the South American country.
- US Quarterly Grain Stocks as of December 1 for corn were 12.169 billion bushels, over 100 mb above analyst expectations, and 1.35 billion bushels larger than last year. The jump in stocks is reflective of the strong corn production in the US this past season.
- With the strong US and Argentina production, world corn ending stocks for corn are estimated at 325.22 mmt, up 10 mmt from last month and 12 mmt above the trade guesses for the report.
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
- The USDA released its monthly WASDE update and quarterly grain stocks as of December 1. 23/24 production and ending stocks both came in above expectations, as did December 1 grain stocks to initially push soybeans 33 cents lower but close with just a 12 ¼ cent loss.
- US 23/24 ending stocks are now estimated at 280 mb, up 35 million from last month, with higher Dec. 1 stocks of 3.0 bb and production of 4.126 bb both contributing to the higher ending stocks.
- The USDA’s South American production estimates also came in above expectations. Brazil’s soybean production is now estimated at 157 mmt, versus the average trade guess of 156.26, and the USDA estimated Argentina’s production 2 mmt above the average guess of 48 mmt.
- With increases in both US and South American production, the USDA raised its projection for world ending stocks slightly from 114.21 mmt in December, to 114.6 mmt, where average trade expectations were for a net reduction to 111.58 mmt.
- Next Tuesday NOPA will release its monthly crush report relaying total crush amounts for the month of December. Average estimates are calling for a record 193.12 mb of soybeans crushed last month, if realized. The total would represent a 2.2% increase from November’s 189.038 mb crushed and an 8.8% increase from last year. Dec. 31 soybean oil stocks are estimated to increase 6.4% to 1.291 billion lbs.
- Rainfall totals in Mato Grosso, Brazil are expected to decline over the next couple of weeks. Although with the rain they have received recently, this shouldn’t cause much issue. However, some of the other drier areas of Brazil may get good rain coverage over the next couple of weeks.
Wheat
Market Notes: Wheat
- Wheat closed lower in all three classes alongside Paris milling wheat, and as the US Dollar continues to consolidate. Of course, today’s price action had much more to do with all the data released by the USDA. Initially, wheat was a little higher just after the report came out, possibly because winter wheat acreage was estimated at 34.4 million acres versus an expected 35.9 ma. But the negative tone of the report in general weighed on wheat by the end of the session.
- The USDA pegged US wheat quarterly stocks for December 1 at 1.410 bb. The trade was looking for 1.383 bb, which compares to 1.780 bb in September and 1.312 bb in December 2022.
- US ending stocks for wheat came in at 647 mb, whereas the trade was looking for 658 mb. This is also a decline from the December report which was 659 mb. For the world number, the USDA estimated 260.0 mmt of wheat carryout, up from the average trade estimate of 258.3 mmt, and up from December at 258.2 mmt.
- For Russia and Ukraine, wheat exports were both raised slightly to 51.0 mmt and 14.0 mmt respectively. US wheat exports were left unchanged by the USDA at 725 mb. As far as other world numbers, production in Australia at 25.5 mmt and in Argentina at 15.0 mmt were both unchanged from last month by the USDA.
- According to the Buenos Aires Grain Exchange, their 23/24 wheat crop is 95% harvested, and their production estimate was unchanged from 15.1 mmt. For reference, this is up from 12.2 mmt last year.
- The NOAA Climate Prediction Center estimates a 73% chance that El Nino will become neutral this spring. In other words, the pattern should come to an end. This may provide good conditions for planting in the US this spring. They also suggested that after a neutral period, the pattern will have a 64% chance to switch back to La Nina by August.
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. The wheat market has continued to be dominated by lower world export prices that have stymied US export sales and depressed US prices. In early December, Grain Market Insider recommended taking advantage and making a sale on a short covering rally which was sparked by several Chinese purchases of US wheat. Since then, China has been silent in the US wheat export market, and prices remain somewhat elevated. Any remaining 2023 soft red winter wheat should be getting priced into market strength with the goal of having zero bushels unpriced by the end of January. Grain Market Insider won’t have any “New Alerts” for 2023 Chicago wheat – either Cash, Calls, or Puts, as we have moved focus onto 2024 and 2025 Crop Year Opportunities.
- No new action is recommended for 2024 Chicago wheat. Since early December, the July ’24 contract has traded mostly sideways to slightly lower after its brief short covering runup on Chinese buying. Although China has since been absent from the US wheat export market, managed funds continue to hold a sizeable, short position that could trigger another short covering rally if a bullish impetus enters the market. 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. Since early September, the July ’25 contract has been rangebound, largely between 650 on the bottom and 675 on the top. Grain Market Insider’s strategy for the 2025 crop year up to this point has been to sit tight. Though if prices break out of the topside of this range toward the 690 – 705 area, we will consider taking advantage of the rally and making sales recommendations.
To date, Grain Market Insider has issued the following Chicago wheat recommendations:
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:
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 second 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.
- 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:
Other Charts / Weather
Brazil 2-week forecast precipitation, percent of normal, courtesy of the National Weather Service, Climate Prediction Center.
Argentina 2-week forecast precipitation, percent of normal, courtesy of the National Weather Service, Climate Prediction Center.