1-23 End of Day: Soybeans Recoup USDA Report Losses While Corn Consolidates
All prices as of 2:00 pm Central Time
| Corn | ||
| MAR ’24 | 446.5 | 0.75 |
| JUL ’24 | 466 | 1.25 |
| DEC ’24 | 477.5 | 1.25 |
| Soybeans | ||
| MAR ’24 | 1239.5 | 15.25 |
| JUL ’24 | 1254.25 | 13 |
| NOV ’24 | 1207 | 9.5 |
| Chicago Wheat | ||
| MAR ’24 | 596.5 | 0 |
| JUL ’24 | 612.75 | 0.75 |
| JUL ’25 | 653.75 | -0.5 |
| K.C. Wheat | ||
| MAR ’24 | 617.5 | 10.5 |
| JUL ’24 | 620 | 5.5 |
| JUL ’25 | 658 | 5.25 |
| Mpls Wheat | ||
| MAR ’24 | 699 | -1.5 |
| JUL ’24 | 710 | 0.25 |
| SEP ’24 | 718 | 0.5 |
| S&P 500 | ||
| MAR ’24 | 4882.75 | 1.75 |
| Crude Oil | ||
| MAR ’24 | 74.39 | -0.37 |
| Gold | ||
| APR ’24 | 2050 | 8.4 |
Grain Market Highlights
- Quiet two-sided trade kept the corn market in consolidation mode for the fourth day in a row with little news to sway the market significantly in either direction. As prices settled slightly weaker in the front months relative to the deferred.
- Strength from soybean meal and oil, and poor early yields from Brazil’s soy harvest, helped to lead soybeans higher as they recovered the losses from the USDA’s January report and from being oversold.
- Recent rains that could bring Australia’s wheat crop to 30 mmt, and a rise in the US dollar to 6-week highs, may have added resistance to the wheat complex. As the wheat complex closed the day mixed with KC leading the strength, while Chicago and Minneapolis lagged.
- To see the updated US 7-day precipitation forecast, as well as the Brazil 2-week forecast total precipitation and GRACE-Based drought indicator, courtesy of the National Weather Service, Climate Prediction Center, and NDMC scroll down to the 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. Front month corn has languished in a sideways to lower trend since printing a high in October, with a general lack of bullish news and an estimated US carryout over 2.1 billion bushels. The failure of the USDA’s January report to provide the bullish news necessary to turn prices higher is disappointing and the market remains at risk of remaining in the same pattern. With that being said, the market does show signs of being oversold, and managed funds hold a sizable net short position, which could trigger a short covering rally if a bullish catalyst enters the scene. 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. Following the January USDA Supply and Demand update, Dec ’24 broke through the bottom end of the 485 ¾ to 602 range that had been in place since February ’22. While this is a disappointing development, bear spreading has allowed Dec ’24 to maintain more of its value versus old crop, as traders attempt to price in a larger 2023 carryout with more uncertainty remaining for the 2024 crop. Additionally, Dec ’24 does show signs of being oversold, which is supportive if a bullish catalyst enters the scene. Grain Market Insider continues to watch for signs of a change in the current trend to look at recommending making additional sales and buying Dec ’24 call options.
- 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
- The corn market continued to consolidate for the fourth consecutive day, as it closed slightly higher following two-sided trade. Significant market news remains relatively quiet, nor have there been any new private corn export sales reported since last Tuesday, but buying strength in the soybean market did help keep a floor under corn futures during the session.
- AgRural estimates Brazil’s first corn harvest to be 7.9% complete, as compared to 5.1% last week and 5.9% last year. The agency also estimates that seeding of the second (safrinha) corn crop is 4.9% complete versus 0.4% last week, and 1% last year.
- A Brazilian crop watcher reduced its estimate of Brazil’s 23/24 corn production in its latest release, by 11% to 118.5 mmt. The reduction is likely due to delays in the soybean crop which would lead to a potential drop in planted area as planting of the second (safrinha) crop gets pushed back. The USDA currently estimates Brazil’s corn production at 127 mmt.
- It is also estimated that if Brazil’s production does fall that much, it is possible that the country’s 23/24 exports could fall to 35 mmt from last year’s 56 mmt. An export drop of 21 mmt for Brazil could open the door for increased US exports for the coming year.
- US corn export prices are currently below both Brazil and Argentina through February, after which Argentina is more competitive.
Above: Earlier in January, March corn broke through 460 support, which is now nearby resistance, and retreated toward nearby support around 440. The market shows signs of being oversold, which can be supportive if bullish information enters the market. If prices break below 440, the next major support level comes in near 415. Overhead, if prices rally above 460, additional resistance may enter in between 470-480.
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 significantly higher and are now 38 cents off last Thursday’s low. Support came from higher soybean meal and oil, and some of the early yields from the beginning of Brazil’s soy harvest that have come in poorly.
- Over the next week, Argentina is expected to be relatively dry, but the good growing conditions they have had so far this season should keep the crop in good shape. Brazil is expected to receive scattered showers over the next week with some dryness in the western region of the country.
- The big question over the next few months will be the size of South America’s total production as the USDA is likely forecasting Brazilian production too high but may be predicting Argentina’s too low. Their guess of 157 mmt for Brazil is above most analysts’ expectations which range between 150 and 155 mmt, with some much lower, but increases by Argentina could offset some of those losses.
- Demand has been mixed with domestic crush very strong and December’s crush numbers breaking records, but export demand has been lagging with exports below last year by 20%. Crush margins have narrowed over the past few weeks, and the US’s export window for soybeans is nearing its end with South American harvest underway.
Above: After posting the 1201 low, short covering from oversold conditions has enabled March soybeans to rebound somewhat. Overhead resistance remains in the 1250 area and again near 1290. If prices turn lower, support comes in around 1200 and then near the November ’21 low of 1181.
Wheat
Market Notes: Wheat
- Wheat closed mixed amongst the three futures classes. Despite being about a dime higher at one point, March Chicago wheat settled unchanged, potentially pressured by another rise in the US Dollar Index. Some weakness may have also stemmed from recent rains in Australia that, according to some private estimates, may boost their crop to 30 mmt. For reference, the USDA is at 25.5 mmt.
- According to the EU’s Monitoring Agricultural Resources unit, winter crops in northern European countries may experience damage due to a cold front. However, Russian wheat is said to be protected by thick snow cover, so not much damage is expected there.
- The Canadian wheat production estimate for 24/25 is seen rising 4.2% to 33.3 mmt, according to an estimate from Agriculture and Agri-Food Canada (AAFC). While planted acreage is expected to be down slightly, yields are expected to be higher.
- China has been encouraging hog producers to reduce capacity after farmers lost about eleven dollars per head on average. While this does not directly affect the wheat market, it is important to note that it may affect the commodity complex as a whole, especially if Chinese hog farmers require less feed grain. Additionally, as they try to become more self-sufficient, there are concerns that down the road China will import less grain in general.
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:
Above: March Chicago wheat has been consolidating after uncovering initial support just below the market around 573. If that holds, the market may test resistance near the 50-day moving average, and again between 620 and 625, while heavy resistance remains near 650. If 573 does not hold, the market may run the risk of retreating and testing the next level of major support 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: With little bullish news in the market, KC wheat has been drifting sideways to lower since the middle of December with the 50-day moving average (632) acting as nearby resistance. If bullish news does enter the scene to move prices higher, major resistance beyond 632 lies between 650 and 678. Otherwise, major support below the market remains between 595 and 575.
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 KC wheat. In early December the July ’24 contract posted a 70-cent rally mostly on short covering activity in the front month contracts. Since then, July ’24 has drifted lower as growing conditions have seen improvement. Still, much of the growing season remains, and managed funds continue to carry a significant short position in old crop. Even though bullish headwinds remain, this could fuel another short covering rally if any production concerns come to the forefront. Back in August, Grain Market Insider recommended buying Jul ’24 KC wheat 660 puts to protect the downside. As the market got further extended into oversold territory and July ’24 showed signs of support near 630, Grain Market Insider recommended exiting 75% of the originally recommended position. Grain Market Insider remains prepared to recommend exiting the last 25% 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: Since the March contract closed below 700 support in early January, the 700 area has acted as resistance for the recent rally. If prices close above that area, the next areas of resistance may come in between 721 and 734. Otherwise, below the market support remains near 669.
Other Charts / Weather
