1-26 End of Day: Improved South American Outlooks Pull Markets Lower
All prices as of 2:00 pm Central Time
| Corn | ||
| MAR ’24 | 446.25 | -5.5 |
| JUL ’24 | 463.5 | -5.75 |
| DEC ’24 | 476.25 | -4.5 |
| Soybeans | ||
| MAR ’24 | 1209.25 | -13.75 |
| JUL ’24 | 1224 | -13.5 |
| NOV ’24 | 1185 | -11.25 |
| Chicago Wheat | ||
| MAR ’24 | 600.25 | -12 |
| JUL ’24 | 616.25 | -11.25 |
| JUL ’25 | 655 | -6.5 |
| K.C. Wheat | ||
| MAR ’24 | 624.75 | -12.25 |
| JUL ’24 | 623.25 | -9.75 |
| JUL ’25 | 656.5 | -7.75 |
| Mpls Wheat | ||
| MAR ’24 | 703.5 | -5.5 |
| JUL ’24 | 713 | -6 |
| SEP ’24 | 721 | -5.25 |
| S&P 500 | ||
| MAR ’24 | 4914 | -9.25 |
| Crude Oil | ||
| MAR ’24 | 78.03 | 0.67 |
| Gold | ||
| APR ’24 | 2034.9 | -1.9 |
Grain Market Highlights
- Weakness in neighboring wheat and soybeans spilled over to the corn market and added negativity to the market that closed lower in reaction to higher-than-expected estimates of Argentina’s corn crop.
- The Buenos Aires Grain Exchange also raised its estimate of Argentina’s soybean crop. That news, plus a wetter Argentine forecast, weighed heavily on March soybeans and meal. March meal closed at its lowest level in almost two years.
- Soybean oil was the strong leg of the soybean complex and closed with a 0.40 cent gain on the day and well off its lows. Gains in bean oil weren’t enough to support Board crush margins though, which fell for the fourth day in a row.
- All three wheat classes closed in negative territory today on a lack of bullish news. Both Chicago and KC saw the largest losses, though buying entered the market at midday and helped all three classes settle well off their lows.
- To see the US 8-14 day temperature and precipitation outlooks, and the 2-week GFS Precipitation Forecast for South America courtesy of the National Weather Service, NOAA and the Climate Prediction Center, 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
- Corn futures traded lower for the second consecutive session as selling pressure in the wheat and soybean market spilled over into the corn market on Friday. March lost 5 ½ cents on the day but did finish ¾ cent higher on the week.
- Argentina weather became a focus this week with a hotter, drier forecast, but early season weather allowed the Buenos Aires Grain exchange to raise their corn crop outlook for the season by 1.5 mmt to 56.5 mmt, which would reflect record production.
- Corn export shipments through January 18 totaled 605 mb, up 28% from last year. Shipments last week were 36.7 mb, below the required 45.4 mb needed to reach the USDA target of 2.100 bb. Overall, the corn shipment pace is still ahead of schedule to reach the USDA target.
- Corn basis may flatten out in the days ahead as producer selling did pick up on the recent corn rally. The warmer weather and snow melt across the Midwest likely aided corn movement into the cash market.
- Hedge funds were holding a large short position in the corn market, over 260,000 net short contracts as of last week Tuesday. With the strength in the market this week, funds have likely begun working out of some of these short positions. The corn market in general looks over-supplied and lacking true bullish news.
Above: Since posting a low on January 18, March corn has traded higher from being oversold. The advance appears to have been met with resistance just below 460. If prices turn back lower, initial support on the downside remains near the recent low of 436 ¾, with the next major support level around 415.
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 to finish the week as South American weather improves and the lower production estimates begin to come into question. Some analysts are raising their earlier predictions for Brazilian estimates, while Argentina raises theirs as well.
- For the week, March soybeans ended up losing 4 cents, March soybean meal lost $7.50, and March soybean oil gained 0.03 cents. Soybeans trended higher for the beginning of the week on thoughts that South America would be drier over the following 10 days, but prices turned around on Thursday following disappointing export sales and an Argentinian forecast that turned wetter.
- With Argentina’s good growing season so far, the Buenos Aires Grain Exchange updated its estimate for the soybean crop to 52.5 mmt from 52 mmt previously, but they are taking into consideration the risk of drier weather through the rest of the month. Brazil’s production may not be as short as some had anticipated as now that harvest is moving along, cash prices have fallen significantly and are now cheaper than US offers.
- This morning, the USDA reported a flash sale of 100,000 tons of soybean meal to unknown destinations for the 23/24 marketing year. Last week’s export sales for soybeans were on the lower end of expectations with an increase of 20.6 mb for 23/24. This was down 28% from the previous week but up 6% from the prior 4-week average.
Above: The recent rally from oversold conditions was rejected by overhead resistance around 1250. The turn lower has the market on track to test the recent 1201 low. If the market breaks that support, it may run the risk of testing the November ’21 low of 1181.
Wheat
Market Notes: Wheat
- The wheat market, along with the rest of the grain complex closed with losses for the day. All three US wheat classes traded lower, with Chicago and KC leading the way with double digit losses. Matif wheat futures also settled sharply lower, offering no support. This price action may have been primarily driven by headlines that Chinese authorities have, for the first time, approved imports of wheat from Argentina.
- In other global news, there are reports that China is talking with Iran and encouraging them to reduce attacks on vessels in the Red Sea. If more ships begin utilizing the Suez Canal again, it could reduce global freight and shipping costs.
- Argentina’s Buenos Aires Grain Exchange increased their corn and soybean production estimates; wheat production was left unchanged at 15.1 mmt, but harvest is now reported to be 100% complete. This year’s 15.1 mmt crop represents about a 24% increase from last year’s 12.2 mmt crop when drought was a much bigger issue.
- One factor that may have added pressure today is the forecast for more rain and snow in the central and southern plains states expected next week. This should help soil moisture levels, may lead to much better growing conditions this spring compared to last year. On the other side of the coin, drought is said to be increasing in northern Africa, meaning that those nations may need to import more wheat.
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: The recent rally came within earshot of the 620 – 625 resistance area and was rejected. For now, minor nearby support may be found near the 100-day moving average. If that breaks, the market runs the risk of receding further with the next downside support near 573 and again around 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 is showing signs of being overbought, and the recent rally appears to have culminated in a bearish reversal right around the 50-day moving average. Currently, upside resistance sits near the recent high of 641, and if prices follow through and trade lower, the next major support level 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: The recent rally in the March contract appears to be stalling, with the market consolidating between the upper 690s and low 700s. Initial resistance now sits just above the market between 710 and 720, with heavier resistance around 735. Below the market support remains near 669.
Other Charts / Weather
Brazil 2-week forecast total precipitation courtesy of the National Weather Service, Climate Prediction Center.
Argentina 2-week forecast total precipitation courtesy of the National Weather Service, Climate Prediction Center.