1-29 End of Day: Grains Follow Through on Friday’s Weakness to Close Lower.
All prices as of 2:00 pm Central Time
| Corn | ||
| MAR ’24 | 440.25 | -6 |
| JUL ’24 | 459.25 | -4.25 |
| DEC ’24 | 474.5 | -1.75 |
| Soybeans | ||
| MAR ’24 | 1194.25 | -15 |
| JUL ’24 | 1215.25 | -8.75 |
| NOV ’24 | 1180.25 | -4.75 |
| Chicago Wheat | ||
| MAR ’24 | 593.5 | -6.75 |
| JUL ’24 | 609.5 | -6.75 |
| JUL ’25 | 648.75 | -6.25 |
| K.C. Wheat | ||
| MAR ’24 | 618.25 | -6.5 |
| JUL ’24 | 615.5 | -7.75 |
| JUL ’25 | 649.25 | -7.25 |
| Mpls Wheat | ||
| MAR ’24 | 693.25 | -10.25 |
| JUL ’24 | 704.75 | -8.25 |
| SEP ’24 | 713.5 | -7.5 |
| S&P 500 | ||
| MAR ’24 | 4931 | 14.75 |
| Crude Oil | ||
| MAR ’24 | 76.85 | -1.16 |
| Gold | ||
| APR ’24 | 2044.6 | 8.5 |
Grain Market Highlights
- The lack of fresh bullish news and carryover weakness from wheat and soybeans pressured the corn market, which followed through on Friday’s instability to close lower on the day.
- The soybean market failed to hold early strength from rebounding soybean meal and closed lower on more bearish Chinese economic news and sharply lower bean oil.
- Soybean meal rebounded early in the session as traders likely covered shorts after posting fresh 2-year lows last Friday. Bean oil followed lower crude and world veg oil to resume its downtrend and post a fresh nearly 8-month low.
- All three wheat classes closed in the red, but late-day buying strength came in to rally them off their respective lows. Word that Egypt may only import 7 mmt of wheat and weakness in China’s business sector likely contributed to the declines.
- To see the updated US 5-day precipitation forecast, 6 – 10 day temperature and precipitation outlooks, and the 1-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 was disappointing and the market remains at risk of remaining in the same pattern. With that being said, managed funds continue to 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. 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 next year. 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
- Selling across the grain markets helped pressure corn futures lower to start the week as bullish news is hard to find. March corn lost 6 cents on the session. Charts stay weak technically, and the March contract established a new contract low daily close of 440 ¼. Prices look poised to test the recent contract trading low of 436 ¾.
- The USDA released weekly corn inspections during the session. Last week, US exporters shipped 35.5 mb (900,000 mt) of corn. This was up from last week’s total. Total inspections for the 23/24 marketing year are at 616 mb, up 30% year over year.
- Argentina weather was a focus last week helping support prices, but weather forecasts are looking at decent rainfall potential going into February. This helped pressure both the corn and soybean markets.
- Brazilian soybean harvest is trending 9-11% complete, which is nearly double the 5-year average. The earlier harvest date should allow Brazil’s key second crop (safrinha) corn to get planted in a timely fashion and a have a full growing season available.
- Hedge funds continue to grow their large short positions in the corn market. On last week’s Commitment of Trader’s Report, hedge funds held a net short position of 265,285 contracts. This is approaching all-time highs with the corn market in general looking 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.
Corn Managed Money Funds net position as of Tuesday, Jan 23. Net position in Green versus price in Red. Managers net sold 4,743 contracts between Jan. 17 – 23, bringing their total position to a net short 265,285 contracts.
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 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. Given this downside breakout and considering South American weather 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 next year, 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 closed sharply lower in the front months but only 5 cents lower in the November contract with pressure coming from lower soybean oil and the news of Chinese real estate developer, Evergrande, being court-ordered to liquidate the company. This news adds to the concern regarding the Chinese economy and their demand.
- Export inspections for soybeans were within trade expectations at 32.7 mb for the week ending January 25 which is down 24% year over year. Total inspections for 23/24 are at 1,017 mb, with the USDA estimating total exports at 1,755 mb, a decrease of 12%.
- Weather in Argentina has been hot and dry but is expected to turn around in a few days with increased moisture and cooler temperatures. Brazil has received too much rain in the northern region but has recently dried up opening the door for harvest. Brazil is now 9% done with harvest which is above last year’s 4.4%.
- Friday’s CFTC report showed funds as sellers of 15,045 contracts of soybeans which increased their net short position to 91,842 contracts last week. Funds currently hold the second largest net short position in history with corn, soybeans, and wheat combined. The last time they were this short was May of 2019.
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.
Soybean Managed Money Funds net position as of Tuesday, Jan. 23. Net position in Green versus price in Red. Money Managers net sold 15,045 contracts between Jan. 17 – 23, bringing their total position to a net short 91,842 contracts.
Wheat
Market Notes: Wheat
- News that a major Chinese real-estate firm, Evergrande, was forced by the courts to liquidate may have played a role in today’s weakness in the commodity complex. This corporation was said to owe $300 billion in debt, and with the existing concerns about China’s economy, this collapse just adds fuel to the fire.
- According to the Egyptian supply minister, Egypt may only import 7 mmt of wheat this year, and that their reserves are sufficient for over four months. Historically they import about 12 mmt of wheat per year. What makes this statement a bit puzzling is the fact that drought is said to be expanding in north African countries, including Egypt. In any case, his statements may have offered some weakness to the futures market.
- Over the weekend it was reported that three US military service members were killed in drone attacks in Jordan. President Biden was quoted as saying “we shall respond”. What exactly this entails is unclear. However, there is concern that this will increase the tension in the Middle East and bring the US into the war. This may lend some support to the crude oil and wheat markets but could also continue to raise freight costs if ships continue to avoid the Suez Canal.
- Farmers unions in France have reportedly threatened to blockade highways surrounding Paris. There have also been alleged calls for a siege of the capital. French farmers have been protesting higher production costs, fewer subsidies, as well as strict European regulations. According to interior minister Gerald Darmanin, about 15,000 police officers will be positioned to prevent tractors from entering Paris and other cities.
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.
Chicago Wheat Managed Money Funds net position as of Tuesday, Jan. 23. Net position in Green versus price in Red. Money Managers net bought 4,034 contracts between Jan. 17 – 23, bringing their total position to a net short 64,541 contracts.
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. 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.
KC Wheat Managed Money Funds net position as of Tuesday, Jan. 23. Net position in Green versus price in Red. Money Managers net bought 312 contracts between Jan. 17 – 23, bringing their total position to a net short 38,340 contracts.
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 the last six months, front month Minneapolis wheat has slowly stair-stepped lower with little bullish news to move markets higher. During this time, prices have pierced the 50-day moving average just once, and managed funds have established and maintained a record (or near record) short position. Although bullish headwinds remain, support may be building in the 670 – 675 area, and 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. Grain Market Insider’s strategy is to look for a modest retracement of the July high and consider additional sales around 725 – 750.
- No new action is recommended for 2024 Minneapolis wheat. Much like the front month contracts, Sept ’24 has been in a downward trend since last summer. And just as Sept ’24 has been influenced to the downside by the front months, it could be similarly influenced to the upside by the front months if a bullish impetus enters the scene and triggers a short covering rally due to the fund’s large short position. 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 next year. 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.
Minneapolis Wheat Managed Money Funds net position as of Tuesday, Jan. 23. Net position in Green versus price in Red. Money Managers net sold 579 contracts between Jan. 17 – 23, bringing their total position to a net short 30,290 contracts.
Other Charts / Weather
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.