11-07 End of Day: Sharply lower crude and “risk off” weakness leads markets lower.
All prices as of 2:00 pm Central Time
| Corn | ||
| DEC ’23 | 468.5 | -8.75 |
| MAR ’24 | 483.5 | -9 |
| DEC ’24 | 510 | -7.25 |
| Soybeans | ||
| JAN ’24 | 1362 | -2 |
| MAR ’24 | 1374 | -4.5 |
| NOV ’24 | 1294.75 | -9.75 |
| Chicago Wheat | ||
| DEC ’23 | 570.25 | -5.5 |
| MAR ’24 | 596 | -6.5 |
| JUL ’24 | 628 | -7.75 |
| K.C. Wheat | ||
| DEC ’23 | 632.5 | -13.25 |
| MAR ’24 | 643.5 | -13.25 |
| JUL ’24 | 659 | -12.5 |
| Mpls Wheat | ||
| DEC ’23 | 724.25 | -4.5 |
| MAR ’24 | 740.5 | -5 |
| SEP ’24 | 767.5 | -6.5 |
| S&P 500 | ||
| DEC ’23 | 4396.5 | 12.25 |
| Crude Oil | ||
| JAN ’24 | 77.24 | -3.36 |
| Gold | ||
| JAN ’24 | 1979.5 | -19.8 |
Grain Market Highlights
- The quick harvest pace continues to add resistance to the corn market which was pressed lower on technical selling and carryover weakness after trading below yesterday’s low.
- After printing a fresh contract high, today’s selloff in soybean meal along with sharply lower bean oil, led to a bearish reversal in beans after the January soybean contract posted its own highest price since September 15.
- Solid crop ratings, slow exports, cheap Russian prices, and weak Chinese economic data all weighed on the wheat complex with all three classes closing lower on the day. KC led the way lower.
- Hawkish comments from the Minneapolis Federal Reserve Bank President Neel Kashkari indicated that more tightening of interest rates will be considered if needed. These comments likely led to the strength in the US dollar which gapped higher on the open of today’s trade and added to the pall of the US grain markets.
- To see the US 8 – 14 day Temperature and Precipitation Outlooks, courtesy of the NWS, and CPC, and the South American GRACE-Based Root Zone Soil Moisture Drought Indicator, courtesy of NASA and the NDMC, scroll down to other Charts/Weather Section.
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Corn
Action Plan: Corn
Calls
2023
No Action
2024
No Action
2025
No Action
Cash
2023
No Action
2024
No Action
2025
No Action
Puts
2023
No Action
2024
No Action
2025
No Action
Corn Action Plan Summary
- No new action is recommended for 2023 corn. The Dec ’23 contract’s quick move above 500 on October 19, and then below the 50-day moving average of 485 just three sessions later, on October 24, signals that there is heavy resistance above the market near the 100-day moving average, and prices continue to be at risk of drifting sideways to lower. The next major level of support remains near the August low of 462 for front month corn. During last summer’s June rally, Grain Market Insider recommended making sales when Dec ’23 was around 624. So, for now, the thought process is to hold tight on any further sales recommendations until later this fall or early winter, with the objective of seeking out better pricing opportunities. If the market has not turned around by early winter, then Grain Market Insider may sit tight on the next sales recommendations until spring. If you end up harvesting more bushels than you can store this fall and must move them, consider protecting those sold bushels with either July or September ’24 call options.
- No new action is recommended for 2024 corn. Since late February ’22, Dec ’24 has been bound by 489 ¾ on the bottom and 600 on the top. After testing 491 to 547 last July, it has mostly traded between 500 and 525. During this time, Dec ’24 has held up better as bear spreading has allowed Dec ’24 to maintain more of its value versus Dec ’23 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 lower trend without further bullish input. Grain Market Insider is watching for signs of a change in the current trend to look at recommending buying Dec ’24 call options. This past spring, Grain Market Insider recommended buying 560 and 610 Dec ’23 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
- An overall weak tone in the commodity space helped push corn futures lower, testing last week’s price low at $4.68 for December futures. December corn lost 8 ¾ cents on the day and established its new lowest close since September 2021. The weak price action and selling pressure have December corn poised to challenge or establish a new September low.
- Corn harvest continues to move along ahead of schedule. The USDA Crop Progress report posted that corn harvest was at 81% harvested versus the 5-year average of 77%. The northern corn producing states are showing the biggest delays due to wet weather.
- The strong pace of harvest has increased harvest pressure as fresh bushels are in the pipeline. Talk of improved yields in the last half of harvested has limited the corn market’s upside potential.
- On November 9, the USDA will release the next Crop Production report. Early expectations are for the USDA to slightly increase corn yield and production, which could add bushels back to an already heavy supply picture. The corn market may likely be pricing in potential negative news.
- South American weather is still a focus of the market at this time. Current weather is likely more supportive of the soybean market, but potential delays or loss of production in the second crop corn in Brazil could support corn prices in the late summer with possible improved late season demand.
Above: On November 3, the December contract posted a bullish key reversal with a low of 468. The 50-day moving average is just above the market at 484, and the market is oversold. If prices can push over 484, they may move higher to test 500 – 509 ½. If not, support below the market rests between 468 and 460.
Corn percent harvested (red) versus the 5-year average (green) and last year (brown).
Soybeans
Action Plan: Soybeans
Calls
2023
No Action
2024
No Action
2025
No Action
Cash
2023
No Action
2024
No Action
2025
No Action
Puts
2023
No Action
2024
No Action
2025
No Action
Soybeans Action Plan Summary
- No new action is recommended for 2023 soybeans. At the end of August, the soybean market turned lower and didn’t find any significant buying interest until it traded down to 1251 in early October. Since then, the nearby contract has traded through nearby resistance and the 50-day moving average and may be poised to test the August high. Looking back, since last May, nearby soybeans have been in a range from 1435 up top to 1251 down below. Last summer, Grain Market Insider did make two sales recommendations in the 1310 – 1360 price window versus Nov ’23. Given that those sales recommendations were made and given that now is not the time of year to be making many sales, if any, Grain Market Insider is content to hold tight on any further sales recommendations until later this fall or early winter. The focus for strategy right now is to be on the lookout for any call option buying opportunities. If you end up harvesting more bushels than you can store this fall, consider protecting any sold bushels with July or Aug ’24 call options.
- No action is recommended for the 2024 crop. Since the inception of the Nov ’24 contract, it has traded at a discount to the 2023 crop, from as much as 142 back in July, to as little as 17 ¾ in early October during harvest. And while the spread difference between the two crops has seen a good amount of volatility, Nov ’24 has been largely rangebound between 1250 and 1320 since it rallied off its 1116 ¼ low last July. To date, Grain Market Insider has not recommended any sales for next year’s soybean crop. First sales targets will probably be early winter at the soonest. Currently, Grain Market Insider’s focus is also on watching for any opportunities to recommend buying call options.
- 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 apart from the November contract which held onto some of its gains in thin delivery cycle trade. This followed an impressive start to the day where all the contract months were solidly higher thanks to big gains in soybean meal, but technical resistance, the selloff in meal from the highs, and a drop in crude oil caused prices to fade.
- Crop progress saw the soybean harvest at 91% complete, slightly below the average trade guess, but still above the 5-year average of 86%. The main soybean producing states are closer to 95% complete, and the 7-day forecast for the central US remains dry and favorable to wrap up harvest.
- On Thursday, the USDA will release its WASDE report, and it will be revealed how much yields are lowered (if at all). The average trade guess is that yields will be decreased by 0.1 bpa which would have a minimal impact on ending stocks unless export demand is adjusted.
- Some bearish influence came from negative economic data from China today. While total Chinese imports were within expectations, total Chinese exports fell by 6.4% for the month of October which was much more than anticipated and caused some concerns regarding crude oil demand. Crude oil fell by over 3.50 a barrel today following the news.
Above: After posting a bearish reversal on November 7 and with the market showing signs of being overbought, further price erosion could take place unless more bullish input is received. Significant resistance now rests between the new recent high of 1380 and 1385, while initial support remains below the market between 1334 and the 50-day moving average, and again down near 1300.
Soybeans percent harvested (red) versus the 5-year average (green) and last year (brown).
Wheat
Market Notes: Wheat
- Early gains faded into a risk-off session with lower closes in corn, soybeans, soybean oil, oats, wheat, and cattle. At the time of writing, metals and energies are also sharply lower. It is possible that in the grain markets there is some positioning going on ahead of Thursday’s WASDE report, but the bigger factor may be recent bearish economic news out of China.
- The wheat export inspections data yesterday at 2.6 mb was an all-time low for this time of year with records going back to 1983. This is in part due to Russia continuing to dominate on the export front. To make matters worse, the USDA could raise the Russian crop up from 85 mmt on this week’s report if Russia’s claims of a 93 mmt crop are to be believed.
- According to the USDA, 90% of the winter wheat crop is planted, which is 1% above average but 1% below last year. Emergence is at 75%, and the crop is rated 50% good to excellent, up 3% from last week. For reference, last year at this time the crop was rated 30% good to excellent.
- According to their agriculture ministry, Ukraine has left their estimate of the winter wheat planted area for the 2024 harvest unchanged at 4.36 million hectares, down from 4.46 million in 2023. As of November 6th, 3.87 million hectares or 88.8% of that area has been planted.
Action Plan: Chicago Wheat
Calls
2023
No Action
2024
No Action
2025
No Action
Cash
2023
No Action
2024
No Action
2025
No Action
Puts
2023
No Action
2024
No Action
2025
No Action
Chicago Wheat Action Plan Summary
- No new action is currently recommended for 2023 Chicago wheat. After making a high in late July, the Dec ’23 contract trended lower until finding support at 540 on September 29, from which it rallied back, briefly piercing 600 and the 50-day moving average. The market now appears to be finding value in the 540 – 616 range established since early September, as weak US export demand, driven by cheap Russian exports, remains the dominant headwind to higher prices. Grain Market Insider made sales recommendations in the late June rally around 720 and again earlier this fall near 604. With those two sales, Grain Market Insider’s strategy is to look for price appreciation going into this winter as weather becomes a more prominent market mover, with an eye on considering additional sales in the 625 – 650 range. 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 Chicago wheat. The July ’24 contract has been trading at a premium to the Dec ’23 contract since late April, which has steadily increased to about 55 cents, September 29, it traded as far out as 71 ¾ cents. Fund positioning and weak fundamentals have driven Dec ’23 closer to the mid to upper 500 range, and July ’24 to the low to mid 600s. The market risk for July ’24 remains the same as for Dec ’23. The market needs bullish input to move prices higher, and without it, prices may continue to erode. At the end of August, Grain Market Insider recommended purchasing July 590 puts to prepare for this possibility, and 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 some 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 a year 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 Chicago wheat recommendations:
Above: After testing the 50-day moving average, the December contract posted a bearish reversal indicating that resistance is now near 582. Further resistance remains above the market near 604 ½. Without bullish input, the market is likely to trend sideways to lower with initial support near 554 and the next major support level between 547 and 540.
Action Plan: KC Wheat
Calls
2023
No Action
2024
No Action
2025
No Action
Cash
2023
No Action
2024
No Action
2025
No Action
Puts
2023
No Action
2024
No Action
2025
No Action
KC Wheat Action Plan Summary
- No new action is recommended for 2023 KC wheat crop. Since late July the Dec ’23 contract has been in a downtrend that has had periods of relative stability, but not any significant reversals higher. The market once again found nearby support as it traded to, and held, its recent low of 625 ½. Currently, weak US export demand, driven by cheap Russian exports, remains the dominant headwind, and the market is in need of bullish input to stabilize and rally prices back higher. If a bullish catalyst enters the market to push prices above 700, it may signal that a fall low is in place and would line up with the historical tendency for prices to appreciate into winter and early spring. Grain Market Insider’s strategy is to look for price appreciation going into this winter, as weather becomes a more prominent market mover with an eye on considering additional sales near 750 – 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 KC wheat. The July ’24 contract is currently trading near a 25-cent premium to July ’23, which is up significantly from last July’s 60-cent discount. Weak fundamentals have driven spread activity to push July ’23 toward its contract lows, while July ’24 has been able to maintain more of its value. The risk for the July ’24 contract is much like that for Dec ’23. The market needs bullish input to move prices higher, and without it, prices may continue to erode. In mid-August, Grain Market Insider recommended purchasing July 660 puts to prepare for this possibility, and back in July, Grain Market Insider recommended a sale near 800 to take advantage of elevated prices before they eroded further. If the market receives the needed impetus to move prices back toward 750 – 800, Grain Market Insider is prepared to recommend adding to current sales levels. 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 some of the original cost and move toward a net neutral cost for the remaining position.
- 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 a year from now. 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: Since breaking through the bottom of the consolidation range at 655, the market has drifted lower and tested minor support, which has held so far with the low at 625 ½. The next level of major support below that remains near 575. Major resistance above the market remains around 690 – 700, with minor resistance near 655.
Winter wheat percent planted (red) versus the 5-year average (green) and last year (brown).
Winter wheat condition percent good-excellent (red) versus the 5-year average (green) and last year (pink).
Action Plan: Mpls Wheat
Calls
2023
No Action
2024
No Action
2025
No Action
Cash
2023
No Action
2024
No Action
2025
No Action
Puts
2023
No Action
2024
No Action
2025
No Action
Mpls Wheat Action Plan Summary
- No new action is currently recommended for the 2023 New Crop. After making highs in July, and the subsequent downtrend to the October 2 low of 707 ½, the Dec ‘23 contract has traded mostly sideways with no significant reversal higher. With weak US export demand still the primary impediment to higher prices, the market remains at risk of trending lower if September’s low close of 709 is violated to the downside unless another bullish impetus enters the scene. If that happens and prices begin to push back toward 775, it may signal that a near-term low is in place. Earlier this year, 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 going into this winter with an eye on considering additional sales around 750 – 800, and again north of 825. 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. Even though the primary strategy is to look for higher prices, Grain Market Insider may also consider a “plan b” in the next couple of weeks if prices grind sideways to lower.
- No new action is currently recommended for 2024 Minneapolis wheat. In the last three months, the Sep ’24 contract has gone from a 60 – 80 discount to Dec ’23, to a 50-cent premium. Weak fundamentals led bear spreading to drive Dec ’23 in search of new contract lows, while Sep ’24 remains off its low from last May. The risk for the Sep ’24 contract is much like that of Dec ’23. The market needs bullish input to move prices higher, and without it, prices may continue to erode. In mid-August, Grain Market Insider recommended purchasing July KC 660 puts (for their greater liquidity, and correlation to Minneapolis pricing) to prepare for this possibility, and back in July, Grain Market Insider recommended a sale near 815 to take advantage of elevated prices. If the market receives the needed stimulus to move prices back toward 800, Grain Market Insider is prepared to recommend adding to current sales levels. Otherwise, the current recommended put position will add a layer of protection if prices erode further. Grain Market Insider will then be prepared to recommend covering some of those puts to offset some of the original cost and move toward a net neutral cost for the remaining position.
- 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: On November 7 the December contract posted a bearish reversal, which may indicate lower prices ahead unless bullish information enters the market to turn prices higher. Currently, upside resistance now lies between 735 and 755, with initial support below the market near 703. The next major level of support is near 669, the May ’21 low.
Other Charts / Weather
