11-09 End of Day: Markets pressed lower by surprise increases in today’s USDA report.
All prices as of 2:00 pm Central Time
| Corn | ||
| DEC ’23 | 468 | -8 |
| MAR ’24 | 482.75 | -7.25 |
| DEC ’24 | 509.25 | -5.25 |
| Soybeans | ||
| JAN ’24 | 1343.5 | -22.25 |
| MAR ’24 | 1357.5 | -19.5 |
| NOV ’24 | 1282.75 | -10.5 |
| Chicago Wheat | ||
| DEC ’23 | 580.75 | -11.5 |
| MAR ’24 | 606.25 | -10.25 |
| JUL ’24 | 636.25 | -11.5 |
| K.C. Wheat | ||
| DEC ’23 | 647.25 | -7.75 |
| MAR ’24 | 658.25 | -6.25 |
| JUL ’24 | 672 | -6.25 |
| Mpls Wheat | ||
| DEC ’23 | 734.5 | -1 |
| MAR ’24 | 748.5 | -1.5 |
| SEP ’24 | 774 | -2.75 |
| S&P 500 | ||
| DEC ’23 | 4363.75 | -35.75 |
| Crude Oil | ||
| JAN ’24 | 75.58 | 0.27 |
| Gold | ||
| JAN ’24 | 1979.6 | 11.3 |
Grain Market Highlights
- The USDA surprised the market by raising yield and production more than they increased demand. The result ended up being a bearish 45 mb increase to 23/24 ending stocks that pushed the market lower, when the market was looking for an 18 mb increase.
- Today’s report affected soybeans more dramatically than corn, in that the USDA increased stocks 25 mb by raising yield, where a 1 mb increase was expected, causing January soybeans to give up its gains and trade lower on the week.
- Soybean meal saw no net revisions to supply or demand, while bean oil saw a decrease in its beginning stocks, thereby lowering its ending stocks by 159 mil. lbs. In reaction to the numbers, meal closed the day mixed with the front months gaining on the deferred, while oil closed higher. January Board crush margins gained 20 ¾ cents on the move.
- Chicago wheat led the slide lower for the wheat complex, and was followed by KC and then Minneapolis, on a 15 mb increase to total US 23/24 wheat supplies where no change was anticipated by the market, and an increase to world ending stocks where a decrease was anticipated.
- To see the US Drought Monitor and the 1-week Class Change map, courtesy of the NDMC and University of Nebraska, and the Brazil and Argentina 2-week precipitation forecasts, courtesy of NOAA, NWS, and the CPC, scroll down to other Charts/Weather Section.
Note – For the best viewing experience, some Grain Market Insider content is best viewed with your phone held horizontally.
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
- The USDA Crop Production report lacked very little bullish news, triggering additional selling in the corn market. December corn futures lost 8 cents and posted a new contract low and low daily close for the recent move. The weak price action will likely pressure the market into Friday’s trade.
- The USDA raised yield projections by 1.9 bushels/acre to 174.9 bushel/acre, which was above expectations. The increase in production added to the balance sheet, despite an increase in projected demand, and raised corn carryout to 2.156 billion bushels, up 45 mb from last month and above analysts’ expectations.
- An increase in demand was questioned by market analysts as the USDA added 50 mb to export demand, 25 mb to ethanol demand, and 50 mb to feed usage. The new export target for the marketing year is 2.075 billion bushels, a 400+ mb increase over last year.
- Weekly export sales were within expectations for corn in the USDA Export sales report. Last week, new sales for the marketing year totaled 1.015 mmt (40.0 mb), within analysts’ expectations. Corn sales commitments now total 759 mb for 23/24 and are up 31% from a year ago but behind the pace needed to reach the USDA export target.
- South American weather stays in focus. Current weather models are leaning toward warm and dry conditions continuing into the end of the year. At this point, the 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.
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 following today’s WASDE report which wasn’t extremely bearish, but expectations were that the report would be friendly which caused a negative reaction. Soybean meal was slightly higher in the December contract but lower in the deferred months, while soybean oil was higher thanks to a reduction in ending stocks and gains in crude oil.
- Highlights from today’s USDA report showed an unexpected increase in the estimate for US soybean yield to 49.9 bpa. Last month’s estimate was 49.6 bpa and no change was expected today. Due to the increase in yield, ending stocks went from 220 mb to 245 mb for 23/24, and demand was unchanged.
- South American soybean production was also updated in today’s report with Argentina’s 22/23 production unchanged at 25 mmt, but Brazil’s increased to 158 mmt from 156 mmt. For 23/24, Argentina’s production estimate was unchanged at 48 mmt, but Brazil’s was increased to 163 mmt despite the hot and dry planting conditions that are persisting due to El Nino.
- Export sales were strong today with an increase of 39.7 mb for 23/24, which was above the average trade guess. Export shipments of 82.2 mb were well above the 31.7 mb needed each week on average to meet the USDA’s export estimate. Further, flash sales were reported of 1,044,000 mt of soybeans to China for 23/24, and 662,500 mt were reported for delivery to unknown destinations.
Above: With the market showing signs of being overbought and after rejecting fresh market highs on November 7 and 8, it is at risk of further price erosion unless more bullish input is received. Heavy resistance rests just above the market between 1385 and 1410, while initial support remains below the market between 1334 and the 50-day moving average, and again down near 1300.
Wheat
Market Notes: Wheat
- All eyes were on today’s WASDE report which ended up having a negative tone. The USDA estimated US 23/24 wheat carryout at 683 mb, above the pre-report estimate of 670 mb, which would have been unchanged from October. Additionally, the world ending stocks were also higher than expected at 258.7 mmt. This compares to a pre-report estimate of 257.9 mmt and last month’s number of 258.1 mmt.
- As far as some of the world numbers are concerned, the USDA did lower Argentina’s crop to 15.0 mmt versus 16.5 mmt in October. And the Russian crop was in fact raised by 5 mmt from last month to 90 mmt of production. For reference, this is still below Russia’s estimate of 93 mmt. Overall, global wheat production was projected at 781.98 mmt, which was down slightly from 783.43 mmt last month.
- In addition to the WASDE report, export sales were also released today. The USDA reported an increase of 13.0 mb of wheat export sales for 23/24. Last week’s shipments were disappointing though, at 4.9 mb. This is below the pace needed each week of 14.5 mb to meet their 23/24 export goal of 700 mb.
- Vladimir Putin recently stated that in the coming year, Russia will have 60 mmt of wheat for export, which is about 10 mmt higher than other estimates. But with the USDA raising the world crop today and a higher projection for Russia this could be true. If so, it will continue to weigh on the export market and US futures.
- Although the USDA did lower their Argentina wheat crop estimate today, it is still higher than some other projections. The Rosario Exchange reduced their projection of Argentina’s wheat crop by 5.6% to 13.5 mmt. They also reported that the wheat harvest is 10% complete, and while recent rains have helped to improve conditions it was too little too late to reverse the early damage done by drought.
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: December wheat rejected the bearish reversal from November 7 and traded sharply higher. It is now in range to test the October high of 604 ½ and possibly resistance near 618. If the market turns back lower, support below the market, may be found between 564 and 554.
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.
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
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.