12-04 End of Day: SA Weather Breaks Beans; Short Covering Bids Wheat
All prices as of 2:00 pm Central Time
| Corn | ||
| MAR ’24 | 485.5 | 0.75 |
| JUL ’24 | 505.75 | -0.25 |
| DEC ’24 | 513.25 | -0.5 |
| Soybeans | ||
| JAN ’24 | 1306.25 | -18.75 |
| MAR ’24 | 1326.5 | -19 |
| NOV ’24 | 1273 | -9.25 |
| Chicago Wheat | ||
| MAR ’24 | 620.5 | 17.75 |
| MAY ’24 | 634 | 17 |
| JUL ’24 | 643.5 | 15.25 |
| K.C. Wheat | ||
| MAR ’24 | 657.75 | 11 |
| MAY ’24 | 661.75 | 10.25 |
| JUL ’24 | 665.5 | 9.5 |
| Mpls Wheat | ||
| MAR ’24 | 736.25 | 6 |
| JUL ’24 | 756.5 | 6 |
| SEP ’24 | 765.5 | 5.25 |
| S&P 500 | ||
| MAR ’24 | 4621.25 | -29.75 |
| Crude Oil | ||
| FEB ’24 | 73.46 | -0.79 |
| Gold | ||
| FEB ’24 | 2049.2 | -40.5 |
Grain Market Highlights
- Despite strong export inspections and a flash sale to Mexico, choppy two sided trade that saw both sides of unchanged dominated the corn market, which was caught between a strong wheat market and weaker soybeans.
- The prospect of much needed moisture in Brazil, and poor export inspections weighed heavily on the soybean market, which ultimately took January soybeans down nearly 19 cents, despite briefly trading on the positive side of unchanged earlier in the day.
- While both soybean meal and oil traded lower on the day by double digits, it was the break in soybeans that led the complex lower as indicated by the improvement in January Board crush margins, which gained 6 ¾ cents. Crush margins remain strong and should continue to support domestic demand and basis.
- A 440k mt flash sale to China spurred the wheat complex to finish the day strong, led by the Chicago contracts, which printed a solid close above its 100-day moving average. KC and Minneapolis had strong closes as well, both closing above their respective 50-day moving averages, Minneapolis for the second day in a row.
- To see the updated US 7-day precipitation forecast, Brazil’s 2 week forecast total precipitation, and map of Brazil’s average temperature, courtesy of the National Weather Service, Climate Prediction Center, 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. Since the beginning of August, the corn market has traded sideways largely between 470 and 500. October’s brief breakout to 509 ½ and the subsequent failure to stay above the 50-day moving average indicates there is significant resistance in that price range. The failure of November’s USDA report to provide a bullish influence on the market puts the market at risk of drifting sideways to lower without a bullish catalyst. During last summer’s June rally, Grain Market Insider recommended making sales when Dec ’23 was around 624. 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. Since late February ’22, Dec ’24 has been bound by 485 ¾ on the bottom and 602 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 crop prices 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 a bullish catalyst. 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 Dec ‘23 560 and 610 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
- Mixed trade to start the week in the corn market as corn futures saw two-sided trade before settling slightly higher in the March, with a ¾ cent gain. The corn market was supported by a strong wheat market, but limited by selling pressure in the soybean complex.
- Funds added to their short position last week by selling a net 20,976 contracts to build a net short position of 206,478 contracts in last week’s Commitment of Trader’s report. The improved technical picture after last week’s strength and jump in demand could have the funds squaring positions into the end of the year, supporting a potential limited price rally.
- Weekly export inspections for corn were above analyst expectations at 1.158 mmt (45.6 mb). The stronger than anticipated exports could be an indication the US corn export window could be starting to open.
- South American weather will stay a focus of the grain markets going into December and the end of the year. The weather has improved, but overall conditions still have limitations. The current South American weather could potentially be a larger corn story in late spring and summer based on its impacts for the planting of the second crop Brazil corn crop.
- The USDA announced a flash sale of corn to Mexico this morning. Mexico purchased 267,000 mt (16.2 mb) of corn for the current marketing year.
Above: The corn market has so far held nearby support near 470, while knocking on the door of nearby overhead resistance at 496. Heavy resistance remains between 500 and 509 ½, and the market will need more bullish influence to push through and test the mid 500’s. Below the market, further support remains near 460, and 415.
Corn Managed Money Funds net position as of Tuesday, Nov. 28. Net position in Green versus price in Red. Managers net sold 20,976 contracts between Nov. 22-28, bringing their total position to a net short 206,478 contracts.
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. Since August, the 2023 soybean market has traded mostly between 1250 and 1400. After trading to 1251 last October, the Jan ’24 contract went on to test the Nov ’23 contract’s August high near 1400, but failed to break through the heavy resistance and has since retreated. Last summer, Grain Market Insider made two sales recommendations in the 1310 – 1360 price window versus Nov ’23, and while seasonally, we are at the time of year when prices tend to rally into the end of the year, due to the considerable overhead resistance in the market, Grain Market Insider may consider making additional old crop sales prior to year’s end.
- 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. 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 May. 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 earliest. 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
- January soybeans ended the day lower, breaking out of the bottom of their range after better-than-expected rains fell throughout South America this weekend. A flash sale and strong crush numbers were friendly, but ultimately, this market is trading weather.
- The focus for the soy complex has fallen almost exclusively on Brazilian weather over the past few months, but a wetter weather pattern appears to be emerging. Despite extremely tight US ending stocks, if a large soy crop comes out of South America, it may be difficult for prices to remain this elevated.
- Demand has been a high point of the soy complex with a flash sale reported to the Philippines by private exporters of 183,000 mt of soybean cake and meal for the 23/24 marketing year. In addition, October crush came in at a whopping 201.1 mb, another record-breaking month. Weekly export inspections, on the other hand, came in lower than expected at 1.109 mmt, versus 1.573 mmt last week.
- Soybeans have been the only product in the grain complex that funds have maintained a net long position in, but they have recently begun reducing that position. As of last week, they were sellers of 14,025 contracts, which brought their net long position down to 67,562 contracts, and this pattern could continue if South American weather remains favorable.
Above: On November 15, January soybeans posted a bearish reversal after coming within 11 cents of the August high. Since then, the market has retested the recent high and failed, creating a head-and-shoulders pattern, which suggests a potential to test October’s 1250 low unless bullish input enters the market. For now, heavy resistance remains between 1400 and 1410, with nearby resistance near 1350. Support below the market remains near 1297.
Soybean Managed Money Funds net position as of Tuesday, Nov. 28. Net position in Green versus price in Red. Money Managers net sold 14,025 contracts between Nov. 22-28, bringing their total position to a net long 67,562 contracts.
Wheat
Market Notes: Wheat
- Wheat closed higher in all three US futures classes, with Chicago contracts leading the charge, despite the uptick in the US Dollar Index. Support came from an announced sale to China for the 23/24 marketing year in the amount of 440,000 mt. There is likely also some short covering happening, as the correction from being technically oversold continues.
- Today’s rally also comes despite a poor export inspections number. For the week ending November 30, the USDA reported that wheat inspections were 6.9 mb, bringing total 23/24 inspections to 306 mb. That is down 24% from last year, and inspections are running behind schedule to meet the USDA’s goal.
- According to the Bahia Blanca Grain Exchange, a crop tour in Argentina found that wheat production in the southwestern region could be 27% below last year at 2.8 mmt, due to the lack of rain that caused poor yield results. It should be noted, however, that this decline in production should be more than offset by increases in the coastal areas, which received better precipitation.
- According to CFTC data, the combined short position of the funds in Chicago, Kansas City, and Minneapolis wheat is a record short as of last Tuesday’s close. With the recent reversals higher, it is likely that funds are covering some of that short position. This could be due, in part, to Russia’s wheat values starting to creep higher, which is, in turn, easing pressure on the US market. There is also talk about the potential threat of winterkill for some Russian wheat, adding fuel to the fire.
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, nearby Chicago wheat trended lower until finding support at 540. During that time, driven by weak US export demand and lower world wheat prices, funds established most of their short position that currently exceeds 100,000 contracts. While bearish obstacles remain, the large short fund position and a seasonal pattern that is currently supportive, could fuel an extended short-covering rally. Earlier this year, 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. Since July, new crop Chicago wheat has slowly worked its way lower with no significant opportunities to make additional sales. The lower market was driven mostly by managed fund selling from lower world wheat prices and weak US demand. As the market sold off, it became significantly oversold with managed funds building a short position in excess of 100,000 contracts. While bearish headwinds remain, the large fund short position and oversold condition of the market are two factors that could fuel a sizeable, short-covering rally. Additionally, price seasonals are supportive as prices tend to build in some risk premium going into the winter months. At the end of August, Grain Market Insider recommended purchasing July 590 puts to prepare for further price erosion, 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 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. 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 Grain Market Insider starts considering the first sales targets.
To date, Grain Market Insider has issued the following Chicago wheat recommendations:
Above: Chicago wheat recently broke out of its trading range and approaching resistance between the 200-day moving average and the August highs near 645, driven largely by short covering and the seasonal build up of weather premium. For now, support below the market comes in near the 50-day moving average, around 575, and again between 555 and 540.
Chicago Wheat Managed Money Funds net position as of Tuesday, Nov. 28. Net position in Green versus price in Red. Money Managers net sold 11,810 contracts between Nov. 22-28, bringing their total position to a net short 119,986 contracts.
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 old crop KC wheat has been in a downtrend that has largely been driven by managed fund selling on low world wheat prices and weak US export demand. As the selloff progressed, the market became oversold, and the funds established the largest short position in three years. Even though bullish headwinds remain, these two factors have fueled the recent short-covering rally, which could extend much further if a bullish catalyst enters the market. This would also line up with the historical tendency for price appreciation as the market builds risk premium going into wintertime. Grain Market Insider’s strategy is to look for price appreciation going into 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 Jul ’24 contract broke out of roughly a one-year trading range, between 740 and 860, to the downside. Since that breakout, the market has continued to slowly stair-step lower, largely driven by managed fund selling, weak US export demand, and lower world wheat prices. As the selloff progressed, the funds built up the largest net short position in three years. While bearish headwinds remain, the significant oversold condition of the market and the large fund net short position are two factors that could fuel a short-covering rally in the months ahead. Price seasonals are also supportive as prices tend to build in some risk premium going into the winter months. Back in August, Grain Market Insider recommended buying Jul’24 KC wheat 660 puts to protect the downside following the range breakout. Though 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: After posting a fresh contract low on November 27, KC wheat has experienced a short covering rally back into the resistance area between 633 and 661. If the market can close above 661, it may then be poised to test 690. If not, and prices retreat, support below the market will likely come in between 595 and 575.
KC Wheat Managed Money Funds net position as of Tuesday, Nov. 28. Net position in Green versus price in Red. Money Managers net sold 2,236 contracts between Nov. 22-28, bringing their total position to a net short 49,749 contracts.
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. Following last July’s rally, the market has slowly stair-stepped lower, primarily due to low world wheat prices, weak US export demand, and managed fund selling. With the funds building a record large short position as the market sold off. Since weak US export demand remains the main impediment to higher prices, the market continues to be at risk of further downside erosion. The record large fund short position could fuel a rally back higher if a bullish catalyst enters the scene, and if that happens, 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 this winter with an eye on considering additional sales around 725 – 775, and again north of 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 Minneapolis wheat. At the end of August, the Sept ’24 contract traded to a peak of 871 ¾ and has continued to slowly stair-step lower, largely driven by lower world wheat prices, weak US export demand, and managed fund selling, and as the selloff progressed, the funds built up a record large short position. While bearish headwinds remain, the significant oversold condition of the market and the large fund net short position are two factors that could fuel a short-covering rally in the months ahead. Price seasonals are also supportive as prices tend to build in some risk premium going into the winter months. 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. Though recently, as the KC market extended further into oversold territory and the July ‘24 KC wheat contract showed signs of support near 630, Grain Market Insider recommended exiting 75% of the originally recommended position. 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, moving forward, Grain Market Insider is 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 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: After making a new contract low on November 27, the March contract found buying interest from its oversold status and record fund short. The market will need more bullish input to push prices above resistance at 740 and 750, at which point they could run toward 790. If prices retreat, support could be found near the recent low of 697 ½ before the May ’21 low of 669.
Minneapolis Wheat Managed Money Funds net position as of Tuesday, Nov. 28. Net position in Green versus price in Red. Money Managers net sold 1,309 contracts between Nov. 22-28, bringing their total position to a net short 28,917 contracts.
Other Charts / Weather
