12-06 End of Day: Markets Open Strong but Reverse to Close Mostly Lower
All prices as of 2:00 pm Central Time
| Corn | ||
| MAR ’24 | 484.25 | -6.25 |
| JUL ’24 | 504 | -6.25 |
| DEC ’24 | 510 | -5.75 |
| Soybeans | ||
| JAN ’24 | 1295.5 | -10 |
| MAR ’24 | 1315.5 | -11 |
| NOV ’24 | 1260.75 | -12.75 |
| Chicago Wheat | ||
| MAR ’24 | 633.5 | 2.25 |
| MAY ’24 | 643.75 | -0.25 |
| JUL ’24 | 648.5 | -3 |
| K.C. Wheat | ||
| MAR ’24 | 656 | -6.75 |
| MAY ’24 | 659.5 | -7.25 |
| JUL ’24 | 663.75 | -6.25 |
| Mpls Wheat | ||
| MAR ’24 | 730.5 | -8.5 |
| JUL ’24 | 751 | -8.75 |
| SEP ’24 | 759.75 | -8.5 |
| S&P 500 | ||
| MAR ’24 | 4619.5 | -5.75 |
| Crude Oil | ||
| FEB ’24 | 69.64 | -2.89 |
| Gold | ||
| FEB ’24 | 2047.4 | 11.1 |
Grain Market Highlights
- The corn market opened strong, but quickly succumbed to weakness from neighboring soybeans and wheat, which led the market lower with additional weakness coming from sharply lower crude oil and more favorable South American weather forecasts.
- Despite higher trade overnight and another large private soybean sale of 136k mt to China, soybeans could not hold the gains and traded lower from the 8:30 opening bell. Weakness from the product side of the complex weighed on the market, possibly triggering more fund long liquidation.
- Soybean meal and oil came under pressure from more favorable South American weather forecasts and sharply lower crude and palm oil, closing sharply lower in both markets, and shaving 20 cents off January board crush, erasing this week’s gain.
- The wheat complex was largely unable to hold early gains made in the overnight session and posted bearish reversals in both KC and Minneapolis. Another large SRW sale to China likely gave Chicago the strength to hold a 2 cent gain into the close, but Black Sea export prices continue to dominate and add resistance to US prices.
- To see the updated US 7-day precipitation forecast, Brazil’s 2 week precipitation forecast, and the GRACE based drought indicator maps for both US and SA, courtesy of the National Weather Service, Climate Prediction Center, and nasagrace.unl.edu, 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
- Strong selling in the commodity space weighed on corn futures, which reversed off session highs. March corn lost 6 ¼ cents on the session. The weak price action damaged an improving technical picture and could trigger additional long liquidation and selling going into tomorrow’s session.
- Strong selling in the crude oil market was the driver behind the liquidation of length across the ag commodity markets on Wednesday. Crude oil futures traded over $3.00 lower and under $70.00 a barrel before seeing some price recovery.
- Farmer selling and hedge pressure likely limited the market’s rally potential. As prices ran into resistance near the 490 – 500 window, they were possibly met by some producer selling.
- Corn demand has improved in recent weeks. The USDA will release weekly export sales on Thursday morning. Expectations are for last week’s new sales to range from 725,000 – 1,500,000 mt.
- Ethanol production for last week averaged 1.076 million barrels/day. This was up 6.4% from last week and over the 5-year average. Ethanol stocks were 21.439 million barrels, up slightly from last week. Total corn used for ethanol production last week was 21.693 mb. This is currently ahead of the USDA projected pace for the marketing year.
Above: Since the lead month rolled to the March contract, the corn market has been rangebound between 470 on the downside and 497 on the upside. Upside resistance appears to be heavy given the bearish reversal that was posted on December 6. That heavy resistance also extends up to the October high of 509 ½, which the market will need more bullish influence to trade through. If the market retreats through nearby 470 support, major support remains near 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. 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
- Strong selling in the soy products and crude oil pressured soybean futures lower on the session. January soybeans lost 10 cents on the day and closed under the key 1300 support level.
- Edible oil prices struggle as palm oil prices continue to slide. The weakness in the edible oil market pressured soybean oil futures, closing back under 50.00 cents/pound.
- China stayed active in the US soybean export market, as the USDA announced a sale of 136,000 mt of soybeans for the current marketing year. This sale was likely for February delivery out of the PNW.
- Weekly export sales for soybeans are expected to range from 1.0 – 1.8 mmt for last week. The USDA will release the weekly export sales report on Thursday morning.
- Brazilian weather has improved significantly, with rain having fallen in some of the driest areas of the country with more expected. While production will still likely be variable in some regions, the recent rains may have helped stabilize the crop in other areas.
Above: Since retreating from the November highs, soybeans have traded back through the 50-day moving average and 1297 support. Currently, the trend is lower, but the market shows signs of being oversold, which can be supportive if prices turn back higher. For now, support below the market remains near 1250, with nearby resistance near the 50-day moving average, around 1320, and again near 1352.
Wheat
Market Notes: Wheat
- March Chicago wheat managed to just barely stay afloat with a gain of 2-1/4 cents for the day, with bull spreading noted, likely spurred by recent Chinese purchases, as the deferred contracts lost ground to the nearby ones. However, all three US wheat classes closed lower overall.
- Another large private sale of US SRW wheat to China was announced by the USDA, this time for 372,000 mt for delivery during the 23/24 marketing year. Despite this sale, the market appeared to implement a risk off posture today, with lower closes in corn, soybeans, meal, bean oil, and livestock. Additionally, crude oil is sharply lower, which is down almost $3 per barrel as of this writing.
- On a positive note, March Chicago wheat was able to close just above its 100 day moving average of 632 ¼ for the first time since the end of July. Combined with the recent correction from oversold, this may indicate that there is still enough technical buying in wheat for momentum to continue higher, regardless of an off day today.
- Egypt purchased 180,000 mt of wheat from Russia and Ukraine on an international tender. This is a reminder that Black Sea wheat exports remain competitive, especially from Russia, and it may take more friendly news to push wheat significantly higher.
- European Union soft wheat exports, as of Sunday, totaled 12.5 mmt since the season began on July 1. This compares with 15.3 mmt at the same time last year, representing a decline of 18% year on year. For a similar timeframe, Ukrainian grain exports have totaled about 13.7 mmt versus 19 mmt last year. That 13.7 mmt figure includes about 6.1 mmt of wheat this season, versus 7.2 mmt last year.
Action Plan: Chicago Wheat
Calls
2023
No Action
2024
No Action
2025
No Action
Cash
2023
New Alert
Sell MAR ’24 Cash
2024
No Action
2025
No Action
Puts
2023
No Action
2024
No Action
2025
No Action
Chicago Wheat Action Plan Summary
- Grain Market Insider recommends selling a portion of your 2023 Soft Red Winter wheat crop. Since the end of July, the wheat market has been in a downtrend due to low world wheat prices generating weak US export demand, with no significant rallies to take advantage of. This current rally has now taken prices in excess of 80 cents from the November low and coincides with a 38% retracement back toward last July’s highs, and the 612 to 646 congestion area from last September. Considering this bounce in the market may be temporary, Grain Market Insider recommends taking advantage of this rally, and these still historically good prices, to make an additional sale on your 2023 crop.
- 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: Short covering and a seasonal build up of weather premium has driven Chicago wheat through the late August highs and may be on track to test the next level of resistance between 660 and 665 left in early August. The market shows signs of being overbought and could retreat. If it does, support may come in around 605 – 600, and again near the 50-day moving average near 575.
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: Since the end of November, the wheat market has rallied largely on short covering activity from being extremely oversold. The market is now showing signs of being overbought, though its close above 661 and the 50-day moving average suggests that it may test the October highs around 692. If not, and prices retreat, support below the market will likely come in between 595 and 575.
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.
Other Charts / Weather
Brazil 2 week forecast total precipitation courtesy of the National Weather Service, Climate Prediction Center.
