12-07 End of Day: Grain Markets Finish Strong Ahead of Friday’s USDA Report
All prices as of 2:00 pm Central Time
| Corn | ||
| MAR ’24 | 488 | 3.75 |
| JUL ’24 | 508 | 4 |
| DEC ’24 | 513.25 | 3.25 |
| Soybeans | ||
| JAN ’24 | 1311.75 | 16.25 |
| MAR ’24 | 1330.25 | 14.75 |
| NOV ’24 | 1274.5 | 13.75 |
| Chicago Wheat | ||
| MAR ’24 | 642.25 | 8.75 |
| MAY ’24 | 649.5 | 5.75 |
| JUL ’24 | 653 | 4.5 |
| K.C. Wheat | ||
| MAR ’24 | 667.5 | 11.5 |
| MAY ’24 | 669.5 | 10 |
| JUL ’24 | 670.5 | 6.75 |
| Mpls Wheat | ||
| MAR ’24 | 737.25 | 6.75 |
| JUL ’24 | 754.75 | 3.75 |
| SEP ’24 | 762.5 | 2.75 |
| S&P 500 | ||
| MAR ’24 | 4640.75 | 34.5 |
| Crude Oil | ||
| FEB ’24 | 69.73 | 0.08 |
| Gold | ||
| FEB ’24 | 2046.8 | -1.1 |
Grain Market Highlights
- Export sales that were at the upper end of expectations, lower Brazilian crop estimates, and outside support from neighboring wheat and soybeans supported corn prices to finish in the green, following choppy two sided trade early in the session.
- A large private export sale totaling 136,000 mt of soybeans to China for this marketing year, along with rumors of China purchasing 3-4 additional cargoes, helped spark a rally in soybeans ahead of tomorrow’s December USDA WASE update. Possible short covering from the recent decline and strong soybean oil also lent support to erase yesterday’s losses, and close in an outside reversal higher.
- In a surprise move, soybean oil rallied nearly 2.00 cents (almost 4%) ahead of the December, erasing almost two days of losses from possible fund short covering, as private estimates lower the Argentine soy outlook (typically the world’s largest soy product exporter). The move in soybean oil lent a large amount of support to soybeans. Meanwhile, soybean meal closed in the red, but well off the day’s lows.
- March Chicago wheat closed higher for the eighth day in a row, with KC and Minneapolis both showing surprising comebacks from yesterday’s weakness. Recent Chinese SRW purchases, along with further possible short covering from the large fund short position ahead of tomorrow’s USDA update, lent support.
- With little news to report on, the US dollar traded sharply lower throughout the day, in a show of its overall weakness, and erased the last two day’s gains as of this writing. The break in the dollar may have lent additional support to the commodity markets.
- To see the updated US Drought Monitor with the weekly classification change map, and South America’s 2 week precipitation forecast as a percentage of normal, courtesy of the NDMC, the National Weather Service, and Climate Prediction Center, scroll down to other Charts/Weather Section.
- CORN ACTION PLAN SUMMARY (approximately 3 bullet points)
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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
- Corn futures followed the strength in other grains to push higher into the close at the end of the session on Thursday. March corn added 3 ¾ cents on the trading session.
- The USDA released weekly export sales on Thursday morning. The USDA reported an increase of 1.289 mmt (50.7 mb) of corn export sales for last week. Corn sales commitments now total 1.014 bb for 23/24 and are up 35% from a year ago.
- The US corn export program is beginning to ramp up as the calendar moves closer to the new year. Currently, US corn has an advantage in price over competing supplies out of Brazil and Argentina until the March time window.
- CONAB estimated Brazil’s total corn crop for 23/24 at 118.53 mmt down from previous estimates of 119.02 MMT. If realized, corn production would be down 13.42 mmt versus last year, or a drop of approximately 11%. CONAB cited the biggest reason for the lower production was due to reduced planted areas.
- The USDA will release the next WASDE report on Friday morning at 11:00 a.m. CST. Expectations are for slight reductions in US corn ending stocks due to small demand adjustments from 2.156 billion bushels to 2.152 billion bushels. The market may be more focused on adjustments to the Brazilian corn and soybean production due to the difficult weather from early in the growing season.
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
- Soybeans ended the day higher with the March contract closing above the 200-day moving average, following a day of good export sales and support from significantly higher soybean oil. Soybean meal was mixed with lower closes in the two front months, but higher in deferred months.
- For the week ending November 30, the USDA reported an increase of 55.8 mb of soybean export sales for 23/24. This was down 20% from the previous week and 21% from the prior 4-week average. Last week’s export shipments of 49.1 mb were above the 28.2 mb needed each week to achieve the USDA’s export estimates, and primary destinations were to China, Spain, and the Netherlands.
- Following the good export sales report, the USDA reported private exporter sales of 121,000 metric tons of soybeans for delivery to unknown destinations during the 23/24 marketing year. Exports have picked up in the window that Brazil is planting their soybean crop.
- Some private analysts have lowered their outlook for the Argentinian soybean production, the world’s largest exporter of soy products, and this may have given soybean oil a boost today.
- There are few changes expected in tomorrow’s USDA WASDE report. US 23/24 ending stocks are estimated to come in at 242 mb versus November’s reported 245 mb. Whereas South American production may see some more changes. Argentina’s production is expected to come in at 48.2 mmt versus last month’s 48 mmt, and Brazil’s soybean crop is expected to drop to 160.1 mmt versus 163 mmt last month.
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
- Wheat recovered from yesterday’s losses in all three US futures classes today. In fact, the grain complex as a whole reversed from the previous day with higher closes across the board in corn and soybeans too. March Chicago wheat, which did barely close higher yesterday, has now closed higher for eight sessions in a row.
- Today, the USDA reported an increase of 13.1 mb for 23/24 wheat export sales, but a reduction of 0.3 mb for 24/25. The recent sales to China may mean that the USDA’s 700 mb export goal could be too low. With some private guesses suggesting it may need to be up to 30 mb higher. This is unlikely to be reflected in tomorrow’s report, but could be changed in the future.
- Tomorrow’s WASDE report is expected to be relatively neutral for wheat. In fact, the pre-report estimate for US 23/24 wheat carryout is unchanged from last month at 684 mb. As for the world numbers, the average pre-report ending stocks estimate comes in at 258.8 mmt, up just 0.1 mmt from last month’s number.
- While the carryout numbers are expected to see little change, it is possible that the USDA may make some revisions to global production numbers. Recently, both Canada and Australia increased their wheat production estimates above the last USDA estimates.
- The national wheat harvest in Argentina is reported to be 37% complete, in line with 38% last year. Estimates of their wheat production range from 13.5 to 14.7 mmt, and the USDA’s last estimate was 15 mmt. Therefore, it is possible there will be a revision lower tomorrow. Some areas of Argentina are seeing poorer yields due to early dryness, but the coastal growing regions received good rain with yields said to more than offset any losses in the dry areas.
Action Plan: Chicago Wheat
Calls
2023
No Action
2024
No Action
2025
No Action
Cash
2023
Active
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 sees an active opportunity to sell 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 and has posted a bearish reversal, though it’s close above the 50-day moving average suggests that there could still be more strength in the market. If not, and prices retreat below the 50-day moving average, support below the market may 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. Since then, the market posted a bearish reversal on December 6, showing significant resistance in the 750 area. If prices can break through upside resistance, they could run toward 790. If prices retreat, nearby support could be found around 718, with further support near the recent low of 697 ½.
Other Charts / Weather
Brazil 2 week forecast precipitation, percent of normal, courtesy of the National Weather Service, Climate Prediction Center.
Argentina 2 week forecast precipitation, percent of normal, courtesy of the National Weather Service, Climate Prediction Center.