12-20 End of Day: The Prospect of Improved Conditions Presses Markets Lower.
All prices as of 2:00 pm Central Time
| Corn | ||
| MAR ’24 | 469.75 | -3 |
| JUL ’24 | 492.5 | -2.25 |
| DEC ’24 | 501.75 | -1.5 |
| Soybeans | ||
| JAN ’24 | 1308.25 | -4.25 |
| MAR ’24 | 1315.75 | -6.75 |
| NOV ’24 | 1263.75 | -7 |
| Chicago Wheat | ||
| MAR ’24 | 610 | -12.75 |
| MAY ’24 | 621.25 | -12 |
| JUL ’24 | 628 | -10.5 |
| K.C. Wheat | ||
| MAR ’24 | 625 | -16.5 |
| MAY ’24 | 629.75 | -15.5 |
| JUL ’24 | 634.5 | -14 |
| Mpls Wheat | ||
| MAR ’24 | 718 | -10.25 |
| JUL ’24 | 735.5 | -8.5 |
| SEP ’24 | 743.5 | -8.75 |
| S&P 500 | ||
| MAR ’24 | 4787.25 | -33 |
| Crude Oil | ||
| FEB ’24 | 74.12 | 0.18 |
| Gold | ||
| FEB ’24 | 2045 | -7.1 |
Grain Market Highlights
- Weakness from wheat and neighboring soybeans weighed on the corn market as it closed lower for the third day in a row and below 470 support as it continues to drift lower into year’s end.
- The prospect of additional rainfall in the parched areas of Brazil and weakness from lower soybean meal and oil spilled over to the soybean market and siphoned off the gains from the overnight session.
- Abiove made a statement that Brazil’s soybean oil demand for biodiesel is set to rise, citing expected increases in Brazil’s biodiesel mix. The announcement likely added pressure to meal, as added crush for bean oil could easily produce excess meal, depressing prices.
- Forecasts for additional rainfall in the HRW growing areas added pressure to the wheat complex as all three classes reversed course and gave up yesterday’s gains.
- To see the updated US 6 – 10 day temperature and precipitation outlooks, and the GRACE-Based Root Zone Drought Indicators for the US, Brazil, and Argentina, courtesy of the National Weather Service, and NASAGRACE in partnership with the NDMC, scroll down to other Charts/Weather Section.
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Corn
Action Plan: Corn
Calls
2023
No New Action
2024
No New Action
2025
No New Action
Cash
2023
No New Action
2024
No New Action
2025
No New Action
Puts
2023
No New Action
2024
No New Action
2025
No New 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 December’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 old 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 sideways to 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
- Pressure from the wheat market on the prospects of better conditions in the southern Plains spilled over into the corn market on the session. March corn futures 3 cents as traded lower for the third consecutive day and established a new low for the March contract at 468 ¼.
- US Customs and Border Protection has maintained the closure of the Eagle Pass and El Paso rail gateways to Mexico to handle migrant surges. The closures are causing disruptions in supply movements and remain despite calls for the gateways to reopen from the Association of American Railroads and various Ag commodity groups.
- South American weather forecasts are staying supportive for the crop going into the end of the year with improved precipitation. The improved weather forecast is limiting buying strength in the corn and soybean markets.
- Ethanol average daily production for the week ending December 15 averaged 1.071 million barrels. This was down 0.3% from last week and up 4.1% from last year. The amount of corn used for the week is estimated at 106.30 million bushels. This pace is slightly ahead of the USDA target for the marketing year.
- USDA will release weekly export sales on Thursday morning. Expectations are for new sales last week to range from 800,000 to 1,500,000 mt for the week.
Above: After posting bearish reversals on December 6 and 8, the market slowly eroded and traded through 470 support. Without fresh bullish input, the market runs the risk testing major support near 460. If a bullish catalyst does enter the market, overhead resistance comes in between 490 and 497, and again near 510.
Soybeans
Action Plan: Soybeans
Calls
2023
No New Action
2024
No New Action
2025
No New Action
Cash
2023
No New Action
2024
No New Action
2025
No New Action
Puts
2023
No New Action
2024
No New Action
2025
No New Action
Soybeans Action Plan Summary
- No new action is recommended for 2023 soybeans. Front month soybeans continue to be rangebound, largely between 1290 and 1400. At some point, the front month will eventually break out of that range, and if it breaks out to the downside, then the first risk would be 1180. If the breakout occurs to the topside, then the first opportunity would be 1510. The biggest looming catalyst behind a potential downside breakout is the projected record global carryout of soybeans, while the biggest looming catalyst for a potential upside breakout is continued adverse South American weather. Given the uncertainty of which direction the market will go, Grain Market Insider recently recommended adding to sales as the current price level is still historically good. It’s been disappointing how the market has been unable to push higher despite the South American planting disruptions. Because of that, Grain Market Insider’s concern is that, if the weather pattern doesn’t remain adverse, the path of least resistance could be lower. Grain Market Insider will continue to look at additional sales opportunities, as well as potential re-ownership strategies.
- 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 lower for the second consecutive trading session with pressure from an improving Brazilian weather forecast and widespread showers over the central region of the country today. Both soy products were lower, but the majority of losses were in soybean meal.
- Although weather forecasts are improved for Brazil, production for the main soybean growing state of Mato Grosso is now forecast to produce 20% fewer soybeans this season. The lowest estimates for the entire country are around 155 mmt which is what was produced last season, and this year, Argentina is also expecting a normal soybean crop. The combined production of both countries could put pressure on US soybean prices.
- Argentinian weather has been very favorable, and the country can likely expect normal to above normal production. This would lead to increased crush numbers and increased exports of both soybean meal and oil. If Argentina regains its status as the largest exporter of meal, US soybean meal prices could fall further and pressure soybeans. Soybean oil could be buoyed by strong demand for bean oil as biofuel in the US.
- Two main rail bridges to Mexico have been closed by US customs at Eagle Pass and El Paso due to large congregations of migrants. This has made shipments to Mexico more difficult and likely added to today’s pressure in the soy complex.
Above: After posting a high of 1398 ½ in November, soybeans found support around 1292. Overhead, nearby resistance remains near 1350 and again around 1400. If the market breaks support at 1292, it runs the risk of testing 1250.
Wheat
Market Notes: Wheat
- Wheat gave back all of yesterday’s gains and then some. Weakness today stemmed from consolidation in the US Dollar Index, a mixed close in Paris milling wheat, and a wetter nearby forecast in the US southern plains. Additionally, global freight costs are increasing due to low water levels on the Panama Canal and Houthi attacks on Red Sea shipping lanes; the rising costs may be reducing export competitiveness of US goods to some parts of the world.
- Egypt’s tender did end up being fulfilled by Russia for all 480,000 mt. Of the total, 180,000 mt are to be shipped during the first half of February, while the remaining 300,000 mt will be shipped during the second half of February.
- Despite an increased estimate of Ukraine’s 2023 grain harvest by consultancy APK-Inform, they kept their wheat production estimate unchanged at 21.5 mmt. The total grain harvest estimate was increased by 1.6 mmt to 56.3 mmt. However, that change is mostly reflected in the corn production number.
- According to state-run news agency Xinhua, China has vowed to focus on grain and ag production during a recent conference. Their goal is said to be to strengthen the use of technology in agriculture, boost grain yields, and ensure that grain production in 2024 exceeds 650 mmt. As they work towards becoming more self-sufficient, this may mean reduced imports of US goods over the coming years.
- An investment group in Brazil is looking to invest $62 million into a port terminal with a capacity of 3 mmt of grain. The reason behind the expansion is believed to be an attempt to reduce congestion on the roads from the transport of ag goods. The investment decision is expected to take place during the first half of 2024. Brazil continues to increase ag exports every year, and investment into port infrastructure may add pressure to the US export market down the road.
Action Plan: Chicago Wheat
Calls
2023
No New Action
2024
No New Action
2025
No New Action
Cash
2023
No New Action
2024
No New Action
2025
No New Action
Puts
2023
No New Action
2024
No New Action
2025
No New Action
Chicago Wheat Action Plan Summary
- No new action is currently recommended for 2023 Chicago wheat. Between late July and the end of November, front month Chicago wheat trended lower, driven mostly by weak US demand and lower world wheat prices. During that time, and as managed funds established most of their short position of nearly 120,000 contracts, the market became extremely oversold. Since then, as the market rallied to a high of 649 ½, China made several US SRW wheat purchases, and funds covered more than 23,000 short contracts. During that runup, Grain Market Insider recommended making an additional sale to take advantage of the elevated prices in case the rally was temporary since US wheat prices remain elevated relative to other world exporters, despite the increase in demand. If 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. From the end of July, the July ’24 contract has slowly stepped its way down to a low of 586 in sympathy with the front month contract where managed money established a large short position during that time. Since then, July ’24 rallied alongside the March ’24 contract, as the funds covered over 30k contracts of their nearly 130k short contract position. While bearish headwinds remain, the funds continue to carry a large short position and seasonals remain supportive for the addition of weather risk premium, which are two factors that could fuel further short covering and another leg up in prices. At the end of August, Grain Market Insider recommended purchasing July 590 puts to prepare for further price erosion. 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: After rallying to 649 ½, Chicago wheat became overbought and turned lower after the December 8 USDA report. Since then, the market has found nearby support near 600. Nearby resistance remains overhead near 650, with additional resistance between 660 and 665. If the market breaks nearby support, it may test the 50-day moving average, and then support near 556.
Action Plan: KC Wheat
Calls
2023
No New Action
2024
No New Action
2025
No New Action
Cash
2023
No New Action
2024
No New Action
2025
No New Action
Puts
2023
No New Action
2024
No New Action
2025
No New 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 July ’24 contract broke out of roughly a one-year trading range and stepped down to a 609 ¼ low in late November, largely driven by managed fund selling in the front month on weak US export demand and lower world wheat prices. Since then, the funds covered part of their large short position which also rallied prices in the July ’24 contract. While bearish headwinds remain, managed funds continue to hold a sizable, short position, and price seasonals remain positive for adding weather risk premium. These are two factors that could fuel additional short covering and rally prices in the months ahead. Back in August, Grain Market Insider recommended buying Jul’24 KC wheat 660 puts to protect the downside following the range breakout. 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 posting bearish reversals on December 6 and 8, the market has been consolidating while holding support around 625, with close in resistance just overhead at the 50-day moving average. If the market breaks lower, the next area of support may come in around 595 and 575. Resistance above the 50-day moving average remains around 675 – 680.
Action Plan: Mpls Wheat
Calls
2023
No New Action
2024
No New Action
2025
No New Action
Cash
2023
No New Action
2024
No New Action
2025
No New Action
Puts
2023
No New Action
2024
No New Action
2025
No New 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
