2-13 End of Day: Strong CPI Data and Sharply Higher US Dollar Adds Resistance to Markets
All prices as of 2:00 pm Central Time
| Corn | ||
| MAR ’24 | 430.75 | 0.25 |
| JUL ’24 | 452.5 | 0.25 |
| DEC ’24 | 469.75 | 0.5 |
| Soybeans | ||
| MAR ’24 | 1186.25 | -6.75 |
| JUL ’24 | 1201.5 | -6 |
| NOV ’24 | 1165.25 | -3.5 |
| Chicago Wheat | ||
| MAR ’24 | 597.5 | 0 |
| JUL ’24 | 597.75 | -2.5 |
| JUL ’25 | 634.25 | -0.5 |
| K.C. Wheat | ||
| MAR ’24 | 594.5 | -4.25 |
| JUL ’24 | 585.75 | -3.25 |
| JUL ’25 | 630 | -2.5 |
| Mpls Wheat | ||
| MAR ’24 | 671.75 | -10.75 |
| JUL ’24 | 678 | -6.75 |
| SEP ’24 | 684.75 | -4 |
| S&P 500 | ||
| MAR ’24 | 4956 | -85.25 |
| Crude Oil | ||
| APR ’24 | 77.48 | 0.66 |
| Gold | ||
| APR ’24 | 2004.8 | -28.2 |
Grain Market Highlights
- Following two-sided trade that was mostly positive, the corn market gave up early strength to close at the lower end of a narrow 6-cent range. Corn prices were met with resistance from lower wheat and soybeans as they continued to consolidate on a lack of fresh news.
- Early strength in soybeans faded with weakness from soybean meal on improved weather in South America following Argentina’s recent dry spell.
- Soybean meal gave up yesterday’s gains as the prospect of increased supplies from Argentina continues to provide overhead resistance to prices. Soybean oil on the other hand posted a bullish reversal and recovered yesterday’s losses.
- With pressure coming from a sharply higher US Dollar, the wheat complex settled mostly lower except for March Chicago wheat. March Chicago wheat closed unchanged with support coming from another round of bull spreading as traders continue to move short positions from the March to the deferred contracts.
- The US Dollar advanced to new highs for the move following the release of January’s Consumer Price Index, which increased 0.3% when 0.2% was expected. Equity markets reacted negatively to the news as hopes for the Federal Reserve dropping interest rates in March quickly faded. Pressure from the higher dollar also likely carried over to the commodity markets.
- To see the updated US 7-day total precipitation forecast, 8 – 14 day temperature and precipitation outlooks, and the 2-week South American forecast precipitation, courtesy of the National Weather Service and the Climate Prediction Center, scroll down to the 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. With a general lack of bullish news and an estimated US carryout over 2.1 billion bushels, front month corn has languished in a sideways to lower trend since printing a high last October. While the lack of a bullish catalyst has been disappointing, the market is in a significantly oversold condition, and managed funds continue to hold a sizable net short position. Either or both could trigger a short covering rally at any time heading into the spring planting window. For now, Grain Market Insider continues to sit 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 or even summer.
- No new action is recommended for 2024 corn. In January, Dec ’24 broke through the bottom end of the 485 ¾ to 602 range that had been in place since February ’22. While this was a disappointing development, bear spreading has allowed Dec ’24 to maintain more of its value versus old crop as traders attempt to price in a larger 2023 carryout with more uncertainty ahead for the 2024 crop. Additionally, Dec ’24 is significantly oversold on the weekly chart, which is supportive for a technical rally to begin at any time as the spring planting window quickly approaches. Given the amount of time and uncertainty that remains for the 2024 crop, Grain Market Insider will consider recommending additional sales on a retracement toward the low to mid 500 level.
- 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 next year. 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
- Choppy, but quiet corn market on Tuesday as trade was two-sided before pulling higher into the close. March corn futures gained a ¼ cent on the session, and the trading range was a narrow 6 cents during the day from high to low.
- Corn prices are consolidating around the 430 level for the March contract. This was the 4th consecutive day trading near this level as the market is looking for news to push prices in either direction.
- A hotter than anticipated CPI data report this morning help push the US Dollar higher, which likely weighed on commodity prices. The stronger inflation levels have made the market concerned that the Fed will keep interest rates higher for a longer period, tightening money supply.
- The corn market is likely supported by near-term demand optimism. Weekly export sales have begun to pick up as US corn is competitive on the global market, and export sales have reflected that fact. This is a key window for US exporters to accumulate sales for shipment later this year. Currently, US export corn sales are running 30% higher than last year’s poor sales pace.
Above: Front month corn is showing signs of being very oversold and has uncovered support near 425, and any new bullish input could trigger a short covering rally toward the 450 – 460 resistance area. If prices fail to hold above initial 425 support, the next level of support remains near 415.
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. In early January, front month soybeans broke through the bottom side of the 1290 – 1400 range that had been in place since mid-October. As South American weather forecasts improved, the potential for a reduction in the record large global carryout also lessened, bringing prices down toward the 1180 support level. For now, 1180 support appears to be holding, and though the weak price action has been disappointing, time remains in the South American growing season, and the old crop marketing year, for unforeseen changes to push prices back higher. Given the potential of a downside breakout back in December, Grain Market Insider recommended adding to sales as prices remained historically good, and Grain Market Insider will continue to look at additional sales opportunities heading into spring.
- No new action is recommended for the 2024 crop. After the Nov ’24 contract broke through the bottom side of the 1233 – 1320 range, prices continued to retreat as South American weather conditions improved. Even though Nov ’24 runs similar downside risks as the front month contracts, which could press new crop prices toward 1150 or possibly the May ’23 low near 1115, plenty of time remains to market this crop. Considering the amount of uncertainty that lies ahead with the 2024 soybean crop, Grain Market Insider recommended back in December buying Nov ’24 1280 and 1360 calls to give you confidence to make sales against anticipated production, and to protect any sales in an extended rally. Additionally, the possibility remains that prices could retest the 2022 highs, at which point Grain Market Insider may consider recommending additional sales.
- 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 next year, 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 after a session of mixed trade which saw prices higher earlier this morning before fading along with soybean meal. Soybean oil managed a higher close with support from Malaysian palm oil.
- Price trends in the soybean meal market are a concern to overall soybean prices. Front month March soybean meal failed to hold the key psychological $350/ton level and posted its lowest daily close since March 2022. The prospects of improved Argentina supplies and strong crush totals in the US are pressuring soybean meal futures.
- Today’s inflation data that was released showed inflation cooling year over year but still above expectations which caused the US Dollar to rally and consequently soybeans and wheat prices to fall along with equity markets that moved sharply lower. The fear is that the Fed will postpone rate cuts that were expected this year.
- Weather in South America has improved significantly this week after a stretch of dryness in Argentina. 23% of Brazil’s soy crop has reportedly been harvested which is well above last year’s pace of 17%. Many analysts still expect Brazilian production slightly below 150 mmt as early yields have been on the low side.
Above: Front month soybeans appear to be consolidating just above 1180 support and continue to show signs of being very oversold on the weekly charts. If this support level holds, the market’s oversold status should be supportive with some bullish input. Right now, overhead resistance comes in between 1205 and 1210, with additional resistance around 1225. Support below the 1180 area remains between 1140 and 1145.
Wheat
Market Notes: Wheat
- Apart from March Chicago wheat which settled unchanged, all three US wheat classes posted losses today. Pressure stemmed from a sharply higher US Dollar Index, which is now at the highest level since mid-November. The jump in the dollar can be attributed to today’s CPI data in which consumer prices were said to be up 3.1% compared to the same time last year – which was higher than expected. This also pressured equity markets, and at the time of this writing, the Dow is down over 700 points.
- Adding to the bearish tone for the wheat market is the fact that prices in both France and Australia are near two-year lows. This is likely a result of stiff competition out of the Black Sea and from Russia in particular.
- Russia’s Ag Ministry is said to have proposed an increase to the quota on grain exports in 2024 to 28 mmt. The current quota stands at 24 mmt; the changes would apply to wheat, corn, rye, barley and meslin (a wheat / rye hybrid).
- Texas released data on their winter wheat crop yesterday afternoon. The crop condition was downgraded by 4% to 42% good to excellent. However, the poor to very poor category improved from 20% to 19%. By area planted, Texas is the second largest winter wheat producing state in the US, so the decline in the GTE rating may provide some support.
- According to France’s Agriculture Ministry, as of February 1, French farmers have planted 6.2 million hectares of winter crops for 2024 harvest. In total that is down 7.5% from last year and 6.1% from the average. Soft wheat in particular comes in at 4.4 million hectares, which is down 7.7% from last year and 7.5% from the average. The decline in that area is largely blamed on weather issues that disrupted fieldwork and planting.
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. The wheat market has continued to be dominated by lower world export prices that have stymied US export sales and depressed US prices. In early December, Grain Market Insider recommended taking advantage and making a sale on a short covering rally which was sparked by several Chinese purchases of US wheat. Since then, China has been silent in the US wheat export market, and prices remain somewhat elevated. Any remaining 2023 soft red winter wheat should be getting priced into market strength with the goal of having zero bushels unpriced by the end of January. Grain Market Insider won’t have any “New Alerts” for 2023 Chicago wheat – either Cash, Calls, or Puts, as we have moved focus onto 2024 and 2025 Crop Year Opportunities.
- No new action is recommended for 2024 Chicago wheat. Since early December, the July ’24 contract has traded mostly sideways to slightly lower after its brief short covering runup on Chinese buying. Although China has since been absent from the US wheat export market, prices appear to have found support above 585, and managed funds continue to hold a sizeable, short position that could trigger another short covering rally if a bullish impetus enters the market. At the end of August, Grain Market Insider recommended purchasing July 590 puts to prepare for further price erosion. Although, 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. Since early September, the July ’25 contract has been mostly rangebound with 632 at the low end and 685 at the top. Grain Market Insider’s strategy for the 2025 crop year up to this point has been to sit tight. Though if prices rally toward the upper end of this range, we will consider taking advantage of the rally’s historically good prices to make sales recommendations.
To date, Grain Market Insider has issued the following Chicago wheat recommendations:
Above: Chicago wheat has been in a congestion pattern bordered between 614-618 on the top and 584 on the bottom. A breakout through the top end could send prices toward the 640 – 650 resistance area, while a downside breakout may find initial support around 573 with more support around 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 last fall, front month KC wheat has been mostly rangebound between 678 up top and the 590 area down below. The latter has held as support for the past three months. Although fundamentals remain weak, considering support lies just below the market and managed funds continue to carry a sizable short position, these factors could trigger a return to higher prices if any unforeseen risks enter the market. Grain Market Insider’s strategy is to look for price appreciation as weather becomes a more prominent market mover and may consider suggesting additional sales if prices make a modest 20% retracement of the 2022 highs back toward 730.
- 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 may be late spring or summer before Grain Market Insider starts considering the first sales targets.
To date, Grain Market Insider has issued the following KC recommendations:
Above: Front month Minneapolis wheat broke through nearby downside support of 688 and may continue to drift lower to test the January low of 678 ¾. If the 678 ¾ area fails, the next major support level may come in around 669. Overhead, resistance remains between 710 and 720.
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. For the last six months, front month Minneapolis wheat has slowly stair-stepped lower with little bullish news to move markets higher. During this time, the 50-day moving average has acted as resistance, above which the market has not been able to hold for very long. Managed funds have also established and maintained a record (or near record) short position for much of the same time. Although bullish headwinds remain, support may be building in the 670 – 675 area, and the large fund net short position continues to leave the market susceptible to a short-covering rally at any time here. Grain Market Insider’s strategy is to look for a modest retracement of the July high and consider additional sales around 725 – 750.
- No new action is recommended for 2024 Minneapolis wheat. Much like the front month contracts, Sept ’24 has been in a downward trend since last summer. And just as Sept ’24 has been influenced to the downside by the front months, it could be similarly influenced to the upside by the front months if a bullish impetus enters the scene and triggers a short covering rally due to the fund’s large short position. 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, and in November recommended exiting 75% of the originally recommended position as July ’24 KC wheat showed signs of support around 630. 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. Grain Market Insider remains prepared to recommend exiting the last 25% of the open puts on any further supportive market developments and consider recommending additional sales if prices make a modest retracement of the 2022 highs.
- 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 in the spring of next year. It may be late spring or summer before Grain Market Insider starts considering the first sales targets.
To date, Grain Market Insider has issued the following Minneapolis wheat recommendations:
Above: Front month Minneapolis wheat continues to drift lower and is beginning to show signs of being oversold, which can be supportive if prices reverse. The breach of the January low indicates that prices may drift further towards 669 support. If a bullish catalyst enters the scene to turn prices around, overhead resistance may come in around 690.
Other Charts / Weather
