2-2 End of Day: Strong Jobs Report Adds Pressure to Markets
All prices as of 2:00 pm Central Time
| Corn | ||
| MAR ’24 | 442.75 | -4.5 |
| JUL ’24 | 462.5 | -3.5 |
| DEC ’24 | 476.75 | -2.25 |
| Soybeans | ||
| MAR ’24 | 1188.5 | -14.75 |
| JUL ’24 | 1208.25 | -15.5 |
| NOV ’24 | 1171 | -14.5 |
| Chicago Wheat | ||
| MAR ’24 | 599.75 | -1.75 |
| JUL ’24 | 613 | -0.75 |
| JUL ’25 | 650.25 | 1 |
| K.C. Wheat | ||
| MAR ’24 | 625 | 4.25 |
| JUL ’24 | 616.5 | 2.25 |
| JUL ’25 | 654.5 | 5.75 |
| Mpls Wheat | ||
| MAR ’24 | 699.75 | 3.75 |
| JUL ’24 | 706.75 | -0.75 |
| SEP ’24 | 714.75 | -1.5 |
| S&P 500 | ||
| MAR ’24 | 4991.25 | 62.75 |
| Crude Oil | ||
| APR ’24 | 72.08 | -1.71 |
| Gold | ||
| APR ’24 | 2053.9 | -17.2 |
Grain Market Highlights
- Despite the amount of corn used for ethanol last month being the highest in 5 ½ years and above expectations, the corn market came under pressure from neighboring soybeans and a higher US dollar and closed lower on the day following a mostly firmer overnight trade.
- While the soybean market entered the early morning hours in the green and near session highs, the market quickly faded upon the release of this morning’s unemployment report that showed job creation well above expectations. This drowned out the positive influence of yesterday’s Fats and Oils report showing record crush numbers.
- The wheat complex fared the best in today’s trade and closed mixed as strong overnight gains faded through the early part of the day session into choppy trade in all three classes. Chicago closed mixed with the fronts losing to the deferreds, KC was firm across the board, while Minneapolis closed mixed as well, but with the nearby contracts gaining on the deferreds.
- Today’s January jobs report showed more than double the number of jobs were added to the economy than expected in the month of January and the unemployment rate came in at 3.7% versus 3.8% expected. The positive economic news rallied the US dollar 0.9% at the time of writing and likely added to the negativity in the Ag space.
- To see the updated US 7 day precipitation forecast, 6 – 10 day temperature and precipitation outlooks, and the 2-week GFS precipitation forecast as a percent of normal for South America, courtesy of the National Weather Service, NOAA, 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. Front month corn has languished in a sideways to lower trend since printing a high in October, with a general lack of bullish news and an estimated US carryout over 2.1 billion bushels. The failure of the USDA’s January report to provide the bullish news necessary to turn prices higher was disappointing and the market remains at risk of remaining in the same pattern. With that being said, managed funds continue to hold a sizable net short position, which could trigger a short covering rally if a bullish catalyst enters the scene. 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. Following the January USDA Supply and Demand update, Dec ’24 broke through the bottom end of the 485 ¾ to 602 range that had been in place since February ’22. While this is 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 remaining for the 2024 crop. Grain Market Insider continues to watch for signs of a change in the current trend to look at recommending making additional sales and buying Dec ’24 call options.
- 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
- Overnight strength from Thursday’s positive ethanol grind data quickly faded on the open of today’s session as US jobs data came in far above expectations and rallied the US dollar, which likely weighed on Ag futures across the board. March corn closed the day 4 ½ cents lower, with a 3 ½ cent loss for the week.
- Thursday afternoon, the USDA released its Grain Crushing’s report that showed 482 mb of corn were used in December 2023 for the production of ethanol. Usage came in above expectations and at the highest level in 5 ½ years. It also represented a 5% increase from November and was 13% higher than a year ago.
- The Buenos Aires Grain Exchange reported that 98% of Argentina’s corn crop is planted, and as a testament to the hot and dry conditions, 11% of the crop is rated poor to very poor, a 5% increase from last week.
- On the flip side, the US Ag attaché in Argentina raised its estimate of Argentina’s corn crop by 2 mmt to 57 mmt. By comparison, the USDA is currently forecasting a 55 mmt crop.
- The US drought monitor continues to show significant improvement over this time last year. As of yesterday’s update, the drought monitor shows 28% of the corn areas in drought versus last year when it showed 45%.
Above: Front month corn posted a key bullish reversal on January 30. This indicates there is significant support below the market around 436, and that prices could retest the 460 resistance area. If the market were to reject the bullish reversal and turn lower, the next major level of support below 436 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 significantly lower again to end the week with pressure from Brazil’s advancing harvest, lower soy products, and poor export sales. Soybean meal has been rangebound for the past few weeks, while soybean oil has trended lower on increased supply and demand concerns.
- For the week, March soybeans lost 20-3/4 cents, March soybean meal gained $7.80, and March soybean oil lost 2.20 cents. Today, nearly all of the grains fell sharply after unemployment numbers were released. This caused the dollar to rise as traders feel that the Fed will further delay dropping rates.
- Soybeans would likely be trading even lower if not for the good domestic crush demand. Yesterday’s Fats and Oils report from the USDA showed that total soybean crush for December was 204 mb, 17 mb above this time a year ago and a new monthly record. Better export demand would be needed for prices to move higher.
- Scattered showers continue to fall throughout Brazil, but the northern region would benefit from drier weather at this point to progress with harvest. Argentina is expected to remain hot and dry throughout the weekend before rains begin to fall again, and it is unknown if the recent hot and dry spell will reduce production estimates.
Above: The soybean market appears to be consolidating within the range of the January 30 bullish key reversal where nearby support remains just below the market around 1188, with nearby resistance just overhead near 1225. Depending on which direction the market breaks out, it could retest 1250 up top, or the November low of 1181.
Wheat
Market Notes: Wheat
- With the US Dollar up sharply after the jobs report, wheat struggled to hold onto earlier gains and closed mixed amongst the three classes. The report showed that 353,000 jobs were added, but perhaps more importantly, unemployment was steady at 3.7% compared to the expectation for an increase to 3.8%.
- Paris milling wheat futures also faded off of earlier highs, which may have also offered weakness to the US market by the close. The March Matif contract posted small gains, while May was down a bit. This is somewhat disappointing given yesterday’s strong bullish reversal off contract lows.
- According to FAO-AMIS, the estimate of global 23/24 wheat stockpiles was increased from 319.3 mmt to 319.7 mmt. Corn production and stockpile estimates were also raised, but soybean stocks were reduced.
- Compared to last year, Russia is estimated to have increased grain exports by 23% in the period of July 1 through January 31. Data suggests that during that period, they exported 38.5 mmt of grain. Turkey was the leading wheat importer at 4.349 mmt with Egypt next in line at 3.577 mmt.
- New Zealand’s National Institute for Water and Atmospheric Research has said that there is a 100% chance of El Nino lasting through April. Additionally, there is a 65% chance that the weather pattern will return to neutral conditions in the May – July timeframe.
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: The recent rally came within earshot of the 620 – 625 resistance area and was rejected. For now, minor nearby support may be found near the 100-day moving average. If that breaks, the market runs the risk of receding further with the next downside support near 573 and again 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 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: KC wheat continues to consolidate just below the 50-day moving average, which is acting as mild resistance to the upside. If the market does breakout to the upside, it may encounter additional resistance near the recent high of 641. To the downside, the next major support level remains between 595 and 575.
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 next year. 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: Front month Minneapolis wheat is correcting from becoming overbought on the recent rally. If prices continue to slide, the next level of support comes in around the January low of 678 ¾. While upside resistance remains between 710 and 720.
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.