2-6 End of Day: Beans and Wheat Close Higher on Short Covering Ahead of this Week’s USDA Report
All prices as of 2:00 pm Central Time
| Corn | ||
| MAR ’24 | 438.75 | -4 |
| JUL ’24 | 460.5 | -1.5 |
| DEC ’24 | 477.25 | -0.5 |
| Soybeans | ||
| MAR ’24 | 1199.5 | 3.25 |
| JUL ’24 | 1217.75 | 3.5 |
| NOV ’24 | 1177.5 | 0.75 |
| Chicago Wheat | ||
| MAR ’24 | 595 | 4.75 |
| JUL ’24 | 605.75 | 2.5 |
| JUL ’25 | 645.75 | 2 |
| K.C. Wheat | ||
| MAR ’24 | 618.5 | 4.5 |
| JUL ’24 | 609 | 1 |
| JUL ’25 | 645.25 | -0.25 |
| Mpls Wheat | ||
| MAR ’24 | 693.25 | 2.25 |
| JUL ’24 | 699.25 | 0.25 |
| SEP ’24 | 705 | -1.5 |
| S&P 500 | ||
| MAR ’24 | 4962 | 0 |
| Crude Oil | ||
| APR ’24 | 73.56 | 0.71 |
| Gold | ||
| APR ’24 | 2052.7 | 9.8 |
Grain Market Highlights
- The lack of friendly news, weak export inspections, and increased grain movement pressed March corn to a new low close for the contract, as traders look toward Thursday’s USDA WASDE report.
- Choppy, two-sided trade dominated the soybean market, as traders likely continued to cover shorts and square positions ahead of Thursday’s report. Carryover strength from strong exports, and a firming Brazilian basis on slow farmer selling likely added support.
- Soybean meal and oil diverged in today’s trade, as oil gained on meal on follow through strength from yesterday’s reversal, with higher Malaysian palm and crude oil offering further support to bean oil. While meal tracked lower with a more negative outlook, as the South American harvest progresses.
- There remains little fresh bullish news to hang one’s hat on, and with a sizable short fund position, the wheat complex likely experienced short covering in anticipation of Thursday’s USDA update, as all three classes closed mostly higher on the day with the front months gaining on the deferred months.
- To see the updated US 6 – 10 day temperature and precipitation outlooks, and the 1-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
- Despite firmer trade in other grains, corn futures failed to find any footing on Tuesday. March corn closed 4 cents lower and posted a new contract low close at the end of the session.
- The strongest selling pressure was in the front month contract, March. Monday’s weak export inspections, and the possible increase in grain movement with warm weather across the Midwest, is likely putting pressure on the front-end of the market.
- Argentina weather is a market driver in the near term. Crop growing regions in Argentina are experiencing above-normal temperature, but weather models stay more friendly for key precipitation over the next couple weeks. The amounts and coverage will be closely monitored.
- Brazil’s 2nd (safrinha) crop corn planting is off to a good start with the earlier soybean harvest. As of last Thursday, 27% of the expected corn area was planted, up from 11% the previous week. This represents the fastest pace for the second crop corn since 2013. The earlier planting window should help the corn crop target key weather windows throughout the growing season.
- The USDA will release the next WASDE report on Thursday, February 8. The focus of the market will be tied to any demand adjustments in the US corn balance sheet, but a key emphasis will be adjustments made to the Argentina and Brazil soybean and corn crops. Prices may stay choppy into that report.
Above: Front month corn continues to consolidate and drift lower since posting a bullish key reversal on January 30. The reversal itself indicates that significant support remains below the market around 436. If support continues to hold, prices may turn higher to test overhead resistance in the 460 area. If not, they may drift toward the next major support level 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 closed higher for the second consecutive day as futures traded within a range of 1180 and 1220. Yesterday’s export inspections report was encouraging to traders with a significant amount of soybeans heading to China.
- Soybean meal closed lower today and has been consolidating since the beginning of January after finding lows last week. Soybean oil closed higher today, but has been in an overall lower trend despite higher crude oil prices. Crush margins have improved recently incentivizing processors.
- This Thursday, the USDA will release its February WASDE report and US ending stocks for soybeans are estimated to rise slightly by 5 mb to 285 mb, while exports are expected to fall by 13 mb to 1,742. Argentia’s production is expected to increase slightly to 50.8 mb and Brazil is expected to fall to 153.7 mb. World ending stocks are expected to decline slightly.
- Total South American production is expected to be larger than last year, and the ongoing harvest and prospect of large supplies has weighed on prices. Argentinian weather has been dry, but is expected to turn around this week, while Brazil has been receiving scattered showers throughout the country.
Above: After resuming its downward trend, the soybean market found nearby support just below the November low of 1181 and reversed back higher. If the market follows through to the upside, nearby resistance remains just overhead near 1225, and again near 1250. If on the other hand nearby support fails, prices could erode further toward the 1140-45 support area.
Wheat
Market Notes: Wheat
- Wheat finished mostly higher in all three futures classes. Bull spreading was a noted feature of both Chicago and KC contracts, in which the front months traded higher compared to the deferred. This may indicate that funds are covering some of their short position before the USDA report on Thursday.
- Any significant rally in wheat is likely to be limited by the uptrend in the US Dollar Index, as well as lower EU and Russian prices. According to IKAR, Russian wheat FOB values are now said to be as low as $228 per mt. This is $7 per mt lower than last week’s high and is reportedly a result of higher production estimates. Additionally, with tensions increasing in the Black Sea and Middle East, freight costs may continue to be affected.
- Texas reported their winter wheat crop ratings yesterday, and the good to excellent category increased by 4% to 46%. There was also a 2% increase in the fair category, and poor to very poor declined by 6% to 20%. This is indicative of the rains in the southern Plains easing drought conditions. By area planted, Texas is the second largest winter wheat producer in the US.
- Wheat in Brazil has taken a backseat to the corn and soybean crops that producers are currently focused on. However, according to Secex (Brazil’s foreign trade secretariat), exports are still progressing well, with Brazil having shipped about 812,000 mt of wheat through the fourth week in January. For reference, January shipments last year were roughly 561,000 mt.
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 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 continues to consolidate with overhead resistance remaining between 710 and 720, and nearby support just under the market at 688. If prices break through nearby support, they may fade and test the January low of 678 ¾. Support below there may come in around 669.
Other Charts / Weather
Brazil 1 week forecast precipitation, percent of normal, courtesy of the National Weather Service, Climate Prediction Center.
Argentina 1 week forecast precipitation, percent of normal, courtesy of the National Weather Service, Climate Prediction Center.