2-7 End of Day: Demand Concerns Press Corn and Beans Lower; Wheat Rallies on Short Covering
All prices as of 2:00 pm Central Time
| Corn | ||
| MAR ’24 | 434.25 | -4.5 |
| JUL ’24 | 455.5 | -5 |
| DEC ’24 | 473.75 | -3.5 |
| Soybeans | ||
| MAR ’24 | 1189 | -10.5 |
| JUL ’24 | 1207 | -10.75 |
| NOV ’24 | 1170.75 | -6.75 |
| Chicago Wheat | ||
| MAR ’24 | 602 | 7 |
| JUL ’24 | 610.5 | 4.75 |
| JUL ’25 | 647.75 | 2 |
| K.C. Wheat | ||
| MAR ’24 | 618.25 | -0.25 |
| JUL ’24 | 609.5 | 0.5 |
| JUL ’25 | 645 | -0.25 |
| Mpls Wheat | ||
| MAR ’24 | 696.25 | 3 |
| JUL ’24 | 700.5 | 1.25 |
| SEP ’24 | 706.5 | 1.5 |
| S&P 500 | ||
| MAR ’24 | 5013.25 | 38.5 |
| Crude Oil | ||
| APR ’24 | 73.83 | 0.46 |
| Gold | ||
| APR ’24 | 2051.2 | -0.2 |
Grain Market Highlights
- Weakness in soybeans and market rumors of China purchasing much cheaper corn from Ukraine weighed on the corn market, which posted a new contract low and low close.
- Soybeans reversed gains from the last two days on reports of beneficial overnight rain in the Buenos Aires province of Argentina, and on rumors that China may have bought Argentine soybeans and could cancel an equal amount of previous US purchases.
- Soybean meal also traded lower and added downward pressure on the soybean market. There was talk of Argentina importing Brazilian soybeans, which could reduce export demand for US meal. Soybean oil was the bright spot of the complex, which closed higher, gaining support from higher Malaysian palm oil and crude oil.
- The wheat complex ended the day mostly higher with Chicago leading the way on more potential short covering ahead of tomorrow’s USDA report. There are also some concerns of winterkill with expectations of a polar vortex bringing frigid temperatures later this month to the winter wheat areas with little to no snow coverage.
- To see the updated US and South American GRACE-Based Drought Indicator maps, and the 1-week GFS precipitation forecast 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
- A disappointing day in the corn market as prices pushed to new contract lows during the session. March corn lost 4 ½ cents and closed at a new contract low close of 434 ¼. March corn futures traded flat or lower for the past five trading sessions.
- Corn prices were pressured by selling in the soybean market, and concerns regarding demand. The market was hearing rumors of China purchasing cheaper Ukrainian corn on the export market. The trending higher dollar has helped put pressure on US export prices.
- The USDA will release the next WASDE report tomorrow at 11:00 CST. The focus of the market will be tied to any demand adjustments in the US corn balance sheet. Expectations are for US corn carryout to be decreased slightly to 2.134 billion bushels, down 30 mb from last month on some possible demand increases. A key emphasis in the report will be adjustments made to the Argentina and Brazil soybean and corn crops.
- The USDA will release weekly export sales on Thursday morning, and expectations are for improved activity on corn export sales. Analysts feel sales will range from 600,000 – 1.3 mmt for sales last week. On last week’s report, US exporters sold 1.206 mmt of corn.
- Ethanol production improved last week as production reached 1.033 barrels/day, up 4.2% over last week and 3.3% over last year. Ethanol stocks were up 2.1% week over week. Corn used in ethanol production last week was estimated at 102.53 mb, just slightly under the target needed to meet USDA’s estimates of 5.375 billion bushels of corn used in the 23/24 marketing year.
Above: The breach of the previous low of 436 puts front month corn at risk of drifting lower without any new bullish input. For now, the next major level of support lies near 415. Should a bullish catalyst enter the scene to move prices higher, overhead resistance may be found between 450 and 460.
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 two consecutively higher closes on Monday and Tuesday. Better rain forecasts in South America, poor export demand, and concerns about Chinese purchases being cancelled. Soybean meal ended the day lower, while soybean oil was higher.
- Rumors of China being a purchaser of Argentina soybeans on the export market weighed on Soybean prices. Market analysts feel that the Argentina purchases could be meet with cancellations of US origin soybeans by China of existing sales.
- December exports of US soybeans were just 4.8 mmt and were 33% below the 5-year average for the month. The lack of Chinese purchases from the US has weighed on prices as China looks to Argentina and Brazil for their soy purchases. Weather in South America has improved lately, and the forecast looks friendly.
- Tomorrow, the USDA will release the next WASDE report. Expectations are for US soybean carryout to increase slightly to 284 million bushels, up 4 mb from last month. A key emphasis in the report will be adjustments made to the Argentina and Brazil soybean and corn crops.
- The USDA will release weekly export sales on Thursday morning. Expectations for new sales range from 400,000 – 1.4 mmt. Last week, sales were disappointing at just 164,000 mt, and below analysts’ expectations. The past two Thursday sessions, March soybeans have lost 17 cents and 19 cents respectively after the export sales report.
Above: Front month soybeans appear to have rejected the recent bullish reversal, but so far, support around 1180 remains intact and the market shows signs of being very oversold on the weekly charts. If this support level holds, the market’s oversold status should be supportive. 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
- Wheat closed higher across the board in the Chicago contract, but was mixed in KC, and just slightly higher in MPLS. Bull spreading was again noted in the Chicago futures, which may indicate more short covering by the funds ahead of tomorrow’s WASDE report. Additional short covering may be taking place due to the extended weather forecast, in which a polar vortex is expected to bring cold temperatures to US winter wheat areas in late February; the threat of winterkill is likely the main concern.
- Ukraine grain exports have surpassed last year’s amounts for the second month in a row. January exports at 5.3 mmt are well above the nearly 4 mmt from a year ago. While 60% of this is said to be corn, the remaining percentage is largely wheat. However, perhaps more importantly, it should be noted that Ukraine is exporting these ag goods without the help or approval of Russia.
- Tomorrow, the USDA will release its February WASDE report, and the average pre-report estimate for US 23/24 wheat ending stocks comes in at 649 mb, up 1 mb from January. In terms of global carryout, the average guess for wheat is pegged at 260.1 mmt versus 260.0 mmt in January. Not many changes are expected for wheat tomorrow, but it is possible that the USDA will lower exports due to strong global competition, especially out of the Black Sea.
- Giving wheat a boost today, the US Dollar Index has faded off of Monday’s high and is back below the 100 day moving average. The bigger question, as it relates to the economy, may be regarding China. They are attempting to stimulate their equity markets and consumer confidence. If successful, this may positively impact their demand for ag goods.
- In addition to tomorrow’s USDA report, Stats Canda will release their estimate of December 31 wheat stocks. All wheat is projected at 20.7 mmt, down from 22.3 mmt a year ago. As to whether the USDA will make a similar adjustment is up in the air. However, US ending stocks are the second tightest in a decade, and global stocks are tight as well, both of which may offer long term support to the market.
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
Above: Brazil 1 week forecast total precipitation courtesy of the National Weather Service, Climate Prediction Center.
Above: Argentina 1 week forecast total precipitation courtesy of the National Weather Service, Climate Prediction Center.