2-9 End of Day: Markets Close Lower on the Week as Bearish USDA Data Looms Overhead
All prices as of 2:00 pm Central Time
| Corn | ||
| MAR ’24 | 429 | -4.25 |
| JUL ’24 | 450.75 | -3.25 |
| DEC ’24 | 468.25 | -4 |
| Soybeans | ||
| MAR ’24 | 1183.5 | -10 |
| JUL ’24 | 1199.75 | -9.5 |
| NOV ’24 | 1163.75 | -9 |
| Chicago Wheat | ||
| MAR ’24 | 596.75 | 8.25 |
| JUL ’24 | 601 | 3.75 |
| JUL ’25 | 635.25 | -1.25 |
| K.C. Wheat | ||
| MAR ’24 | 601.5 | 0.5 |
| JUL ’24 | 593.75 | 0.25 |
| JUL ’25 | 632.5 | 0.5 |
| Mpls Wheat | ||
| MAR ’24 | 684.25 | 0.5 |
| JUL ’24 | 686 | -2 |
| SEP ’24 | 690.25 | -3.75 |
| S&P 500 | ||
| MAR ’24 | 5043.25 | 25.5 |
| Crude Oil | ||
| APR ’24 | 76.73 | 0.54 |
| Gold | ||
| APR ’24 | 2039.3 | -8.6 |
Grain Market Highlights
- March corn failed to trade above yesterday’s high and reversed lower as it followed through on yesterday’s weakness and posted yet another new contract low and settled below nearby support.
- With the USDA’s bearish 315 mb carryout and anticipation of a large South American harvest looming, soybeans reversed yesterday’s gains and turned back lower in today’s trade. So far, support around 1180 in the March continues to hold.
- Soybean oil turned and closed the day lower with traders likely taking profits from this week’s rally after hitting resistance at the 50-day moving average. March meal reversed back higher after posting a fresh 2-year low to close slightly lower. Bull spreading supported the front months versus the deferred.
- The wheat complex had a mixed close, with all three classes well off their respective highs, and Minneapolis mostly lower. Bull spreading was noted in Chicago and Minneapolis as the front months gained on the deferreds on possible short covering from the funds sizable net short positions.
- To see the updated US 5-day total precipitation forecast, 6 – 10 day temperature and precipitation outlooks, and the 2-week Brazil 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
- Corn futures finished lower again to end the week as the lack of bullish news kept the sellers active. March corn placed another round of new contract lows as the futures dropped 4 ¼ cents on the session. For the week, March futures lost 13 ¾ cents and has traded steady or lower for the past seven sessions.
- The weak price action in the corn and soybean markets make it difficult for buyers to step in the market. March corn has drifted through a key level of support at both 440 and 430 levels. This leaves the door open for additional technical selling next week.
- Corn prices reflected the negative sentiment of increasing US supplies. Despite the small adjustment in Thursday’s USDA report, corn ending stock still increased by 10 mb. This is the third time in four months that corn ending stocks in the US have increased. The stocks-to-use ratio has been raised to 14.9%, the highest since 2018-19 marketing year.
- Managed money continues to grow its large short position in the grain markets. Last week, managed funds were short 280,151 contract of corn, and that position likely grew this week with the additional selling pressure. The next Commitment of Traders report will be released on Friday afternoon.
- With the CONAB lowering anticipated Brazilian corn production to 113 mmt, a big focus will be on the Argentina crop this spring. Expectations are for a record crop near 55 mmt, but recent hot and dry weather has helped support the market. This week, weather forecasts have moderated and turned more friendly to crop production, which has weighed on both corn and soybean futures.
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 closed lower today on the heels of yesterday’s bearish WASDE report, which saw US ending stocks increased and Brazilian production not lowered as much as expected. Both soybean meal and oil ended the day lower as well, despite gains in crude oil.
- For the week, March soybeans lost 5 cents, March soybean meal lost $10.00, and March soybean oil gained 2.53 cents. Pressure has come from steady selling by non-commercials, improved Argentinian weather, poor export sales, and anticipation of a large upcoming South American harvest.
- Yesterday, traders were slightly divided between the estimates over Brazil’s soybean production by the USDA and CONAB. The USDA maintained their position that Brazil would have a larger soy crop at 156 mmt, while CONAB’s estimates were far lower at 149 mmt. Historically, the USDA is typically more accurate, but the numbers had trade questioning the USDA’s accuracy.
- Also, in yesterday’s WASDE report, soybean export demand was lowered from 1.755 billion bushels to 1.720 bb as China notably looks to South America for the bulk of its purchases. US shipments are currently down 22% from the previous year.
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 mixed among the three US classes. This is despite a strong reversal off the contract low with a sharply higher close for March Matif wheat. Overall, March Chicago wheat has been in a relatively narrow trading range recently and seems to be limited to the upside around the six dollar level. Spillover pressure from lower corn and soybeans today may have also limited the rally in wheat.
- Bull spreading was again noted in Chicago wheat futures, in which nearby contracts rallied more strongly compared to deferred contracts. With the funds still net short a sizeable amount of wheat, this may indicate that they are exiting some of their positions in the front months ahead of the potential polar vortex predicted towards the end of this month.
- The Indian government is reported to have cut the wheat stockpile limits in half for traders and chain retailers, from 1,000 to 500 mt. Stock limits were also said to be reduced for wheat processors. According to the Ministry of Consumer Affairs, wheat stocking entities will be required to register and update their position each week. This is all said to be in attempt to eliminate the potential for artificial scarcity of the crop.
- As of February 3, barge shipments on the Mississippi River have increased to 598,000 tons versus 342,000 tons the week prior. Of that total, just 26,000 tons were wheat. However, that is nearly a 770% increase from 3,000 tons as of January 27.
- According to the US Climate Prediction Center, there is a historical tendency for a La Nina weather pattern to follow a strong El Nino pattern. The current El Nino pattern is forecasted to become neutral between April-June, but could then return to La Nina; there is a 55% chance of this happening according to the CPC. If accurate, this could affect wheat production in the US 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. 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: 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 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 2 week forecast total precipitation courtesy of the National Weather Service, Climate Prediction Center.
Above: Argentina 2 week forecast total precipitation courtesy of the National Weather Service, Climate Prediction Center.