3-14 End of Day: Reports of More Chinese Cancellations Hit the Wheat Market
All prices as of 2:00 pm Central Time
| Corn | ||
| MAY ’24 | 433.75 | -7.5 |
| JUL ’24 | 446.25 | -7.25 |
| DEC ’24 | 467.75 | -5.25 |
| Soybeans | ||
| MAY ’24 | 1195.25 | -1.5 |
| JUL ’24 | 1209.75 | -0.5 |
| NOV ’24 | 1187 | 1 |
| Chicago Wheat | ||
| MAY ’24 | 532.25 | -12 |
| JUL ’24 | 547.25 | -11 |
| JUL ’25 | 618.25 | -6.5 |
| K.C. Wheat | ||
| MAY ’24 | 574.75 | -12.75 |
| JUL ’24 | 568 | -11.5 |
| JUL ’25 | 613.75 | -9.5 |
| Mpls Wheat | ||
| MAY ’24 | 655.25 | -8.25 |
| JUL ’24 | 660.5 | -7 |
| SEP ’24 | 665.75 | -6.75 |
| S&P 500 | ||
| JUN ’24 | 5216 | -16.5 |
| Crude Oil | ||
| MAY ’24 | 80.62 | 1.32 |
| Gold | ||
| JUN ’24 | 2187.9 | -14.5 |
Grain Market Highlights
- Despite strong weekly export sales that came in near the top end of expectations and a flash corn sale to Mexico. The corn market came under pressure from improved rain chances in Brazil, lower wheat and a weakening soybean market.
- The soybean complex ended the day mixed with relatively small net changes. Improved rain chances in Brazil and mediocre export sales contributed to the midday decline that brought all three legs of the complex toward the bottoms of their respective ranges into the close.
- Reports of more Chinese wheat purchase cancellations weighed heavily on the wheat complex today as all three wheat classes closed in the red. US weekly export sales did little to help as they came in at the low end of expectations and included 3.9 mb of US cancellations by China.
- To see the current corn and winter wheat areas in drought, the updated US 6 – 10 day temperature and precipitation outlooks, and the percent of normal 2-week precipitation forecast for South America, courtesy of the NWS, CPC, NOAA, and NDMC, 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
In late February, after languishing in a downtrend that began last October and managed funds posting a record net short position exceeding 340,000 contracts, corn posted a bullish key reversal. Since that time, the market has rallied as the funds covered some of their short positions, though they remain heavily short the market, which could fuel an extended rally as we head into the uncertainty of the spring planting window.
- No new action is recommended for 2023 corn. The recommendation for now is to hold off on additional sales until May corn recovers back toward the 500 level. If you need to move bushels for cash or logistics reasons, consider re-owning any sold bushels with September call options.
- No new action is recommended for 2024 corn. Given the amount of time and uncertainty that remains to market the 2024 crop, we will consider recommending additional sales on a retracement toward the low to mid 500 level.
- No Action is currently recommended for 2025 corn. For now, we aren’t considering any recommendations at this time for the 2025 crop that will be planted next year. It will probably be spring or summer 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
- Selling pressure and weak price action moved back into the corn market as May corn futures traded 7 ½ cents lower on the day. For the week, May corn futures are trading 6 cents lower going into Friday trade. March futures expired today with final trades at 422 ½.
- Both US and Brazilian corn prices were pressured by improved forecasts for rain in the key production area of Brazil. Recent dry and hot temperature forecasts have pushed corn prices higher, adding some weather premium to the market.
- The corn market was limited by strong selling pressure in the wheat market. A report that China cancelled or delayed shipment of nearly 1 mmt of Australian wheat pressured global wheat prices.
- Weekly export sales have stayed supportive of the corn markets. The USDA announced new sales last week totaling 50.5 mb (1.283 mmt) in the weekly export sales report. This has total sales commitments at 1.595 billion bushels, up 27% from last year. Japan was the largest buyer of US corn last week.
- The USDA announced a flash export sale of corn to Mexico this morning. Mexico purchased 3.8 mb (110,000 mt) of corn for the 23/24 marketing year as Mexico purchases remain strong and at record historical levels.
Above: On March 7th the corn market closed above the 20-day moving average for the first time since late December. If it can push through and close above the 435 – 445 resistance area it could test the January high of 452 ¼. If they fall back, and close below 421, the bottom of the recent range, then they may slide to test downside support between 400 and 410.
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
Since old crop soybeans broke out of the 1290 – 1400 range in January, prices appear to have made a near term low. Managed funds have also established a record net short position for this time of year, and world carryout has dropped according to the USDA. While new lows could still be made, US planting is not far off, and the funds current short position could fuel an extended short covering rally on a smaller South American crop, lower world soybean carryout, and potential US weather concerns.
- No new action is recommended for 2023 soybeans. The current recommendation is to hold off on making additional sales until prices post a modest 30% retracement back toward the 2022 high of 1759.
- No new action is recommended for the 2024 crop. Considering the amount of uncertainty that lies ahead with the 2024 soybean crop, we 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. Based on our research, the possibility remains that prices could retest the upper 1300 range near the 2022 highs going into spring/summer, at which point we would consider recommending additional sales.
- No Action is currently recommended for 2025 Soybeans. We currently aren’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
- The trade in soybeans was volatile today as May futures rallied sharply above the 50-day moving average and at one point were up as much as 21 cents. There has been some early support with CONAB’s production estimates far lower than the USDA’s, but exports today were soft. Soybean meal ended the day higher while soybean oil was lower.
- For the week ending March 7, the USDA reported an increase of 13.8 mb of soybean sales for 23/24 and an increase of 3.5 mb for 24/25. This was on the lower end of trade expectations and puts soybean sales down 20% from the previous year. Although last week’s export shipments of 34.8 mb were well above the 16.5 mb needed each week to meet the USDA’s trade expectations. Primary destinations were to China, Germany, and Mexico.
- In Brazil, farmers have taken advantage of the soybean rally and have been more active in their sales when previously, many were holding back due to low premiums. The increase in farmer selling partially stifled today’s rally, along with a forecast for southern Brazil which is expected to receive more rain as harvest continues.
- The NOPA crush report for February is seen at 178.058 million bushels which would be a record high for the month of February. This number would be down 4.2% from January’s crush but up 7.6% from the previous year.
Above: After posting a low of 1128 ½ on February 29, soybeans have rallied higher on short covering. The market remains oversold on the weekly chart and continues to provide underlying support. For now, resistance remains between 1190 and 1205, with the next area of heavy resistance between 1225 and 1250 if prices continue higher. Underneath, initial support remains between 1130 and 1140.
Wheat
Market Notes: Wheat
- The wheat complex finished the day lower across the board for the second day in a row, led by the KC and Chicago contracts. Reports of more Chinese cancellations rocked the wheat market and were likely the primary reason for the day’s decline.
- It was reported that China cancelled an undisclosed amount of French wheat that was intended for replacement supplies versus new demand. Additionally, they either postponed or canceled upwards of 1 mmt of Australian wheat due to increasing world supplies and lower prices.
- Adding to the woes of the wheat market, FranceAgriMer reported that French 23/24 ending stocks are expected to be 3.74 mmt. This is up from February’s estimate of 3.5 mmt, and the highest total since the 18/19 marketing year.
- Moving over to Russia, IKAR, as reported by Interfax, sees Russian wheat exports near a record 50 mmt for the 24/25 season, with a wheat harvest near 93 mmt, marking a 1 mmt increase from IKAR’s November report.
- The USDA issued its weekly export sales report this morning for the week ending March 7, that showed total net new wheat sales for the 23/24 marketing year at 3.1 mb. The total came in at the low end of expectations and included 3.9 mb of SRW cancellations that were reported previously. As for the 24/25 marketing year, the USDA reported 3.0 mb of new sales.
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
Since the early December runup, Chicago wheat has suffered in a lower trend while going on to make new contract lows. Although the lack of any bullish information has been disappointing, the market is in a significantly oversold condition, and managed funds continue to hold a significant net short position. Either or both could fuel a short covering rally at any time as we head into the more active part of the growing season.
- No new action is currently recommended for 2023 Chicago wheat. Any remaining 2023 soft red winter wheat should be getting priced into market strength. 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. At the end of August, we recommended purchasing July ‘24 590 puts to prepare for further price erosion, and recently recommended exiting half of those puts to lock in gains and get closer to a net neutral cost on the remaining position. For now, the current recommendation is to hold off on making any additional sales unless the market moves back toward last summer’s highs. At which point, we are prepared to recommend adding to current sales levels and possibly even purchasing call options to protect those sales. Otherwise, the remaining July ‘24 590 put position will add a layer of protection if prices erode further.
- No action is currently recommended for 2025 Chicago Wheat. The strategy for the 2025 crop year remains to hold off on making any sales. Though if prices rally toward the mid-600s, we will consider taking advantage of those better prices to make sales recommendations.
To date, Grain Market Insider has issued the following Chicago wheat recommendations:
Above: After posting a bullish reversal on March 11, prices appear to have stalled around 555 and could retreat toward the support area near the recent low of 523 ½. Below there, further support may be found around 470 – 488. If prices regain their bullish footing, and close above 556, they then could challenge the 50 and 100-day moving averages that coincide with the 585 – 620 congestion area.
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
Since December’s brief runup, prices have continued to erode as US exports continue to suffer from lower world export prices. Although fundamentals remain weak. Managed funds continue to hold a considerable net short position, and the market is at levels not seen since spring of 2021, which combined could trigger a return to higher prices if any unforeseen risks enter the market.
- No new action is recommended for 2023 KC wheat crop. The current strategy is to look for price appreciation as weather becomes a more prominent market mover and consider suggesting additional sales if prices make a modest 20% retracement of the 2022 highs back toward the upper 600s
- No new action is recommended for 2024 KC wheat. Back in August, Grain Market Insider recommended buying July ’24 KC wheat 660 puts to protect the downside, and recommended exiting the original position in three separate tranches as the market got further extended into oversold territory to protect any gains that were made. Taking the equity gained from the closed July 660 put position into account, the current strategy for the 2024 crop is to wait for better opportunities and consider recommending additional sales if July ‘24 retraces back toward the January highs in the mid-630s.
- No action is currently recommended for 2025 KC Wheat. We currently aren’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: For now, it appears that May KC wheat has rejected the advances above the 50-day moving average and may retreat back toward support around the 551 ½ low with minor nearby support around 570. If prices can penetrate and close above the 50-day moving average, they could still make a run toward the 610 to 640 congestion area.
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
Since last summer, Minneapolis wheat has slowly stair-stepped lower with weaker world prices and 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, the market has become very oversold, and the large fund net short position continues to leave the market susceptible to a short-covering rally at any time.
- No new action is currently recommended for 2023 Minneapolis wheat. The current strategy is to look for a modest retracement of the July high and consider additional sales in the neighborhood of 675 – 700.
- No new action is recommended for 2024 Minneapolis wheat. Back in August, Grain Market Insider recommended buying July ’24 KC wheat 660 puts (due to their higher liquidity and correlation to Minneapolis), to protect the downside, and recommended exiting the original position in three separate tranches as the market got further extended into oversold territory to protect any gains that were made. From here, the strategy for the 2024 crop is to consider recommending additional sales if Sep ‘24 posts a modest 22% retracement back toward the 2022 highs of 1400.
- No action is currently recommended for the 2025 Minneapolis wheat crop. We are currently not 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: After breaking out of the consolidation range, there appears to be a rounded bottom formation in May Minneapolis wheat, which suggests that prices could test the 700 – 710 area if they can close above the 50-day moving average and nearby 675 – 680 resistance. If prices turn back lower, nearby support remains near 640, with major support near 600.
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.