4-22 End of Day: Potential Short Covering Rally in Wheat Buoys Corn and Beans
All prices as of 2:00 pm Central Time
| Corn | ||
| MAY ’24 | 439.75 | 6.25 |
| JUL ’24 | 449.75 | 6.75 |
| DEC ’24 | 472.5 | 6.25 |
| Soybeans | ||
| MAY ’24 | 1161 | 10.5 |
| JUL ’24 | 1176.5 | 10.75 |
| NOV ’24 | 1171.75 | 10.75 |
| Chicago Wheat | ||
| MAY ’24 | 570.25 | 20 |
| JUL ’24 | 587.5 | 20.75 |
| JUL ’25 | 658.25 | 15 |
| K.C. Wheat | ||
| MAY ’24 | 597.5 | 16 |
| JUL ’24 | 602.5 | 19.5 |
| JUL ’25 | 648.75 | 18.25 |
| Mpls Wheat | ||
| MAY ’24 | 655.75 | 8.75 |
| JUL ’24 | 662.75 | 10.25 |
| SEP ’24 | 672.25 | 10.25 |
| S&P 500 | ||
| JUN ’24 | 5073.5 | 69.75 |
| Crude Oil | ||
| JUN ’24 | 82.04 | -0.18 |
| Gold | ||
| JUN ’24 | 2342.4 | -71.4 |
Grain Market Highlights
- Sharply higher wheat markets and short covering by Managed funds helped briefly push July corn over its 100-day moving average for the first time since early August. Although July corn failed to close above its 100-day ma, it posted its highest close in 11 weeks.
- Soybeans closed higher with support coming from both soybean meal and oil, along with potential short covering from oversold conditions. July soybeans managed to close higher for the second day in a row and pierce its 20-day moving average, though it settled 4 cents below it.
- For the week ending April 16, Managed funds sold a record amount of soybean oil contracts for one week, just over 49,000 contracts. Today’s strength in bean oil may likely have been some short covering of those contracts which also carried over to the soybean market.
- Higher Paris milling wheat, frost concerns in both the US and Europe, and yet another attack on an Odesa grain facility in Ukraine, all may have contributed to today’s short covering rally from oversold conditions in the wheat complex. Both KC and Minneapolis posted a third day of gains, while Chicago recorded its second, with all three classes closing solidly above their respective July contract 50-day moving averages.
- To see the updated US 7-day precipitation forecast, the 8 – 14 day Temperature and Precipitation Outlooks, and the 1-week precipitation forecast for Brazil and N. Argentina, courtesy of 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
From the low on February 26 to the high on March 12, May corn experienced a significant rally of nearly 40 cents. However, since then, it has consolidated within a narrow trading range, fluctuating mostly between 430 and 445. The size of Managed Money’s net short position, coupled with prevailing macro oversold conditions, suggests potential for further upside as we head into spring planting. While the recovery in corn prices may encounter obstacles, overall market conditions remain conducive to a continued price recovery into May and June.
- No new action is recommended for 2023 corn. The target range to make additional sales is 480 – 520 versus May ’24 futures. 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. We are targeting 520 – 560 to recommend making additional sales versus Dec ‘24 futures. For put option hedges, we are looking for 500 – 520 versus Dec ‘24 before recommending buying put options on production that cannot be forward priced prior to harvest.
- No Action is currently recommended for 2025 corn. At the beginning of the year, Dec ’25 corn futures left a gap between 502 ½ and 504 on the daily chart. Considering the tendency for markets to fill price gaps like these, we are targeting the 495 – 510 area to recommend making additional sales.
To date, Grain Market Insider has issued the following corn recommendations:
Market Notes: Corn
- Strong wheat markets and short covering in the agriculture space helped push corn futures higher in the session. The corn market rallied 13 cents off Friday’s low as managed funds covered some of their short positions that were added to last week.
- On Friday’s Commitment of Traders report, managed funds grew their net short position in the corn market to a total of 279,570 contracts, adding a net 16,010 short contracts as of April 16. Beyond corn, managed funds are holding their largest net short in the Ag commodity sector in 4 ½ years. The ag sector in general saw strong buying across the board on Monday.
- Weekly corn export inspection hit a marketing year high on Monday at 64 mb (1.64 mmt). Mexico was the top export destination for US corn last week. Total export inspections are up 35% from last year, while the USDA is targeting a 26% year-over-year increase.
- Despite wet and cool conditions across most of the Corn Belt last week, corn planting is expected to reach 12% complete as of Sunday, April 21, and ahead of the 5-year pace.
- Over the next two weeks, weather models are predicting warmer, but wetter than normal conditions into the month of May. The planting pace is off to a good start, but increased precipitation could slow progress going into May.
Above: The corn market transitioned lead months from May to July making the chart look like prices have gapped higher due to the 11-cent premium to July. The market remains largely rangebound and a close above 460 could allow prices to test the 495 – 510 area. If they break out to the downside and close below 421, they could slide further to test 400 – 410 support.
Above: Corn Managed Money Funds net position as of Tuesday, April 16. Net position in Green versus price in Red. Managers net sold 16,016 contracts between April 10 – April 16, bringing their total position to a net short 279,570 contracts.
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
The USDA’s April Supply and Demand report failed to provide significant bullish data to prompt substantial short covering, as it mainly reflected recent demand challenges and an increase in ending stocks that aligned with the market’s expectations. However, Managed Money retains a considerable net short position near 139,000 contracts, as of the latest Commitment of Traders report. This could still fuel a short covering rally should complications arise during planting season, which has just begun. Otherwise, if weather conditions cooperate and planting progresses without major issues, prices could remain susceptible to revisiting recent lows throughout the spring.
- No new action is recommended for 2023 soybeans. We are currently targeting a rebound to the 1275 – 1325 area versus May ’24 futures to recommend making further sales. If you need to move inventory for cash or logistics reasons, consider re-owning any sold bushels with September call options.
- 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. We are currently targeting the 1280 – 1320 range versus Nov ’24 futures, which is a modest retracement toward the 2022 highs, to recommend making 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
- Soybeans closed sharply higher for the second consecutive day for a total gain of 27 ½ cents over the past two days. There was not much news to explain this rally, but it is likely that a large amount of short covering was occurring, and wheat was the primary leader in the grain complex today. Both soybean meal and oil ended the day higher, but soybean oil posted the majority of the gains.
- For the week ending Thursday, April 18, soybean inspections totaled 16.0 mb which were within the range of trade guesses. Total inspections for 23/24 now total 1.414 billion bushels which is down 18% from last year, and the USDA is estimating total soybean exports at 1.720 bb which would be down 14%.
- A large part of the recent selloff in soybeans has been due to the decline in exports from last year. This morning, it was reported that Chinese soybean imports from the US have been cut in half for the month of March while Brazilian imports increased by nearly the same amount. This is not particularly surprising as Brazilian soybeans are much less expensive than US soybeans, and China’s poor hog margins are discouraging feed consumption.
- As of April 16, managed funds reportedly sold 28,565 contracts of soybeans which increased their net short position to 167,875 contracts. This puts funds near their record short position but also puts funds in a position to cover those short contracts if fundamentals become more bullish.
Above: April 19 July soybeans posted a key bullish reversal, marking support just below the market near 1145 which coincides with the March 6 low of 1140 ¼. Should this support area hold, prices could potentially rebound and test the March high near 1227. Below 1140 ¼ lies, key support near the February low of 1128 ½.
Above: Soybean Managed Money Funds net position as of Tuesday, April 16. Net position in Green versus price in Red. Money Managers net sold 28,565 contracts between April 10 – April 16, bringing their total position to a net short 167,875 contracts.
Wheat
Market Notes: Wheat
- Wheat closed sharply higher today, with gains of over 20 cents in Chicago, with KC and Minneapolis contracts not far behind. Paris milling wheat also jumped, with the May contract gaining 9.00 Euros per metric ton. There wasn’t a lot of fresh news to propel the market higher, which may indicate that it was a correction from oversold conditions with fund short covering. There was some Russian destruction of Ukrainian grain infrastructure over the weekend, but this was likely not the main driver today.
- Parts of Europe and the US southwestern Plains had frost concerns over the weekend. While damage is not expected to be a major issue, this news may have lent some support to the strong rally in wheat today. In addition, the Canadian prairies are too dry and need some moisture to recharge their soils.
- According to SovEcon, Russian grain exports last week totaled 1.25 mmt. Of that total, 1.07 mmt was wheat – for reference, the previous week was 1.14 mmt of wheat. Furthermore, they also reduced their estimate of the Russian wheat crop by 1 mmt to 93 mmt due to hot weather that may affect yields.
- IKAR has said that Russia’s FOB wheat export values ended last week at $208 per mt – that is down from $210 the week prior. IKAR also increased their Russian wheat export estimate by 1 mmt to 53 mmt, vs the USDA at 52 mmt.
- Weekly wheat inspections at 16.5 mb were decent and in line with expectations. This brings the 23/24 total inspections to 604 mb, down 8% versus last year, with inspections running below the USDA’s estimated pace.
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 marking a fresh low in early March, Chicago wheat has traded mostly sideways, seeing limited upward movement due to overhead resistance. While the absence of bullish signals has been disappointing, managed funds continue to maintain a significant net short position. This suggests the potential for a short covering rally to emerge at any moment, especially as we enter the more dynamic 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. Back in August we recommended buying July ’24 590 puts to prepare for further price erosion. Since then, we recommended exiting half of the original position to get closer to a net neutral cost, and then most recently, we recommended exiting another half of the remaining position to lock in further gains in case prices continue higher, leaving 25% of the original position in place. We continue to target a market rebound back towards 675 – 715 versus July ’24 futures before recommending any additional sales. As for the open July ’24 590 put position, we are looking for prices between 475 – 500 versus July ’24 futures to before we recommend exiting any of the last 25%.
- No new action is currently recommended for 2025 Chicago Wheat. We recently recommended initiating your first sales for the 2025 SRW crop year as prices pressed back toward the mid-600 range to take advantage of historically good prices for next year’s crop. Since plenty of time remains to market this crop, we are looking for further price appreciation and are currently targeting the 690 – 725 area to recommend making additional sales.
To date, Grain Market Insider has issued the following Chicago wheat recommendations:
Above: July Chicago wheat rallied through resistance and the recent high of 574 ¾ before encountering heavier selling near the 200-day moving average (MA) and psychological resistance around 600. A close above the 200-day MA could pave the way for testing the December high of 630, with resistance levels between 617 and 622 before reaching that target. On the downside, if prices retreat, initial support is likely around 548, followed by 538.
Above: Chicago Wheat Managed Money Funds net position as of Tuesday, April 16. Net position in Green versus price in Red. Money Managers net sold 9,835 contracts between April 10 – April 16, bringing their total position to a net short 96,403 contracts.
Action Plan: KC Wheat
Calls
2023
No New Action
2024
No New Action
2025
No New Action
Cash
2023
New Alert
Sell JUL ’24 Cash
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 the end of February, prices have been trading in a broad range, bound mostly by 555 on the downside and 605 up top, with little fresh bullish news to trade, while 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 unforeseen risks enter the market.
- Grain Market Insider recommends selling a portion of your 2023 HRW wheat production. Since the end of February, the market has been moving sideways, constrained by slow export demand and low world export prices, which have capped US prices. July ’24 has returned to the upper end of the 555 – 605 trading range and is approaching resistance near the 100-day moving average. Given that time is getting more limited before the ‘24 KC crop gets harvested, Grain Market Insider is now looking for less aggressive rallies to get the last of the ‘23 KC crop moved.
- 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. The current strategy is to target 625 – 650 versus July ’24 futures to recommend additional sales.
- 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: Significant resistance remains within the range bound by the 50-day moving average and the March 10 high of 605 ¼. A close above 605 ½ in the July ’24 might pave the way for further advancement toward the congestion area of 610 – 640. Otherwise, should prices retreat below the initial support level of 561, there’s a possibility of testing the March low of 551 ½.
Above: KC Wheat Managed Money Funds net position as of Tuesday, April 16. Net position in Green versus price in Red. Money Managers net sold 4,620 contracts between April 10 – April 16, bringing their total position to a net short 49,231 contracts.
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 February, Minneapolis wheat has largely been rangebound, except for a temporary dip to set a new contract low, from which prices have recovered. Although a lack of bullish drivers and resistance from the 50-day moving average remain, historical seasonal trends typically strengthen as we approach late spring and early summer. Furthermore, managed funds continue to hold a substantial net short position, that potentially sets the stage for a short covering rally at any moment.
- 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 target 675 – 700 to recommend more sales.
- 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. The current strategy is targeting the 775 – 815 area versus Sept ’24 to recommend making additional sales. We are also targeting the 850 – 900 area to recommend buying upside calls to help protect any sales that would have been made.
- 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: Despite recent bearish market reversals, July ’24 Minneapolis wheat remains rangebound since posting a low on April 3. Initial support below the market rests near 632, with the 625 ¼ April low just below that. Should these levels hold, and prices rally above 660 – 677 resistance, they could potentially test 700 – 712. If not, the market could drift toward 595 – 600 psychological support.
Above: Minneapolis Wheat Managed Money Funds net position as of Tuesday, April 16. Net position in Green versus price in Red. Money Managers net bought 1,509 contracts between April 10 – April 16, bringing their total position to a net short 25,598 contracts.
Other Charts / Weather
Above: US 7-day precipitation forecast courtesy of NOAA, Weather Prediction Center.
Above: Brazil and N. Argentina 1-week forecast total precipitation courtesy of the National Weather Service, Climate Prediction Center.