4-3 End of Day: Short Covering in Wheat Supports Corn; Soybeans Rally Alongside
All prices as of 2:00 pm Central Time
| Corn | ||
| MAY ’24 | 431.75 | 5.25 |
| JUL ’24 | 445 | 4 |
| DEC ’24 | 471.25 | 3.25 |
| Soybeans | ||
| MAY ’24 | 1182.25 | 8.25 |
| JUL ’24 | 1195.25 | 7.5 |
| NOV ’24 | 1184.75 | 7.75 |
| Chicago Wheat | ||
| MAY ’24 | 556 | 10.75 |
| JUL ’24 | 572.25 | 10.5 |
| JUL ’25 | 645.25 | 7.5 |
| K.C. Wheat | ||
| MAY ’24 | 580.5 | 17.25 |
| JUL ’24 | 572 | 14.5 |
| JUL ’25 | 629.75 | 11.25 |
| Mpls Wheat | ||
| MAY ’24 | 639.5 | 12 |
| JUL ’24 | 647.75 | 10.75 |
| SEP ’24 | 657.75 | 10.25 |
| S&P 500 | ||
| JUN ’24 | 5274 | 13.5 |
| Crude Oil | ||
| JUN ’24 | 84.7 | 0.48 |
| Gold | ||
| JUN ’24 | 2317.1 | 35.3 |
Grain Market Highlights
- The corn market found support from rising wheat prices, boosted further by a rally in crude oil and a weakening US dollar index, closing near the upper end of its range, just a penny and a quarter shy of the high in the May contract.
- Early morning strength in the soybean market faded into midday before charging back from the lows with soybean meal and oil both rallying alongside. Additional support may have come from an announcement from Phillips 66 stating that the company’s San Francisco refinery is on track to increase its renewable diesel production by 20k barrels/day by the end of the second quarter, as well as begin producing sustainable aviation fuel.
- After briefly extending yesterday’s losses, the wheat complex reversed course from yesterday’s negativity and rallied back to settle near the highs in all three classes. Traders likely covered short positions while adding some needed weather premium to prices, as confidence waned in the forecasts of beneficial rain for the dry areas of the SW plains.
- To see the updated US 7-day precipitation forecast, and GRACE-Based Drought Indicators for the US and South America, courtesy of the NWS, NOAA, NASA-Grace, and the NDMC.
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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. During this period, Managed Money has reduced its net short position by approximately 53,000 contracts, although it still holds a historically large short position of around 252,000 contracts. 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
- Corn prices found some buying support on Wednesday as strength in wheat, the crude oil market and a weaker dollar helped support prices. Despite the higher trade, May futures traded within yesterday’s trading range as prices consolidated.
- The USDA will release weekly export sales on Thursday morning. Expectations for new sales to range from 800,000 – 1.4 mmt. Last week corn sales totaled 1.206 mmt, which was toward the top end of expectations. Current corn export sales are running ahead of the pace needed to reach USDA targets.
- Concerns about HPAI (Avian Influenza) have weighed on grain markets over the past couple sessions. The detection of HPAI in cattle herds and in US poultry flocks have the market concerned about limited demand potential and added selling pressure.
- Brazil weather is still favorable overall for development of the second (safrinha) corn crop. There are no short-term issues now, but South American weather will remain a key market driver in the weeks ahead.
- Weekly ethanol production averaged 1.073 million barrels/day last week. This hit a new daily high for production for the year. Total production was up 7.0% from last year’s levels. Corn used in ethanol production was estimated at 106.5 mb for the week. Total corn used for the ethanol grind for the marketing year has reached 3.104 bb, which is currently ahead of the pace needed to reach USDA targets.
Above: Since the beginning of March, the corn market has been trading sideways, bound mostly by 445 up top and 430 down below. If prices can close above 445, they could then test the January high of 452 ¼. If they break out to the downside and close below 421, they could slide further to test 400 – 410 support.
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 gave little in the way of outright bullish information to trigger great amounts of short covering as their March 1 stocks and prospective soybean plantings estimates were relatively neutral and came in as expected by the market. That said, Managed Money still held a sizable 135,000 contract net short position in the most recent Commitment of Traders report, which can still fuel a short covering rally if issues come up this season, with planting not that far off. Otherwise, prices may still be at risk of retesting the recent lows this spring if weather stays benign and planting goes smoothly.
- 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 ended the day higher, breaking the trend of five consecutive days of losses prior to today. Futures were likely recovering from oversold conditions but also got help from higher soybean meal and oil prices. May soybean futures are back in between the 40 and 50-day moving averages.
- Tomorrow, the USDA will release its export sales report. Soybean sales are expected to be on the soft side again with trade guesses between 200k and 600k metric tons. There have been no soybean flash sales reported in two weeks, and part of the weakness in soybeans lately has been the lack of export demand. This demand is not expected to improve with the ongoing South American harvest.
- Crude oil rallied sharply today above $86 per barrel with support from the lower US Dollar. Higher crude oil prices along with stronger vegetable oil prices have been a big support to soybean oil and soybeans. Demand for soybean oil as feedstock is increasing as more biofuel plants pop up across the country.
- In Brazil, CONAB has estimated that their soybean harvest is more than 71% complete while other analysts peg the completion at 76% done or higher. Discrepancy over total production remains with the USDA holding relatively firm in its guess of 156 mmt while CONAB is much lower near 142 mmt.
Above: The market’s recent close below the 1175 support level suggests a potential for further retreat toward 1130 – 1140. However, the market shows signs of becoming oversold, which could provide support in case of an upward turn in prices. Overhead, nearby resistance may be found between the 50-day moving average of 1185 and 1202. A close above this range could pave the way for a test of the recent high at 1226 ¾.
Wheat
Market Notes: Wheat
- Wheat stopped the bleeding today with a higher close for all three classes. The rally was likely fund short covering; managed funds are estimated to still be short about 90,000 Chicago wheat contracts. In addition, the sharp drop in the US Dollar today may have offered some support to wheat and the grain complex.
- Russia is reportedly expanding their investigation on the quality of grains for export. Recently, as much as 400,000 mt of grain belonging to shipper RIF, was stuck in port. Now, sources say that Russia has not issued the necessary phytosanitary certificates for two Aston vessels.
- There are some weather issues in western Europe, where they have received too much Rain. France in particular is expected to receive an additional 1-2 inches. Interestingly, Paris milling wheat futures had a mixed close, with a loss of 0.50 Euros in the front month May contract, but a gain of 0.50 in December.
- According to Reuters, Indian government is asking private traders to not purchase new-season wheat in an effort to rebuild reserves. Over the past couple of years, record amounts of wheat were sold out of reserves to reduce food inflation and an export ban from 2022 also remains in place. The Food Corporation of India, which is backed by the government, plans to purchase 30 mmt of wheat in 2024, compared with 26.2 mmt last year.
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 making a fresh low in early March, Chicago wheat has traded mostly sideways with relatively small gains capped by overhead resistance. Although the lack of any bullish information has been disappointing, the market remains oversold on a macro level, and managed funds continue to hold a significant net short position. Either or both of these factors 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, we are targeting a market rebound back towards 675 – 715 versus May ’24 futures before recommending any additional sales. As for the open 590 put position, we are looking for prices between 475 – 500 versus July ’24 futures to before we recommend exiting half of the remaining July ’24 590 puts.
- 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: Significant resistance remains above the market around the 50-day moving average. Should prices rebound and close above 567, they could still potentially challenge the 50 and then the 100-day moving averages, as well as the congestion area between 585 and 620. Although, if prices retreat and close below 523 ½, there’s a risk of trading downwards toward the next major support level situated around 488.
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 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.
- No new action is recommended for 2023 KC wheat crop. As weather becomes a more dominant market mover, we are targeting 670 – 700 versus May ’24 futures to recommend making additional sales. This area represents a modest 20% retracement back toward the 2022 highs.
- 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 ¼ 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.
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
Minneapolis wheat has primarily traded within a range since last February until a recent breakout below its lower boundary, marking new contract lows and potentially signaling a continuation of the downtrend initiated last summer. Despite facing resistance from the 50-day moving average and a lack of bullish catalysts, seasonal patterns tend to improve heading into early summer. Furthermore, managed funds still maintain a large net short position, which might trigger 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 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: After posting a key bullish reversal on April 3 and with additional support from being oversold, prices may attempt to extend further and challenge the resistance area around 660 – 670. However, if they fail to rally, they may be at risk of drifting back toward psychological support at 600 and the March ’21 low of 596 ¼.
Other Charts / Weather
US 7-day precipitation forecast courtesy of NOAA, Weather Prediction Center.
