5-2 End of Day: South American Harvest and Crop Concerns Rally Soybeans and Corn
All prices as of 2:00 pm Central Time
| Corn | ||
| JUL ’24 | 459.75 | 9 |
| DEC ’24 | 479.5 | 6.75 |
| DEC ’25 | 491 | 4.5 |
| Soybeans | ||
| JUL ’24 | 1199 | 28.75 |
| NOV ’24 | 1187.75 | 22.75 |
| NOV ’25 | 1170.25 | 14.75 |
| Chicago Wheat | ||
| JUL ’24 | 604.25 | 5 |
| SEP ’24 | 624.25 | 5.25 |
| JUL ’25 | 685 | 3 |
| K.C. Wheat | ||
| JUL ’24 | 636.5 | 11.5 |
| SEP ’24 | 649.5 | 11 |
| JUL ’25 | 687.5 | 12.25 |
| Mpls Wheat | ||
| JUL ’24 | 709.25 | 7 |
| SEP ’24 | 714.75 | 7 |
| SEP ’25 | 702.25 | 5 |
| S&P 500 | ||
| JUN ’24 | 5091.5 | 45 |
| Crude Oil | ||
| JUL ’24 | 78.55 | 0.11 |
| Gold | ||
| AUG ’24 | 2338.7 | 5.8 |
Grain Market Highlights
- Overly wet conditions in Southern Brazil, combined with potential planting delays from additional wet weather in the Midwest, helped push July corn to close just at its highest level since February and just below its 460 March high.
- Flooding in Brazil with continued rain in N. Argentina and frost concerns in S. Argentina drove soybean meal $15.90 higher, and likely triggered a round of short covering in July soybeans which closed at their highest level since late March.
- Record census crush for March may have also helped beans rally, but soybean oil stocks in the same report also rose more than expected adding a bearish tilt to bean oil demand, which could negatively impact soybeans.
- KC wheat led the wheat complex higher again. While forecasted rains for the dry areas of western KS and the TX and OK panhandles will be welcome, more will be needed to alleviate drought conditions. Moreover, rainfall in the Black Sea region has fallen short of initial expectations, exacerbating concerns in that area as well.
- To see the updated US 5-day precipitation forecast, and US Drought Monitor maps depicting changes from last week and crop areas in drought, courtesy of NOAA, NWS, CPC, USDA 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
Although July ’24 corn has rallied beyond the congestion range on the front month continuous charts, it remains below its high of 460 that was posted on March 28. With little fresh bullish fundamental news, managed funds have maintained a significant net short position. While the fund’s large net short position likely sparked the recent rise in prices and could fuel a more significant upside move as we move through planting and into the growing season, the market now shows signs of being overbought, which could add resistance to higher prices. Despite potential obstacles along the way, overall market conditions and seasonal tendencies 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 July ’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
- Potential planting delays and wetness in Southern Brazil helped push corn futures higher on Thursday. July corn closed at its highest price level since early February.
- Grain markets became concerned about current weather conditions in Brazil and Argentina. Wet weather in Rio Grande Do Sol has damaged the late corn and soybean harvest, which triggered short covering in the soybean market. Central Brazil is trending drier with high temperatures, which could pressure the development of the second (safrinha) crop corn. With these concerns and a corn market holding a large net short position, a short covering rally was triggered on Thursday.
- Weather models are forecasting rounds of precipitation to push through the Corn Belt, which could limit planting until the middle of May. Corn planting is off to a good start, but forecasted rains could push overall progress to delayed or late.
- Weekly exports sales for corn were within expectations. Last week, US exporters registered new sales of 29.9 mb (758,000 mt) of old crop corn and 1.3 mb (33,670 mt) for new crop. Japan was the largest buyer of US corn last week. Total corn sales commitments now total 1.840 billion bushels, up 23% from last year.
- The strong closing and price action at the end of the session could trigger additional buying to start the overnight session. With the market holding a large short position, the possibility remains that price momentum could be turning higher in the short term.
Above: The corn market continues to struggle to rally with overhead resistance remaining around 460 in the July contract. A breakout above there could allow prices to test the 495 – 510 area. If prices break 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
In mid to late April soybeans posted an intermediate low and a bullish reversal with some subsequent short covering which rallied the market back toward early April’s congestion area. While that initial rally was limited, and the current supply/demand situation remains somewhat bearish, Managed funds remain short about 149,000 contracts according to the latest Commitment of Traders report. This could still fuel an extended short covering rally should any production concerns arise in the coming weeks. 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 July ’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 today with the July contract breaking out of its recent sideways range and testing highs from early April. The November contract closed right below its 100-day moving average. The rally in soybeans today was fueled by a very significant jump in soybean meal which closed $15.90 higher in the July at $364.90, an increase of 4.56%. Soybean oil closed slightly lower.
- Argentina and S. Brazil are currently dealing with continuous rains that have kept farmers out of the fields and unable to harvest the crop timely. In addition to the rains, temperatures are now forecast to drop in S. Argentina which could cause frost conditions and further damage the crop. This is supportive to soybean meal because Argentina is the number one exporter of the product and any threat to its production could lower Argentine exports giving the export business to the US.
- Today’s export sales report showed an increase of 15.2 million bushels of soybean export sales for 23/24 and an increase of 0.3 mb for 24/24. This was within analysts’ expectations but was on the lower side of the trade range. Last week’s export shipments of 9.9 mb were below the 12.8 mb needed each week to meet the USDA’s estimates. Primary destinations were to Japan, Indonesia, and Mexico.
- March census crush reported by US NASS yesterday afternoon came in at a record high for the month of March at 203.73 mb. While this was a new record, still showing strong domestic demand, the number was below the range of estimates. Bean oil stocks for the month of March were reported at 2.369 billion pounds, though lower than year ago levels, they were higher than trade expectations and are likely weighing on bean oil prices.
Above: The May 2nd close above 1191 ¾ resistance opened the door for the market to make a run toward and test resistance around the 1227 March high. A close above there could lead to a test of the January high around 1248. Initial support below the market remains between 1145 and 1140, if prices slide back toward key support and the February low of 1128 ½.
Wheat
Market Notes: Wheat
- Wheat finished the session with modest gains when compared with the surging soybean market. After the reversal off the recent high, one must wonder if wheat would have had a positive close today if it weren’t for the soy rally. Today the US Dollar Index did fade to the lowest level in two weeks, which may have also helped support grain markets.
- The USDA reported net sales cancellations totaling 0.7 mb of wheat for 23/24 and an increase in sales of 15.0 mb for 24/25. The cancellations are disappointing, however, last week’s shipments of 18.7 mb did exceed the 16.4 mb pace needed per week to reach the USDA export goal of 710 mb. Shipments now total 615 mb, which is up 2% from last year.
- Western Kansas and the panhandles of Texas and Oklahoma are set to receive some rain, which should help ease the dry conditions there. Though this will bring relief, more moisture will be needed to eliminate drought conditions. According to the USDA 28% of the US winter wheat area is in drought as of April 30, a 2% improvement from last week’s 30%. However, the spring wheat area in drought increased 1% to 27% for the same period.
- According to their supply minister, Egypt may import as much as 5.7 mmt of wheat during the 24/25 fiscal year (starting in July). Additionally, their current stocks are estimated to be sufficient for three months, with the government having purchased 1.1 mmt from domestic farmers since mid-April.
- India is expected to face severe heat in May, according to their meteorological department. With talk that they will need to import wheat. Elsewhere, rains in southern Russia and parts of Ukraine this week have been less than anticipated. With expectations for a drier pattern to return, this may be supportive to the US futures 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
Active
Exit All JUL ’24 590 Puts ~ 24c
2025
No New Action
Chicago Wheat Action Plan Summary
After holding downside support near 550, Chicago wheat staged a rally, likely fueled by Managed fund short covering and HRW crop concerns, that took it through the major moving averages on the continuous chart, and towards last December’s highs. Although bearish fundamentals remain, and the market shows signs of being overbought which adds downside risk, Managed funds still hold a large net short position that has the potential to drive an extended short covering rally should any crop more concerns arise 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.
- Grain Market Insider sees a continued opportunity to sell the remaining, previously recommended July ’24 Chicago wheat 590 puts at current market prices, minus fees, and commission. Back in March Grain Market Insider suggested covering half of the originally recommended July ’24 Chicago wheat 590 puts when they were about double of the original entry price, and in April we recommended covering another 25% of the original position when support around 550 was uncovered. Given today’s market action, it appears that July ’24 Chicago wheat may have found support around the 200-day moving average on the continuous chart and considering that the July ’24 590 puts have done their job of protecting the value of unsold 2024 bushels, we recommend exiting any remaining put options.
- 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: After failing to close above the December high of 630, Chicago wheat retreated and found initial support near the 200-day moving average. If initial support holds, and the market turns back higher, a close above the recent 633 ¼ high could open the door for a test of 664 resistance. Otherwise, if prices retreat, initial support is likely around 575 and the 50-day moving average (currently 564).
Action Plan: KC Wheat
Calls
2023
No New Action
2024
No New Action
2025
No New Action
Cash
2023
Active
Sell JUL ’24 Cash
2024
Active
Sell JUL ’24 Cash
2025
No New Action
Puts
2023
No New Action
2024
No New Action
2025
No New Action
KC Wheat Action Plan Summary
Between the end of February and the middle of April, KC wheat was mostly rangebound between the mid 590’s on the topside and mid 550’s down low, with little to move prices higher. All the while Managed funds continued adding to their large net short positions. Toward the end of April, dryness in the Black Sea region and the US HRW growing areas started becoming more concerning and triggered a short covering rally across the wheat complex, driving prices to levels not seen since last December. While low world export prices continue to be a drag on US demand and prices, and it is likely that Managed funds covered a significant portion of their net short positions, it is also quite possible that they remain short the market. Which could still push prices higher if production concerns persist.
- Grain Market Insider sees a continued opportunity to sell a portion of your 2023 HRW wheat production. Dryness in the Southwestern Plains and Russia, along with elevated geopolitical tensions in the Middle East and Black Sea spurred Managed funds to cover some of their extensive short positions in the wheat complex. As a result, the July ’24 KC wheat futures contract is about 50 cents higher than our previous old crop sales recommendation, and near both the 200-day moving average and the resistance area of last December’s highs. Considering this rally may primarily be weather driven and could be short-lived, as well as being limited on time before the 2024 crop is harvested, we advise you to take advantage of these elevated prices to sell another portion of your 2023 HRW wheat inventory.
- Grain Market Insider sees a continued opportunity to sell a portion of your 2024 HRW wheat production. Since the end of July, the wheat market has been in a downtrend with no significant selling opportunities, while many uncertainties remain that could drive prices even higher. The market is now approximately 90 cents off the March low and entering an area of heavy resistance that coincides with a 25% retracement of the recent downtrend back toward the July high. Grain Market Insider recommends taking advantage of this rally to make an additional sale on your 2024 crop.
- 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: After failing to close above the 200-day moving average and posting a bearish reversal on April 29, the KC wheat market retreated and closed through 640 initial support. The market could now be on track to test support near the 100-day moving average (near 604) and the broad support area of 605 – 551. If prices turn back higher and close above 664, they could then run to test the 678 – 700 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
Between mid-February and much of April Minneapolis wheat traded mostly sideways to lower with little bullish fundamental news to drive prices higher. In late April, driven by world wheat crop concerns and dryness in the HRW growing areas, and fueled by likely Managed fund short covering, Minneapolis wheat rallied back toward the January highs. Although bullish fundamentals remain scarce, and the market shows signs of being overbought, historical seasonal trends typically strengthen as we approach late spring and early summer. Furthermore, Managed funds quite possibly still hold a net short position, that could fuel an extended rally if more production concerns arise.
- No new action is recommended for 2023 Minneapolis wheat. Following the recent breakout to the upside and the subsequent rally off the April lows, we recommended making a sale to take advantage of the elevated prices. The current strategy is to look for an extension of the rally toward last December’s highs and target 725 – 750 to recommend additional 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: The market’s test of the 700 – 712 area has put it into overbought territory and is at risk of falling back. Should this occur, initial support may come between 675 and 660, with further support down toward 632 and 625 ¼. Conversely, if prices close above 712 and continue toward the November high of 752, they may encounter more resistance between 725 and 735.
Other Charts / Weather
Above: US 5-day precipitation forecast courtesy of NOAA, Weather Prediction Center.
