5-3 End of Day: South American Rains and Lower Russian Wheat Estimates Likely Spark More Short Covering
All prices as of 2:00 pm Central Time
| Corn | ||
| JUL ’24 | 460.25 | 0.5 |
| DEC ’24 | 482.75 | 3.25 |
| DEC ’25 | 494 | 3 |
| Soybeans | ||
| JUL ’24 | 1215 | 16 |
| NOV ’24 | 1201 | 13.25 |
| NOV ’25 | 1177.5 | 7.25 |
| Chicago Wheat | ||
| JUL ’24 | 622.5 | 18.25 |
| SEP ’24 | 643 | 18.75 |
| JUL ’25 | 698 | 13 |
| K.C. Wheat | ||
| JUL ’24 | 650.25 | 13.75 |
| SEP ’24 | 663.25 | 13.75 |
| JUL ’25 | 695 | 7.5 |
| Mpls Wheat | ||
| JUL ’24 | 714.5 | 5.25 |
| SEP ’24 | 719.5 | 4.75 |
| SEP ’25 | 702.75 | 0.5 |
| S&P 500 | ||
| JUN ’24 | 5161 | 69.5 |
| Crude Oil | ||
| JUL ’24 | 77.65 | -0.83 |
| Gold | ||
| AUG ’24 | 2328.8 | -2.8 |
Grain Market Highlights
- Carryover strength from neighboring soybeans and wheat lent support to July corn futures which closed fractionally higher at its 100-day moving average after trading up to resistance and fading at midday.
- Continued production concerns in South America kept soybean meal and soybeans on an upward trajectory going into the weekend. Another day of sharp gains in meal lent support to soybeans which likely experienced additional short covering by the Managed funds. July meal had its highest close since early January.
- Soybean oil on the other hand consolidated for the third consecutive day, held back again by lower world veg oil prices and slowing demand for biofuel use.
- Reduced Russian wheat production and export estimates by IKAR, along with dryness in Australia and higher Matif wheat, likely triggered more short covering in the wheat complex. July Chicago and KC contracts both rallied sharply before hitting resistance near their respective 200-day moving averages and settling below. Minneapolis, on the other hand settled with modest gains, mid-range, after trading both sides of unchanged.
- To see the updated US 5-day precipitation forecast, the US 6 – 10 and 8 – 14 day Temperature and Precipitation Outlooks, as well as the 1-week total precipitation for Brazil and N. Argentina, courtesy of NOAA, NWS, and CPC 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
- Corn futures faded off early session strength but finished mostly higher on the session to end the week. Strong buying in both the wheat and soybean markets supported corn futures. For the week, the July corn futures traded higher for the second consecutive week gaining 10 ¼ cents, and the highest weekly close since January.
- The Buenos Aires Exchange cut its projection for the Argentina corn production estimate to 46.5 mmt from 49.5 mmt. This newest projection is down 10 mmt from the early season estimate. Final production of corn in Argentina has been impacted by insect, disease, and weather damage.
- Weather conditions in southern Brazil remain a concern with heavy rain and flooding impacting corn and soybean harvest in the region. Central Brazil is trending drier with high temperatures, which could pressure the development of the second (safrinha) crop corn. These concerns have added some weather premium into the corn market this week.
- 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.
- Managed money is still estimated to hold a large net short position in the corn market. The concerns this week have helped trigger a short covering rally. The weekly Commitment of Traders report later this afternoon will give a clearer picture regarding the money flow in the corn market.
Above: July corn pierced the 200-day moving average and closed above 460 resistance, opening the door for a potential run toward the 495 – 510 resistance area. The market is showing signs of being overbought which can be an obstacle to a higher move while adding fuel to any decline. To the downside, initial support may be found between 445 and 435, with greater support down near 421.
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 ended the day sharply higher for the third consecutive day with the July contract up 52 cents and November up 41 ½ cents since Wednesday. Soybean meal has been the driver behind the gains in soybeans with another higher close today although soybean oil ended the day lower. Issues with harvest in South America have provided support.
- For the week, July soybeans gained 37 ¾ cents ending at 1215, November soybeans gained 26 ¼ cents to 1201, July soybean meal gained a whopping $27.50 for $372.20, and July soybean oil lost 2.46 cents closing at 43.08 cents. Soybean meal has been the clear leader as major harvesting delays in Argentina due to excessive rains threaten yields and therefore soybean meal exports.
- In Brazil, the last of the soybeans left in the field are deteriorating as heavy flooding disrupts harvest in Rio Grande do Sul. Reuters has estimated that Brazil’s total soybean production could fall by as much as 15% in that state for a total production of 19 to 20 mmt where the previous estimates had been closer to 22 mmt.
- This week’s export sales report was relatively poor for soybeans at 15.5 million bushels and export shipments at 9.9 mb, but this morning, private exports reported to the USDA a flash sale of 122,000 metric tons of soybeans for delivery to unknown destinations during the 23/24 marketing year.
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 closed sharply higher in both the Chicago and Kansas City classes, with Minneapolis posting more modest gains. Today’s drop in the US Dollar Index was supportive, while fund short covering is likely the main driver of the market’s current momentum. Concerns regarding dryness in Russia and Australia, along with the worst flooding in southern Brazil since 1941, have all lent support to the wheat market.
- Paris milling wheat futures surged higher today, helping the US market. The September contract gained 7.25 Euros to 235.00, closing well above the 200-day moving average. Prior to breaking through this resistance last week, it has not traded above that average since July of last year.
- This week, rains in Russian wheat growing areas were less than expected. This is causing production concerns and adding support to futures pricing. IKAR reportedly decreased their Russian wheat production estimate by 2 mmt to 91 mmt, while also reducing their export estimate by 1.5 mmt to 50.5 mmt. For reference, the USDA is using a figure of 91.5 mmt of production with exports at 52 mmt.
- Wheat planting continues to move forward in Australia, but more moisture is needed. The hope is that the transition from El Nino to La Nina will bring rain to recharge the soils. Friday and Saturday storms should bring precipitation to eastern regions, but the area may be limited to the northern part of New South Wales.
- From a technical point of view, the July contracts of both Chicago and KC futures ran into resistance at their 200-day moving averages again. After rallying above that level for the second time in as many weeks, both classes closed below it today, and it may take more friendly news to see wheat rally significantly above these levels.
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
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.
- No new action is recommended for 2024 Chicago wheat. Since weather became a much more dominant story for the wheat market, it appears that Chicago wheat may have established a springtime low. In light of this, Grain Market Insider has issued two separate recommendations to exit the second half of the July ’24 Chicago wheat 590 puts that were recommended for purchase last August. Considering that the crop is still developing, and weather remains a factor, we are aiming to recommend further sales within the 685 – 715 range versus July ’24 futures.
- 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.
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
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
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.
- No new action is recommended for 2024 KC wheat. Since weather has become a much more dominant driver, marked by the market breaking out of its 2-month long 552 – 605 trading range, we recently recommended making a sale for the 2024 crop considering weather rallies can be short lived. Seeing that the crop is still developing, and weather has become a larger factor, we are currently targeting the 760 – 780 range 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: Even though initial support below the market between 620 and 625 remains intact, July KC wheat continues to struggle to close above the 200-day moving average. A close above the recent high of 664 may open the door for the market to test the 678 – 700 area. While a close below 620 may put it on track to test support near the 100-day moving average and the broad support area of 605 – 551.
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: While the close above 712 in the July contract puts the market on track to continue toward the November high of 752, it could still face resistance in the 725 – 735 area. The close above 712 also puts the market solidly in overbought territory and at risk of a downturn. Should this occur, initial support may come around 690, with further support between 675 and 660.
Other Charts / Weather
Above: US 5-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.