|

1-31 End of Day: Continued Hot and Dry Argentine Weather Supports Beans and Corn

ByGrain Market Insider

All prices as of 2:00 pm Central Time

Grain Market Highlights

  • Support from soybeans and an extended hot and dry Argentine forecast helped rally the corn market to close near the day’s highs following choppy two-sided trade.

  • Strength from soybean meal carried over to pull soybeans off their midday lows to settle in the green, as the trade grapples with hot/dry Argentine weather and anticipates record crush numbers in tomorrow’s census crush report.

  • Soybean oil settled near unchanged but saw continued pressure from lower world veg oils and crude oil as Chinese import demand remains a concern. Soybean meal recovered from midday weakness and extended yesterday’s rally to settle $5.30 higher on the day, as buyers re-entered the market with possible short covering.

  • All three wheat classes closed lower on the day as anticipation of additional rain moving into Kansas and western Nebraska weighed on the wheat complex along with a new low close in France’s Matif March wheat futures.

  • To see the updated US 7-day precipitation forecast, 8 – 14 day temperature and precipitation outlooks, and the 2-week GFS precipitation forecast for South America, courtesy of the National Weather Service, NOAA, and the Climate Prediction Center, scroll down to the other Charts/Weather section.

Note – For the best viewing experience, some Grain Market Insider content is best viewed with your phone held horizontally.

Corn

Corn Action Plan Summary

  • No new action is recommended for 2023 corn. Front month corn has languished in a sideways to lower trend since printing a high in October, with a general lack of bullish news and an estimated US carryout over 2.1 billion bushels. The failure of the USDA’s January report to provide the bullish news necessary to turn prices higher was disappointing and the market remains at risk of remaining in the same pattern. With that being said, managed funds continue to hold a sizable net short position, which could trigger a short covering rally if a bullish catalyst enters the scene. For now, Grain Market Insider will continue to hold tight on any further sales recommendations for the next few weeks with the objective of seeking out better pricing opportunities. If the market has not turned around by then, Grain Market Insider may sit tight on the next sales recommendations until spring.

  • No new action is recommended for 2024 corn. Following the January USDA Supply and Demand update, Dec ’24 broke through the bottom end of the 485 ¾ to 602 range that had been in place since February ’22. While this is a disappointing development, bear spreading has allowed Dec ’24 to maintain more of its value versus old crop, as traders attempt to price in a larger 2023 carryout with more uncertainty remaining for the 2024 crop. Grain Market Insider continues to watch for signs of a change in the current trend to look at recommending making additional sales and buying Dec ’24 call options.

  • No Action is currently recommended for 2025 corn. Grain Market Insider isn’t considering any recommendations at this time for the 2025 crop that will be planted next year. It will probably be late winter or early spring of 2024 before Grain Market Insider starts considering the first sales targets.

To date, Grain Market Insider has issued the following corn recommendations:

  • Trade was quiet in the corn market as prices consolidated at the top of yesterday’s range. March corn futures finished ½ cent higher in a narrow trading range of only 5 ½ cents.

  • The corn market was lacking news overall and was likely a follower of other grains. Weakness in the wheat market limited gains, but a late push higher by soybeans helped pull corn futures off the lows for the day.

  • Argentina weather has been a focus in recent session. Afternoon weather models pushed some moisture chances until later in the weekend, which help support the corn and soybean markets into the close.

  • Weekly ethanol production rebounded but was still a disappointment. Last week, ethanol production was 991k bd, up from 818k bd last week, but was still 5% below last year’s level. Production has dropped below the pace to hit USDA market year corn usage target. Last week, only 99 million bushels of corn were used in the ethanol grind.

  • The USDA will release weekly corn export sales on Thursday morning. This is a key export window for US corn against global suppliers. Expectations for new sales to range from 800,000 – 1.3 mmt. Last week corn sales were 954,796 mt.

  • With Managed Money holding an extremely large short position in the corn market, the recent price strength could lead to additional short covering going into tomorrow’s session, but export demand will be a key as the market works through a perceived heavy front end corn supply.

Above: Front month corn posted a key bullish reversal on January 30. This indicates there is significant support below the market around 436, and that prices could retest the 460 resistance area. If the market were to reject the bullish reversal and turn lower, the next major level of support below 436 remains near 415.

Soybeans

Soybeans Action Plan Summary

  • No new action is recommended for 2023 soybeans. In early January, front month soybeans broke through the bottom side of the 1290 – 1400 range that had been in place since mid-October. As South American weather forecasts improved, the potential for a reduction in the record large global carryout also lessened, bringing prices down toward the 1180 support level. For now, 1180 support appears to be holding, and though the weak price action has been disappointing, time remains in the South American growing season, and the old crop marketing year, for unforeseen changes to push prices back higher.  Given the potential of a downside breakout back in December, Grain Market Insider recommended adding to sales as prices remained historically good, and Grain Market Insider will continue to look at additional sales opportunities heading into spring.

  • No new action is recommended for the 2024 crop. After the Nov ’24 contract broke through the bottom side of the 1233 – 1320 range, prices continued to retreat as South American weather conditions improved. Even though Nov ’24 runs similar downside risks as the front month contracts, which could press new crop prices toward 1150 or possibly the May ’23 low near 1115, plenty of time remains to market this crop. Considering the amount of uncertainty that lies ahead with the 2024 soybean crop, Grain Market Insider 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. Additionally, the possibility remains that prices could retest the 2022 highs, at which point Grain Market Insider may consider recommending additional sales.

  • No Action is currently recommended for 2025 Soybeans. Grain Market Insider isn’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:

  • Soybeans ended the day higher for the second consecutive day with support from higher soybean meal. Prices were lower for the majority of the day but rebounded into the close. Soybean oil was mixed and near unchanged with the front month ending higher but deferred months slightly lower.

  • There has been little fresh news for the markets to trade on, but it is the last day of the month and non-commercials may be covering a portion of their short position. Yesterday, funds were estimated to have bought back 10,000 contracts of soybeans and likely bought more back today. They still hold a large net short position.

  • The Brazilian soybean crop is now above 11% harvested, but production estimates are being dialed back again with Ag Resource pegging the total at 145.50 mmt which compares to 150.7 mmt in the previous forecast. The country’s soybean exports are expected to reach 2.49 mmt in January, well over the exports at this time a year ago.

  • In Singapore, demand for biodiesel has more than tripled since 2022 for marine use in the Port of Singapore. Imports of seed oils from China rose by 30% in 2023, and this points to the growing use of soybean oil and other seed oils as biofuel globally.

  • On tomorrow’s USDA census crush report, trade is expecting a record December US soybean crush at 206 mb. If true, that would be up from 200 mb in November, and compares to 187 mb last year.

Above: After printing a new low for the move and closing higher in a classic bullish key reversal, soybean may be on track to retest overhead resistance around 1250. If the market rejects the key reversal, initial support should be found near 1188 with further support near the November ’21 low of 1181.

Wheat

Market Notes: Wheat

  • Despite corn and soybeans coming back at the close, wheat could not do the same and posted losses in all three classes. No support came from Matif futures, in which the front month March lost three Euros per mt and had a new contract low close.

  • There has been talk that since China will allow imports of Argentinian wheat for the first time, Brazil may purchase their wheat needs from the US, compared to what they normally get from Argentina.

  • According to Anec, January wheat exports in Brazil are anticipated to increased 5.2% when compared to last year, at 685,171 mt. Overall Brazil is a net importer of wheat but exports the lower quality portions of grain with 90% of it going to animal feed.

  • A group of flour mills in South Korea has issued a tender for 100,000 mt of wheat to be sourced from the US and Australia. Taiwan is also tendering for US wheat, and Jordan has issued an international tender for 120,000 mt. At any rate, Russia remains the dominant exporter without much sign of slowing down. Their crops are also reportedly rated 96% good to satisfactory.

  • This afternoon the Fed announced that they will hold rates steady, marking the fourth time in a row that there was no change. The US Dollar Index is not showing much response as of as of writing, with it right around the neutral level, although it has been on both sides of that today. According to the committee, rates will not see any cuts until there is greater certainty that inflation is approaching two percent.

Chicago Wheat Action Plan Summary

  • No new action is currently recommended for 2023 Chicago wheat. The wheat market has continued to be dominated by lower world export prices that have stymied US export sales and depressed US prices. In early December, Grain Market Insider recommended taking advantage and making a sale on a short covering rally which was sparked by several Chinese purchases of US wheat. Since then, China has been silent in the US wheat export market, and prices remain somewhat elevated. Any remaining 2023 soft red winter wheat should be getting priced into market strength with the goal of having zero bushels unpriced by the end of January. 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 early December, the July ’24 contract has traded mostly sideways to slightly lower after its brief short covering runup on Chinese buying. Although China has since been absent from the US wheat export market, prices appear to have found support above 585, and managed funds continue to hold a sizeable, short position that could trigger another short covering rally if a bullish impetus enters the market. At the end of August, Grain Market Insider recommended purchasing July 590 puts to prepare for further price erosion. Although, if the market receives the needed stimulus to move prices back toward this summer’s highs, Grain Market Insider is prepared to recommend adding to current sales levels and possibly even purchasing call options to protect those sales. Otherwise, the current recommended put position will add a layer of protection if prices erode further, and Grain Market Insider will be prepared to recommend covering some of those puts to offset much of the original cost and move toward a net neutral cost for the remaining position.

  • No action is currently recommended for 2025 Chicago Wheat. Since early September, the July ’25 contract has been mostly rangebound with 632 at the low end and 685 at the top. Grain Market Insider’s strategy for the 2025 crop year up to this point has been to sit tight. Though if prices rally toward the upper end of this range, we will consider taking advantage of the rally’s historically good prices to make sales recommendations.

To date, Grain Market Insider has issued the following Chicago wheat recommendations:

Above: The recent rally came within earshot of the 620 – 625 resistance area and was rejected. For now, minor nearby support may be found near the 100-day moving average. If that breaks, the market runs the risk of receding further with the next downside support near 573 and again around 556.

KC Wheat Action Plan Summary

  • No new action is recommended for 2023 KC wheat crop. Since last fall, front month KC wheat has been mostly rangebound between 678 up top and the 590 area down below. The latter has held as support for the past three months. Although fundamentals remain weak, considering support lies just below the market and managed funds continue to carry a sizable short position, these factors could trigger a return to higher prices if any unforeseen risks enter the market. Grain Market Insider’s strategy is to look for price appreciation as weather becomes a more prominent market mover and may consider suggesting additional sales if prices make a modest 20% retracement of the 2022 highs back toward 730.

  • No new action is recommended for 2024 KC wheat. At the end of August, the July ’24 contract broke out of roughly a one-year trading range and stepped down to a 609 ¼ low in late November, largely driven by managed fund selling in the front month on weak US export demand and lower world wheat prices. Since then, the funds covered part of their large short position which also rallied prices in the July ’24 contract. While bearish headwinds remain, managed funds continue to hold a sizable, short position, and price seasonals remain positive for adding weather risk premium. These are two factors that could fuel additional short covering and rally prices in the months ahead. Back in August, Grain Market Insider recommended buying Jul’24 KC wheat 660 puts to protect the downside following the range breakout. As the market recently got further extended into oversold territory and the July contract showed signs of support near 630, Grain Market Insider recommended exiting 75% of the originally recommended position. Moving forward, Grain Market Insider is prepared to recommend exiting the last 25% on any further supportive market developments.

  • No action is currently recommended for 2025 KC Wheat. Grain Market Insider isn’t considering any recommendations at this time for the 2025 crop that will be planted next fall. It will probably be mid-winter before Insider starts considering the first sales targets.

To date, Grain Market Insider has issued the following KC recommendations:

Above: KC wheat appears to be consolidating around the 50-day moving average following its rally, and it continues to show signs of being overbought. Currently, upside resistance sits near the recent high of 641, with the next major support level remaining between 595 and 575.

Mpls Wheat Action Plan Summary

  • No new action is currently recommended for the 2023 New Crop. For the last six months, front month Minneapolis wheat has slowly stair-stepped lower with 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, support may be building in the 670 – 675 area, and the large fund net short position continues to leave the market susceptible to a short-covering rally at any time here. Grain Market Insider’s strategy is to look for a modest retracement of the July high and consider additional sales around 725 – 750.

  • No new action is recommended for 2024 Minneapolis wheat. Much like the front month contracts, Sept ’24 has been in a downward trend since last summer. And just as Sept ’24 has been influenced to the downside by the front months, it could be similarly influenced to the upside by the front months if a bullish impetus enters the scene and triggers a short covering rally due to the fund’s large short position. Back in August, Grain Market Insider recommended buying July ’24 KC wheat 660 puts to protect the downside following a 1-year range breakout in KC wheat, and in November recommended exiting 75% of the originally recommended position as July ’24 KC wheat showed signs of support around 630. While in the same time frame, Grain Market Insider also recommended making an additional sale as the Sept ’24 Minneapolis contract broke long time 743 support. Grain Market Insider remains prepared to recommend exiting the last 25% of the open puts on any further supportive market developments and consider recommending additional sales if prices make a modest retracement of the 2022 highs.

  • No action is currently recommended for the 2025 Minneapolis wheat crop. Grain Market Insider isn’t considering any recommendations at this time for the 2025 crop that will be planted next year. It will probably be mid-winter before Grain Market Insider starts considering the first sales targets.

To date, Grain Market Insider has issued the following Minneapolis wheat recommendations:

Above: Front month Minneapolis wheat is correcting from becoming overbought on the recent rally. If prices continue to slide, the next level of support comes in around the January low of 678 ¾. While upside resistance remains between 710 and 720.

Other Charts / Weather

Brazil 2-week forecast total precipitation courtesy of the National Weather Service, Climate Prediction Center.

Argentina 2-week forecast total precipitation courtesy of the National Weather Service, Climate Prediction Center.

|

1-30 End of Day: Corn, Beans, and Chicago Wheat Post Key Reversals on Turnaround Tuesday

ByGrain Market Insider

All prices as of 2:00 pm Central Time

Grain Market Highlights

  • Carryover strength from neighboring soybeans helped support the corn market which saw strong buying and possible short covering from early in the session. After printing a fresh contract low in the overnight, March corn closed just off its high of the day in a bullish key reversal.

  • Buying activity in the soybean complex built up steam throughout the day as confidence waned in the forecasted rain amounts for Argentina. March soybeans posted a key bullish reversal and closed within 2 ½ cents of the day’s high.

  • Soybean meal also likely saw additional support on tight supplies from the extreme cold earlier this month that reduced crushing capacity. Soybean oil posted a bullish reversal in concert with soybeans, though the market continues to see resistance from Chinese demand concerns and lower biodiesel RIN values.

  • Chicago and KC led the wheat complex to a strong finish, with all three classes closing within 2 cents of their respective highs and Chicago posting a key bullish reversal.

  • To see the updated US 5-day precipitation forecast, the updated NASA-Grace based Drought Indicator for South America, and the 1-week GFS Precipitation Forecast for South America, courtesy of the National Weather Service, NOAA, the Climate Prediction Center, and NASA Grace with the NDMC, scroll down to the other Charts/Weather section.

Note – For the best viewing experience, some Grain Market Insider content is best viewed with your phone held horizontally.

Corn

Corn Action Plan Summary

  • No new action is recommended for 2023 corn. Front month corn has languished in a sideways to lower trend since printing a high in October, with a general lack of bullish news and an estimated US carryout over 2.1 billion bushels. The failure of the USDA’s January report to provide the bullish news necessary to turn prices higher was disappointing and the market remains at risk of remaining in the same pattern. With that being said, managed funds continue to hold a sizable net short position, which could trigger a short covering rally if a bullish catalyst enters the scene. For now, Grain Market Insider will continue to hold tight on any further sales recommendations for the next few weeks with the objective of seeking out better pricing opportunities. If the market has not turned around by then, Grain Market Insider may sit tight on the next sales recommendations until spring.

  • No new action is recommended for 2024 corn. Following the January USDA Supply and Demand update, Dec ’24 broke through the bottom end of the 485 ¾ to 602 range that had been in place since February ’22. While this is a disappointing development, bear spreading has allowed Dec ’24 to maintain more of its value versus old crop, as traders attempt to price in a larger 2023 carryout with more uncertainty remaining for the 2024 crop. Grain Market Insider continues to watch for signs of a change in the current trend to look at recommending making additional sales and buying Dec ’24 call options.

  • No Action is currently recommended for 2025 corn. Grain Market Insider isn’t considering any recommendations at this time for the 2025 crop that will be planted next year. It will probably be late winter or early spring of 2024 before Grain Market Insider starts considering the first sales targets.

To date, Grain Market Insider has issued the following corn recommendations:

  • After posting a new contract low, March corn futures turned higher with moderate gains on the day. March corn gained 7 ½ cents and posted a bullish turn on the chart. Strong buying in the soybean and wheat markets helped support the corn market.

  • With Managed Money holding an extremely large short position in the corn market, today’s price turn posted a key bullish reversal on the charts. The strong price action could lead to additional short covering going into tomorrow’s session.

  • Argentina weather has been a focus. Weather forecasts are looking at decent rainfall potential going into February, but temperatures are above normal in the near-term. The excess heat could limit some grain production overall, which helped support the market.

  • Despite today’s price move, demand remains a limiting factor in the market. US corn is in a key export window compared to more expensive sources. Corn export sales need to reflect improved business over the next few weeks.

Above: Front month corn posted a key bullish reversal on January 30. This indicates there is significant support below the market around 436, and that prices could retest the 460 resistance area. If the market were to reject the bullish reversal and turn lower, the next major level of support below 436 remains near 415.

Soybeans

Soybeans Action Plan Summary

  • No new action is recommended for 2023 soybeans. Front month soybeans recent downside breakout of the 1290 – 1400 range indicates that there is risk that prices may continue to retreat toward 1180, as forecasts for improved South American weather lessen the potential for the record large global carryout to be reduced. Given the potential of a downside breakout, Grain Market Insider recommended adding to sales as the current price level is still historically good. It’s been disappointing how the market has been unable to push higher despite the South American production concerns. Because of that, Grain Market Insider’s concern is that, if the weather pattern doesn’t remain adverse, the path of least resistance could be lower. Grain Market Insider will continue to look at additional sales opportunities, as well as potential re-ownership strategies.

  • No new action is recommended for the 2024 crop. The Nov ’24 contract recently broke through the downside of the 1233 – 1320 range that has been in place since the end of July. Given this downside breakout and considering South American weather appears to be improving, Nov ’24 runs the risk of retreating towards 1150 unless another bullish catalyst enters the market. If prices find support and turn back higher, Grain Market Insider recently recommended buying Nov ’24 1280 and 1360 calls to give you confidence to make sales against anticipated 2024 production and to protect any sales in an extended rally. Grain Market Insider will also continue to watch for any sales opportunities.

  • No Action is currently recommended for 2025 Soybeans. Grain Market Insider isn’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:

  • Soybeans closed sharply higher today taking back all of yesterday’s losses and then some. Yesterday, trade reacted strongly to news of potential weakness in China’s economy, but the selloff may have been an overreaction. Both soybean meal and oil closed higher with larger gains in meal.

  • Lower soybean meal has put a significant amount of pressure on soybeans as it reached its lowest price since 2022 in the March contract yesterday. With freight costs falling, some cargoes of South American soybeans have been imported into the Southeast US for crushing. Crush margins have fallen recently but remain profitable.

  • In Soybean oil, prices have been steadily falling as well. Both palm oil and soybean oil on the Dalian exchange sold off sharply on worries about Chinese demand, and some analysts are lowering estimates for Chinese imports of soybeans below 98 mmt.

  • Argentinian weather is still mostly hot and dry but is expected to become more friendly in the coming days, though confidence may be waning. While the whole of Brazil is receiving scattered showers today. The northern region of Brazil has gotten too much rain while today’s showers are beneficial to the southern regions. Harvest is estimated at 11% complete which is above the average pace for this time of year.

Above: After printing a new low for the move and closing higher in a classic bullish key reversal, soybean may be on track to retest overhead resistance around 1250. If the market rejects the key reversal, initial support should be found near 1188 with further support near the November ’21 low of 1181.

Wheat

Market Notes: Wheat

  • Wheat reversed off of the lows in all three US futures classes, with Chicago and KC both posting double digit gains at the close. There wasn’t much in the way of fundamental news to drive this rally, but the grain complex as a whole had a positive session. This may indicate that today was a technical bounce that resulted in short covering by the managed funds.

  • Winter wheat conditions in the US are looking much better than a year ago. Select states released their crop condition data yesterday afternoon. Kansas, the biggest wheat producing state, rated their crop at 54% good to excellent versus 21% at this time last year. In fact, every reporting state except for North Carolina had better ratings than a year ago.

  • US wheat exports have not been stellar, and with only 9.7 mb inspected last week, total inspections are down 17% from last year. One of the limiting factors is exports out of Russia, which continue to dominate the market. According to IKAR, Russian FOB values fell by three dollars to just $235 per mt. This may limit further upside movement in the market.

  • Russia exported 4.26 mmt of wheat in January of last year. This year there is an estimated reduction of about 13% to 3.7 mmt; it is believed this is to help maintain reserves and also increase exports in the spring months. Additionally, as of January 26, Russia has purchased 473,000 mt of wheat for their state fund, with plans to buy up to two million metric tons of grain in total.

  • The US Dollar Index continues to consolidate, but its direction will be critical for wheat pricing. It was down slightly during today’s session, which may have offered some support to wheat. Tomorrow afternoon, traders will receive the results of the FOMC meeting; the Fed is expected to keep rates steady, but any surprise could affect the direction of the Dollar.

Chicago Wheat Action Plan Summary

  • No new action is currently recommended for 2023 Chicago wheat. The wheat market has continued to be dominated by lower world export prices that have stymied US export sales and depressed US prices. In early December, Grain Market Insider recommended taking advantage and making a sale on a short covering rally which was sparked by several Chinese purchases of US wheat. Since then, China has been silent in the US wheat export market, and prices remain somewhat elevated. Any remaining 2023 soft red winter wheat should be getting priced into market strength with the goal of having zero bushels unpriced by the end of January. 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 early December, the July ’24 contract has traded mostly sideways to slightly lower after its brief short covering runup on Chinese buying. Although China has since been absent from the US wheat export market, prices appear to have found support above 585, and managed funds continue to hold a sizeable, short position that could trigger another short covering rally if a bullish impetus enters the market. At the end of August, Grain Market Insider recommended purchasing July 590 puts to prepare for further price erosion. Although, if the market receives the needed stimulus to move prices back toward this summer’s highs, Grain Market Insider is prepared to recommend adding to current sales levels and possibly even purchasing call options to protect those sales. Otherwise, the current recommended put position will add a layer of protection if prices erode further, and Grain Market Insider will be prepared to recommend covering some of those puts to offset much of the original cost and move toward a net neutral cost for the remaining position.

  • No action is currently recommended for 2025 Chicago Wheat. Since early September, the July ’25 contract has been mostly rangebound with 632 at the low end and 685 at the top. Grain Market Insider’s strategy for the 2025 crop year up to this point has been to sit tight. Though if prices rally toward the upper end of this range, we will consider taking advantage of the rally’s historically good prices to make sales recommendations.

To date, Grain Market Insider has issued the following Chicago wheat recommendations:

Above: The recent rally came within earshot of the 620 – 625 resistance area and was rejected. For now, minor nearby support may be found near the 100-day moving average. If that breaks, the market runs the risk of receding further with the next downside support near 573 and again around 556.

KC Wheat Action Plan Summary

  • No new action is recommended for 2023 KC wheat crop. Since last fall, front month KC wheat has been mostly rangebound between 678 up top and the 590 area down below. The latter has held as support for the past three months. Although fundamentals remain weak, considering support lies just below the market and managed funds continue to carry a sizable short position, these factors could trigger a return to higher prices if any unforeseen risks enter the market. Grain Market Insider’s strategy is to look for price appreciation as weather becomes a more prominent market mover and may consider suggesting additional sales if prices make a modest 20% retracement of the 2022 highs back toward 730.

  • No new action is recommended for 2024 KC wheat. At the end of August, the July ’24 contract broke out of roughly a one-year trading range and stepped down to a 609 ¼ low in late November, largely driven by managed fund selling in the front month on weak US export demand and lower world wheat prices. Since then, the funds covered part of their large short position which also rallied prices in the July ’24 contract. While bearish headwinds remain, managed funds continue to hold a sizable, short position, and price seasonals remain positive for adding weather risk premium. These are two factors that could fuel additional short covering and rally prices in the months ahead. Back in August, Grain Market Insider recommended buying Jul’24 KC wheat 660 puts to protect the downside following the range breakout. As the market recently got further extended into oversold territory and the July contract showed signs of support near 630, Grain Market Insider recommended exiting 75% of the originally recommended position. Moving forward, Grain Market Insider is prepared to recommend exiting the last 25% on any further supportive market developments.

  • No action is currently recommended for 2025 KC Wheat. Grain Market Insider isn’t considering any recommendations at this time for the 2025 crop that will be planted next fall. It will probably be mid-winter before Insider starts considering the first sales targets.

To date, Grain Market Insider has issued the following KC recommendations:

Above: KC wheat appears to be consolidating around the 50-day moving average following its rally, and it continues to show signs of being overbought. Currently, upside resistance sits near the recent high of 641, with the next major support level remaining between 595 and 575.

Mpls Wheat Action Plan Summary

  • No new action is currently recommended for the 2023 New Crop. For the last six months, front month Minneapolis wheat has slowly stair-stepped lower with 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, support may be building in the 670 – 675 area, and the large fund net short position continues to leave the market susceptible to a short-covering rally at any time here. Grain Market Insider’s strategy is to look for a modest retracement of the July high and consider additional sales around 725 – 750.

  • No new action is recommended for 2024 Minneapolis wheat. Much like the front month contracts, Sept ’24 has been in a downward trend since last summer. And just as Sept ’24 has been influenced to the downside by the front months, it could be similarly influenced to the upside by the front months if a bullish impetus enters the scene and triggers a short covering rally due to the fund’s large short position. Back in August, Grain Market Insider recommended buying July ’24 KC wheat 660 puts to protect the downside following a 1-year range breakout in KC wheat, and in November recommended exiting 75% of the originally recommended position as July ’24 KC wheat showed signs of support around 630. While in the same time frame, Grain Market Insider also recommended making an additional sale as the Sept ’24 Minneapolis contract broke long time 743 support. Grain Market Insider remains prepared to recommend exiting the last 25% of the open puts on any further supportive market developments and consider recommending additional sales if prices make a modest retracement of the 2022 highs.

  • No action is currently recommended for the 2025 Minneapolis wheat crop. Grain Market Insider isn’t considering any recommendations at this time for the 2025 crop that will be planted next year. It will probably be mid-winter before Grain Market Insider starts considering the first sales targets.

To date, Grain Market Insider has issued the following Minneapolis wheat recommendations:

Above: The recent rally in the March contract appears to be stalling, with the market consolidating between the upper 690s and low 700s. Initial resistance now sits just above the market between 710 and 720, with heavier resistance around 735. Below the market support remains near 669.

Other Charts / Weather

Brazil 1-week forecast total precipitation courtesy of the National Weather Service, Climate Prediction Center.

Argentina 1-week forecast total precipitation courtesy of the National Weather Service, Climate Prediction Center.

|

1-29 End of Day: Grains Follow Through on Friday’s Weakness to Close Lower.

ByGrain Market Insider

All prices as of 2:00 pm Central Time

Grain Market Highlights

  • The lack of fresh bullish news and carryover weakness from wheat and soybeans pressured the corn market, which followed through on Friday’s instability to close lower on the day.

  • The soybean market failed to hold early strength from rebounding soybean meal and closed lower on more bearish Chinese economic news and sharply lower bean oil.

  • Soybean meal rebounded early in the session as traders likely covered shorts after posting fresh 2-year lows last Friday. Bean oil followed lower crude and world veg oil to resume its downtrend and post a fresh nearly 8-month low.

  • All three wheat classes closed in the red, but late-day buying strength came in to rally them off their respective lows. Word that Egypt may only import 7 mmt of wheat and weakness in China’s business sector likely contributed to the declines.

  • To see the updated US 5-day precipitation forecast, 6 – 10 day temperature and precipitation outlooks, and the 1-week GFS Precipitation Forecast for South America courtesy of the National Weather Service, NOAA and the Climate Prediction Center, scroll down to the other Charts/Weather section.

Note – For the best viewing experience, some Grain Market Insider content is best viewed with your phone held horizontally.

Corn

Corn Action Plan Summary

  • No new action is recommended for 2023 corn. Front month corn has languished in a sideways to lower trend since printing a high in October, with a general lack of bullish news and an estimated US carryout over 2.1 billion bushels. The failure of the USDA’s January report to provide the bullish news necessary to turn prices higher was disappointing and the market remains at risk of remaining in the same pattern. With that being said, managed funds continue to hold a sizable net short position, which could trigger a short covering rally if a bullish catalyst enters the scene. For now, Grain Market Insider will continue to hold tight on any further sales recommendations for the next few weeks with the objective of seeking out better pricing opportunities. If the market has not turned around by then, Grain Market Insider may sit tight on the next sales recommendations until spring.

  • No new action is recommended for 2024 corn. Following the January USDA Supply and Demand update, Dec ’24 broke through the bottom end of the 485 ¾ to 602 range that had been in place since February ’22. While this is a disappointing development, bear spreading has allowed Dec ’24 to maintain more of its value versus old crop, as traders attempt to price in a larger 2023 carryout with more uncertainty remaining for the 2024 crop. Grain Market Insider continues to watch for signs of a change in the current trend to look at recommending making additional sales and buying Dec ’24 call options.

  • No Action is currently recommended for 2025 corn. Grain Market Insider isn’t considering any recommendations at this time for the 2025 crop that will be planted next year. It will probably be late winter or early spring of 2024 before Grain Market Insider starts considering the first sales targets.

To date, Grain Market Insider has issued the following corn recommendations:

  • Selling across the grain markets helped pressure corn futures lower to start the week as bullish news is hard to find. March corn lost 6 cents on the session. Charts stay weak technically, and the March contract established a new contract low daily close of 440 ¼. Prices look poised to test the recent contract trading low of 436 ¾.

  • The USDA released weekly corn inspections during the session. Last week, US exporters shipped 35.5 mb (900,000 mt) of corn. This was up from last week’s total. Total inspections for the 23/24 marketing year are at 616 mb, up 30% year over year.

  • Argentina weather was a focus last week helping support prices, but weather forecasts are looking at decent rainfall potential going into February. This helped pressure both the corn and soybean markets.

  • Brazilian soybean harvest is trending 9-11% complete, which is nearly double the 5-year average. The earlier harvest date should allow Brazil’s key second crop (safrinha) corn to get planted in a timely fashion and a have a full growing season available.

  • Hedge funds continue to grow their large short positions in the corn market. On last week’s Commitment of Trader’s Report, hedge funds held a net short position of 265,285 contracts. This is approaching all-time highs with the corn market in general looking over-supplied and lacking true bullish news.

Above: Since posting a low on January 18, March corn has traded higher from being oversold. The advance appears to have been met with resistance just below 460. If prices turn back lower, initial support on the downside remains near the recent low of 436 ¾, with the next major support level around 415.

Corn Managed Money Funds net position as of Tuesday, Jan 23. Net position in Green versus price in Red. Managers net sold 4,743 contracts between Jan. 17 – 23, bringing their total position to a net short 265,285 contracts.

Soybeans

Soybeans Action Plan Summary

  • No new action is recommended for 2023 soybeans. Front month soybeans recent downside breakout of the 1290 – 1400 range indicates that there is risk that prices may continue to retreat toward 1180, as forecasts for improved South American weather lessen the potential for the record large global carryout to be reduced. Given the potential of a downside breakout, Grain Market Insider recommended adding to sales as the current price level is still historically good. It’s been disappointing how the market has been unable to push higher despite the South American production concerns. Because of that, Grain Market Insider’s concern is that, if the weather pattern doesn’t remain adverse, the path of least resistance could be lower. Grain Market Insider will continue to look at additional sales opportunities, as well as potential re-ownership strategies.

  • No new action is recommended for the 2024 crop. The Nov ’24 contract recently broke through the downside of the 1233 – 1320 range that has been in place since the end of July. Given this downside breakout and considering South American weather appears to be improving, Nov ’24 runs the risk of retreating towards 1150 unless another bullish catalyst enters the market. If prices find support and turn back higher, Grain Market Insider recently recommended buying Nov ’24 1280 and 1360 calls to give you confidence to make sales against anticipated 2024 production and to protect any sales in an extended rally. Grain Market Insider will also continue to watch for any sales opportunities.

  • No Action is currently recommended for 2025 Soybeans. Grain Market Insider isn’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:

  • Soybeans closed sharply lower in the front months but only 5 cents lower in the November contract with pressure coming from lower soybean oil and the news of Chinese real estate developer, Evergrande, being court-ordered to liquidate the company. This news adds to the concern regarding the Chinese economy and their demand.

  • Export inspections for soybeans were within trade expectations at 32.7 mb for the week ending January 25 which is down 24% year over year. Total inspections for 23/24 are at 1,017 mb, with the USDA estimating total exports at 1,755 mb, a decrease of 12%.

  • Weather in Argentina has been hot and dry but is expected to turn around in a few days with increased moisture and cooler temperatures. Brazil has received too much rain in the northern region but has recently dried up opening the door for harvest. Brazil is now 9% done with harvest which is above last year’s 4.4%.

  • Friday’s CFTC report showed funds as sellers of 15,045 contracts of soybeans which increased their net short position to 91,842 contracts last week. Funds currently hold the second largest net short position in history with corn, soybeans, and wheat combined. The last time they were this short was May of 2019.

Above: The recent rally from oversold conditions was rejected by overhead resistance around 1250. The turn lower has the market on track to test the recent 1201 low. If the market breaks that support, it may run the risk of testing the November ’21 low of 1181.

Soybean Managed Money Funds net position as of Tuesday, Jan. 23. Net position in Green versus price in Red. Money Managers net sold 15,045 contracts between Jan. 17 – 23, bringing their total position to a net short 91,842 contracts.

Wheat

Market Notes: Wheat

  • News that a major Chinese real-estate firm, Evergrande, was forced by the courts to liquidate may have played a role in today’s weakness in the commodity complex. This corporation was said to owe $300 billion in debt, and with the existing concerns about China’s economy, this collapse just adds fuel to the fire.

  • According to the Egyptian supply minister, Egypt may only import 7 mmt of wheat this year, and that their reserves are sufficient for over four months. Historically they import about 12 mmt of wheat per year. What makes this statement a bit puzzling is the fact that drought is said to be expanding in north African countries, including Egypt. In any case, his statements may have offered some weakness to the futures market.

  • Over the weekend it was reported that three US military service members were killed in drone attacks in Jordan. President Biden was quoted as saying “we shall respond”. What exactly this entails is unclear. However, there is concern that this will increase the tension in the Middle East and bring the US into the war. This may lend some support to the crude oil and wheat markets but could also continue to raise freight costs if ships continue to avoid the Suez Canal.

  • Farmers unions in France have reportedly threatened to blockade highways surrounding Paris. There have also been alleged calls for a siege of the capital. French farmers have been protesting higher production costs, fewer subsidies, as well as strict European regulations. According to interior minister Gerald Darmanin, about 15,000 police officers will be positioned to prevent tractors from entering Paris and other cities.

Chicago Wheat Action Plan Summary

  • No new action is currently recommended for 2023 Chicago wheat. The wheat market has continued to be dominated by lower world export prices that have stymied US export sales and depressed US prices. In early December, Grain Market Insider recommended taking advantage and making a sale on a short covering rally which was sparked by several Chinese purchases of US wheat. Since then, China has been silent in the US wheat export market, and prices remain somewhat elevated. Any remaining 2023 soft red winter wheat should be getting priced into market strength with the goal of having zero bushels unpriced by the end of January. 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 early December, the July ’24 contract has traded mostly sideways to slightly lower after its brief short covering runup on Chinese buying. Although China has since been absent from the US wheat export market, managed funds continue to hold a sizeable, short position that could trigger another short covering rally if a bullish impetus enters the market. At the end of August, Grain Market Insider recommended purchasing July 590 puts to prepare for further price erosion. Back in June, Grain Market Insider recommended two separate sales that averaged about 720 to take advantage of the brief upswing. If the market receives the needed stimulus to move prices back toward this summer’s highs, Grain Market Insider is prepared to recommend adding to current sales levels and possibly even purchasing call options to protect those sales. Otherwise, the current recommended put position will add a layer of protection if prices erode further, and Grain Market Insider will be prepared to recommend covering some of those puts to offset much of the original cost and move toward a net neutral cost for the remaining position.

  • No action is currently recommended for 2025 Chicago Wheat. Since early September, the July ’25 contract has been rangebound, largely between 650 on the bottom and 675 on the top. Grain Market Insider’s strategy for the 2025 crop year up to this point has been to sit tight. Though if prices break out of the topside of this range toward the 690 – 705 area, we will consider taking advantage of the rally and making sales recommendations.

To date, Grain Market Insider has issued the following Chicago wheat recommendations:

Above: The recent rally came within earshot of the 620 – 625 resistance area and was rejected. For now, minor nearby support may be found near the 100-day moving average. If that breaks, the market runs the risk of receding further with the next downside support near 573 and again around 556.

Chicago Wheat Managed Money Funds net position as of Tuesday, Jan. 23. Net position in Green versus price in Red. Money Managers net bought 4,034 contracts between Jan. 17 – 23, bringing their total position to a net short 64,541 contracts.

KC Wheat Action Plan Summary

  • No new action is recommended for 2023 KC wheat crop.  After posting an 80-cent rally in late November and early December, front month KC wheat has languished and drifted lower. Managed funds continue to carry a significant short position, and even though bullish headwinds like weak US demand and low world wheat prices remain, this could fuel a return to higher prices as winter weather risks add volatility to the market. Grain Market Insider’s strategy is to look for price appreciation this winter, as weather becomes a more prominent market mover, and may consider suggesting additional sales if prices become over-extended.

  • No new action is recommended for 2024 KC wheat. At the end of August, the July ’24 contract broke out of roughly a one-year trading range and stepped down to a 609 ¼ low in late November, largely driven by managed fund selling in the front month on weak US export demand and lower world wheat prices. Since then, the funds covered part of their large short position which also rallied prices in the July ’24 contract. While bearish headwinds remain, managed funds continue to hold a sizable, short position, and price seasonals remain positive for adding weather risk premium. These are two factors that could fuel additional short covering and rally prices in the months ahead. Back in August, Grain Market Insider recommended buying Jul’24 KC wheat 660 puts to protect the downside following the range breakout. As the market recently got further extended into oversold territory and the July contract showed signs of support near 630, Grain Market Insider recommended exiting 75% of the originally recommended position. Moving forward, Grain Market Insider is prepared to recommend exiting the last 25% on any further supportive market developments.

  • No action is currently recommended for 2025 KC Wheat. Grain Market Insider isn’t considering any recommendations at this time for the 2025 crop that will be planted next fall. It will probably be mid-winter before Insider starts considering the first sales targets.

To date, Grain Market Insider has issued the following KC recommendations:

Above: March KC wheat is showing signs of being overbought, and the recent rally appears to have culminated in a bearish reversal right around the 50-day moving average. Currently, upside resistance sits near the recent high of 641, and if prices follow through and trade lower, the next major support level remains between 595 and 575.

KC Wheat Managed Money Funds net position as of Tuesday, Jan. 23. Net position in Green versus price in Red. Money Managers net bought 312 contracts between Jan. 17 – 23, bringing their total position to a net short 38,340 contracts.

Mpls Wheat Action Plan Summary

  • No new action is currently recommended for the 2023 New Crop. For the last six months, front month Minneapolis wheat has slowly stair-stepped lower with little bullish news to move markets higher. During this time, prices have pierced the 50-day moving average just once, and managed funds have established and maintained a record (or near record) short position. Although bullish headwinds remain, support may be building in the 670 – 675 area, and the large fund net short position could fuel a short-covering rally if a bullish catalyst enters the scene to move prices to close above the 50-day moving average. Grain Market Insider’s strategy is to look for a modest retracement of the July high and consider additional sales around 725 – 750.

  • No new action is recommended for 2024 Minneapolis wheat. Much like the front month contracts, Sept ’24 has been in a downward trend since last summer. And just as Sept ’24 has been influenced to the downside by the front months, it could be similarly influenced to the upside by the front months if a bullish impetus enters the scene and triggers a short covering rally due to the fund’s large short position. Back in August, Grain Market Insider recommended buying July ’24 KC wheat 660 puts to protect the downside following a 1-year range breakout in KC wheat, and in November recommended exiting 75% of the originally recommended position as July ’24 KC wheat showed signs of support around 630. While in the same time frame, Grain Market Insider also recommended making an additional sale as the Sept ’24 Minneapolis contract broke long time 743 support. For now, Grain Market Insider remains prepared to recommend exiting the last 25% of the open puts on any further supportive market developments.

  • No action is currently recommended for the 2025 Minneapolis wheat crop. Grain Market Insider isn’t considering any recommendations at this time for the 2025 crop that will be planted next year. It will probably be mid-winter before Grain Market Insider starts considering the first sales targets.

To date, Grain Market Insider has issued the following Minneapolis wheat recommendations:

Above: The recent rally in the March contract appears to be stalling, with the market consolidating between the upper 690s and low 700s. Initial resistance now sits just above the market between 710 and 720, with heavier resistance around 735. Below the market support remains near 669.

Minneapolis Wheat Managed Money Funds net position as of Tuesday, Jan. 23. Net position in Green versus price in Red. Money Managers net sold 579 contracts between Jan. 17 – 23, bringing their total position to a net short 30,290 contracts.

Other Charts / Weather

Brazil 1-week forecast total precipitation courtesy of the National Weather Service, Climate Prediction Center.

Argentina 1-week forecast total precipitation courtesy of the National Weather Service, Climate Prediction Center.

|

1-26 End of Day: Improved South American Outlooks Pull Markets Lower

ByGrain Market Insider

All prices as of 2:00 pm Central Time

Grain Market Highlights

  • Weakness in neighboring wheat and soybeans spilled over to the corn market and added negativity to the market that closed lower in reaction to higher-than-expected estimates of Argentina’s corn crop.

  • The Buenos Aires Grain Exchange also raised its estimate of Argentina’s soybean crop. That news, plus a wetter Argentine forecast, weighed heavily on March soybeans and meal. March meal closed at its lowest level in almost two years.

  • Soybean oil was the strong leg of the soybean complex and closed with a 0.40 cent gain on the day and well off its lows. Gains in bean oil weren’t enough to support Board crush margins though, which fell for the fourth day in a row.

  • All three wheat classes closed in negative territory today on a lack of bullish news. Both Chicago and KC saw the largest losses, though buying entered the market at midday and helped all three classes settle well off their lows.

  • To see the US 8-14 day temperature and precipitation outlooks, and the 2-week GFS Precipitation Forecast for South America courtesy of the National Weather Service, NOAA and the Climate Prediction Center, scroll down to the other Charts/Weather section.

Note – For the best viewing experience, some Grain Market Insider content is best viewed with your phone held horizontally.

Corn

Corn Action Plan Summary

  • No new action is recommended for 2023 corn. Front month corn has languished in a sideways to lower trend since printing a high in October, with a general lack of bullish news and an estimated US carryout over 2.1 billion bushels. The failure of the USDA’s January report to provide the bullish news necessary to turn prices higher is disappointing and the market remains at risk of remaining in the same pattern. With that being said, the market does show signs of being oversold, and managed funds hold a sizable net short position, which could trigger a short covering rally if a bullish catalyst enters the scene. For now, Grain Market Insider will continue to hold tight on any further sales recommendations for the next few weeks with the objective of seeking out better pricing opportunities. If the market has not turned around by then, Grain Market Insider may sit tight on the next sales recommendations until spring.

  • No new action is recommended for 2024 corn. Following the January USDA Supply and Demand update, Dec ’24 broke through the bottom end of the 485 ¾ to 602 range that had been in place since February ’22. While this is a disappointing development, bear spreading has allowed Dec ’24 to maintain more of its value versus old crop, as traders attempt to price in a larger 2023 carryout with more uncertainty remaining for the 2024 crop. Additionally, Dec ’24 does show signs of being oversold, which is supportive if a bullish catalyst enters the scene. Grain Market Insider continues to watch for signs of a change in the current trend to look at recommending making additional sales and buying Dec ’24 call options.

  • No Action is currently recommended for 2025 corn. Grain Market Insider isn’t considering any recommendations at this time for the 2025 crop that will be planted two springs from now. It will probably be late winter or early spring of 2024 before Grain Market Insider starts considering the first sales targets.

To date, Grain Market Insider has issued the following corn recommendations:

  • Corn futures traded lower for the second consecutive session as selling pressure in the wheat and soybean market spilled over into the corn market on Friday. March lost 5 ½ cents on the day but did finish ¾ cent higher on the week.

  • Argentina weather became a focus this week with a hotter, drier forecast, but early season weather allowed the Buenos Aires Grain exchange to raise their corn crop outlook for the season by 1.5 mmt to 56.5 mmt, which would reflect record production.

  • Corn export shipments through January 18 totaled 605 mb, up 28% from last year. Shipments last week were 36.7 mb, below the required 45.4 mb needed to reach the USDA target of 2.100 bb. Overall, the corn shipment pace is still ahead of schedule to reach the USDA target.

  • Corn basis may flatten out in the days ahead as producer selling did pick up on the recent corn rally. The warmer weather and snow melt across the Midwest likely aided corn movement into the cash market.

  • Hedge funds were holding a large short position in the corn market, over 260,000 net short contracts as of last week Tuesday. With the strength in the market this week, funds have likely begun working out of some of these short positions. The corn market in general looks over-supplied and lacking true bullish news.

Above: Since posting a low on January 18, March corn has traded higher from being oversold. The advance appears to have been met with resistance just below 460. If prices turn back lower, initial support on the downside remains near the recent low of 436 ¾, with the next major support level around 415.

Soybeans

Soybeans Action Plan Summary

  • No new action is recommended for 2023 soybeans. Front month soybeans recent downside breakout of the 1290 – 1400 range indicates that there is risk that prices may continue to retreat toward 1180, as forecasts for improved South American weather lessen the potential for the record large global carryout to be reduced. Given the potential of a downside breakout, Grain Market Insider recently recommended adding to sales as the current price level is still historically good. It’s been disappointing how the market has been unable to push higher despite the South American production concerns. Because of that, Grain Market Insider’s concern is that, if the weather pattern doesn’t remain adverse, the path of least resistance could be lower. Grain Market Insider will continue to look at additional sales opportunities, as well as potential re-ownership strategies.

  • No new action is recommended for the 2024 crop. The Nov ’24 contract recently broke through the downside of the 1233 – 1320 range that has been in place since the end of July. With this downside breakout, and considering the bullish influence of adverse South American weather, which appears to be improving, Nov ’24 runs the risk of retreating towards 1150 unless another bullish catalyst enters the market.  If prices find support and turn back higher, Grain Market Insider recently recommended buying Nov ’24 1280 and 1360 calls to give you confidence to make sales against anticipated 2024 production and to protect any sales in an extended rally. Grain Market Insider will also continue to watch for any sales opportunities.

  • No Action is currently recommended for 2025 Soybeans. Grain Market Insider isn’t considering any recommendations at this time for the 2025 crop that will be planted two springs from now, 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:

  • Soybeans ended the day lower to finish the week as South American weather improves and the lower production estimates begin to come into question. Some analysts are raising their earlier predictions for Brazilian estimates, while Argentina raises theirs as well.

  • For the week, March soybeans ended up losing 4 cents, March soybean meal lost $7.50, and March soybean oil gained 0.03 cents. Soybeans trended higher for the beginning of the week on thoughts that South America would be drier over the following 10 days, but prices turned around on Thursday following disappointing export sales and an Argentinian forecast that turned wetter.

  • With Argentina’s good growing season so far, the Buenos Aires Grain Exchange updated its estimate for the soybean crop to 52.5 mmt from 52 mmt previously, but they are taking into consideration the risk of drier weather through the rest of the month. Brazil’s production may not be as short as some had anticipated as now that harvest is moving along, cash prices have fallen significantly and are now cheaper than US offers.

  • This morning, the USDA reported a flash sale of 100,000 tons of soybean meal to unknown destinations for the 23/24 marketing year. Last week’s export sales for soybeans were on the lower end of expectations with an increase of 20.6 mb for 23/24. This was down 28% from the previous week but up 6% from the prior 4-week average.

Above: The recent rally from oversold conditions was rejected by overhead resistance around 1250. The turn lower has the market on track to test the recent 1201 low. If the market breaks that support, it may run the risk of testing the November ’21 low of 1181.

Wheat

Market Notes: Wheat

  • The wheat market, along with the rest of the grain complex closed with losses for the day. All three US wheat classes traded lower, with Chicago and KC leading the way with double digit losses. Matif wheat futures also settled sharply lower, offering no support. This price action may have been primarily driven by headlines that Chinese authorities have, for the first time, approved imports of wheat from Argentina.

  • In other global news, there are reports that China is talking with Iran and encouraging them to reduce attacks on vessels in the Red Sea. If more ships begin utilizing the Suez Canal again, it could reduce global freight and shipping costs.

  • Argentina’s Buenos Aires Grain Exchange increased their corn and soybean production estimates; wheat production was left unchanged at 15.1 mmt, but harvest is now reported to be 100% complete. This year’s 15.1 mmt crop represents about a 24% increase from last year’s 12.2 mmt crop when drought was a much bigger issue.

  • One factor that may have added pressure today is the forecast for more rain and snow in the central and southern plains states expected next week. This should help soil moisture levels, may lead to much better growing conditions this spring compared to last year. On the other side of the coin, drought is said to be increasing in northern Africa, meaning that those nations may need to import more wheat.

Chicago Wheat Action Plan Summary

  • No new action is currently recommended for 2023 Chicago wheat. The wheat market has continued to be dominated by lower world export prices that have stymied US export sales and depressed US prices. In early December, Grain Market Insider recommended taking advantage and making a sale on a short covering rally which was sparked by several Chinese purchases of US wheat. Since then, China has been silent in the US wheat export market, and prices remain somewhat elevated. Any remaining 2023 soft red winter wheat should be getting priced into market strength with the goal of having zero bushels unpriced by the end of January. 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 early December, the July ’24 contract has traded mostly sideways to slightly lower after its brief short covering runup on Chinese buying. Although China has since been absent from the US wheat export market, managed funds continue to hold a sizeable, short position that could trigger another short covering rally if a bullish impetus enters the market. At the end of August, Grain Market Insider recommended purchasing July 590 puts to prepare for further price erosion. Back in June, Grain Market Insider recommended two separate sales that averaged about 720 to take advantage of the brief upswing. If the market receives the needed stimulus to move prices back toward this summer’s highs, Grain Market Insider is prepared to recommend adding to current sales levels and possibly even purchasing call options to protect those sales. Otherwise, the current recommended put position will add a layer of protection if prices erode further, and Grain Market Insider will be prepared to recommend covering some of those puts to offset much of the original cost and move toward a net neutral cost for the remaining position.

  • No action is currently recommended for 2025 Chicago Wheat. Since early September, the July ’25 contract has been rangebound, largely between 650 on the bottom and 675 on the top. Grain Market Insider’s strategy for the 2025 crop year up to this point has been to sit tight. Though if prices break out of the topside of this range toward the 690 – 705 area, we will consider taking advantage of the rally and making sales recommendations.

To date, Grain Market Insider has issued the following Chicago wheat recommendations:

Above: The recent rally came within earshot of the 620 – 625 resistance area and was rejected. For now, minor nearby support may be found near the 100-day moving average. If that breaks, the market runs the risk of receding further with the next downside support near 573 and again around 556.

KC Wheat Action Plan Summary

  • No new action is recommended for 2023 KC wheat crop.  After posting an 80-cent rally in late November and early December, front month KC wheat has languished and drifted lower while retracing about 50% of the upward move. Managed funds continue to carry a significant short position, and even though bullish headwinds like weak US demand and low world wheat prices remain, this could fuel a return to higher prices as winter weather risks add volatility to the market. Grain Market Insider’s strategy is to look for price appreciation this winter, as weather becomes a more prominent market mover, and may consider suggesting additional sales if prices become over-extended.

  • No new action is recommended for 2024 KC wheat. At the end of August, the July ’24 contract broke out of roughly a one-year trading range and stepped down to a 609 ¼ low in late November, largely driven by managed fund selling in the front month on weak US export demand and lower world wheat prices. Since then, the funds covered part of their large short position which also rallied prices in the July ’24 contract. While bearish headwinds remain, managed funds continue to hold a sizable, short position, and price seasonals remain positive for adding weather risk premium. These are two factors that could fuel additional short covering and rally prices in the months ahead. Back in August, Grain Market Insider recommended buying Jul’24 KC wheat 660 puts to protect the downside following the range breakout. As the market recently got further extended into oversold territory and the July contract showed signs of support near 630, Grain Market Insider recommended exiting 75% of the originally recommended position. Moving forward, Grain Market Insider is prepared to recommend exiting the last 25% on any further supportive market developments.

  • No action is currently recommended for 2025 KC Wheat. Grain Market Insider isn’t considering any recommendations at this time for the 2025 crop that will be planted next fall. It will probably be mid-winter before Insider starts considering the first sales targets.

To date, Grain Market Insider has issued the following KC recommendations:

Above: March KC wheat is showing signs of being overbought, and the recent rally appears to have culminated in a bearish reversal right around the 50-day moving average. Currently, upside resistance sits near the recent high of 641, and if prices follow through and trade lower, the next major support level remains between 595 and 575.

Mpls Wheat Action Plan Summary

  • No new action is currently recommended for the 2023 New Crop. For much of the second half of last year, driven mostly by fund selling and slow US export demand, front month Minneapolis wheat slowly stair-stepped lower until hitting the November low. During this time, managed funds also established a record net short position. Since then, with the market mostly sideways, the November low of 697 ½ has held, and prices have pierced the 50-day moving average just once. Although bearish headwinds remain, the large fund net short position could fuel a short-covering rally if a bullish catalyst enters the scene to move prices to close above the 50-day moving average. Back in June, Grain Market Insider made a sales recommendation during the July rally near 820, and with that sale in place, Grain Market Insider’s strategy is to look for price appreciation this winter with an eye on considering additional sales around 725 – 775, and again north of 800.

  • No new action is recommended for 2024 KC wheat. In early December the July ’24 contract posted a 70-cent rally mostly on short covering activity in the front month contracts. Since then, July ’24 has drifted lower as growing conditions have seen improvement. Still, much of the growing season remains, and managed funds continue to carry a significant short position in old crop. Even though bullish headwinds remain, this could fuel another short covering rally if any production concerns come to the forefront. Back in August, Grain Market Insider recommended buying Jul ’24 KC wheat 660 puts to protect the downside. As the market got further extended into oversold territory and July ’24 showed signs of support near 630, Grain Market Insider recommended exiting 75% of the originally recommended position. Grain Market Insider remains prepared to recommend exiting the last 25% on any further supportive market developments.

  • No action is currently recommended for the 2025 Minneapolis wheat crop. Grain Market Insider isn’t considering any recommendations at this time for the 2025 crop that will be planted two springs from now. It will probably be mid-winter before Grain Market Insider starts considering the first sales targets.

To date, Grain Market Insider has issued the following Minneapolis wheat recommendations:

Above: The recent rally in the March contract appears to be stalling, with the market consolidating between the upper 690s and low 700s. Initial resistance now sits just above the market between 710 and 720, with heavier resistance around 735. Below the market support remains near 669.

Other Charts / Weather

Brazil 2-week forecast total precipitation courtesy of the National Weather Service, Climate Prediction Center.

Argentina 2-week forecast total precipitation courtesy of the National Weather Service, Climate Prediction Center.

|

1-25 End of Day: Wheat Continues Higher, Row Crops Lower on Thursday

ByGrain Market Insider

All prices as of 2:00 pm Central Time

Grain Market Highlights

  • Corn futures were lower today for the first time this week. Late day strength in the wheat market helped corn to close well off its daily low.

  • Soybeans fell on the day after softer than expected export sales this morning. Brazilian cash market weakness added pressure as harvest is just getting underway.

  • Soybean meal and soybean oil futures both were lower on the day as crush margins continue to narrow.

  • All three wheat classes closed in the green once again on Thursday. KC wheat led the gains today as continuous KC wheat futures closed above the 50-day moving average for the first time in 2024.

  • To see the US Corn Areas in Drought Map as of January 23, 2024, and the 1-week GFS Ensemble Precipitation Forecast for South America courtesy of the USDA Office of the Chief Economist, the World Agricultural Outlook Borad and the Climate Prediction Center, scroll down to the other Charts/Weather section.

Note – For the best viewing experience, some Grain Market Insider content is best viewed with your phone held horizontally.

Corn

Corn Action Plan Summary

  • No new action is recommended for 2023 corn. Front month corn has languished in a sideways to lower trend since printing a high in October, with a general lack of bullish news and an estimated US carryout over 2.1 billion bushels. The failure of the USDA’s January report to provide the bullish news necessary to turn prices higher is disappointing and the market remains at risk of remaining in the same pattern. With that being said, the market does show signs of being oversold, and managed funds hold a sizable net short position, which could trigger a short covering rally if a bullish catalyst enters the scene. For now, Grain Market Insider will continue to hold tight on any further sales recommendations for the next few weeks with the objective of seeking out better pricing opportunities. If the market has not turned around by then, Grain Market Insider may sit tight on the next sales recommendations until spring.

  • No new action is recommended for 2024 corn. Following the January USDA Supply and Demand update, Dec ’24 broke through the bottom end of the 485 ¾ to 602 range that had been in place since February ’22. While this is a disappointing development, bear spreading has allowed Dec ’24 to maintain more of its value versus old crop, as traders attempt to price in a larger 2023 carryout with more uncertainty remaining for the 2024 crop. Additionally, Dec ’24 does show signs of being oversold, which is supportive if a bullish catalyst enters the scene. Grain Market Insider continues to watch for signs of a change in the current trend to look at recommending making additional sales and buying Dec ’24 call options.

  • No Action is currently recommended for 2025 corn. Grain Market Insider isn’t considering any recommendations at this time for the 2025 crop that will be planted two springs from now. It will probably be late winter or early spring of 2024 before Grain Market Insider starts considering the first sales targets.

To date, Grain Market Insider has issued the following corn recommendations:

  • Weekly corn export sales were within expectations at 954,800 MT (37.6 mb) for the 2023-24 marketing year. This is the key export window for US corn exports over the next couple months, and the market is looking for sales numbers to grow. Current total sales commitments are up 29% over last year.

  • China stays absent from the US corn export market, but Mexico has been buying corn at a record pace.  As of January 18th, Mexico has bought 15.3 MMT (602 mb), well above previous high from 2022. Mexico is responsible for 47% of all US corn sales for the current 2023/24 marketing year.

  • Weather forecasts in Argentina have turned hotter and drier going into February. The change in weather has been enough to trigger some short covering, supporting the market this week. Argentina is forecasted to produce a record corn crop this season after two years of drought.

  • Hedge funds were holding a large short position in the corn market, over 260,000 net short contracts as of last week Tuesday. Funds have likely begun working out of some of these short positions with the strength in the market this week. The corn market in general looks over-supplied and lacking true bullish news.

Above: Since posting a low on January 18, March corn has traded higher from being oversold and appears on track to test nearby resistance around 460. If prices turn back lower, initial support on the downside remains near the recent low of 436 ¾, with the next major support level around 415.

Soybeans

Soybeans Action Plan Summary

  • No new action is recommended for 2023 soybeans. Front month soybeans recent downside breakout of the 1290 – 1400 range indicates that there is risk that prices may continue to retreat toward 1180, as forecasts for improved South American weather lessen the potential for the record large global carryout to be reduced. Given the potential of a downside breakout, Grain Market Insider recently recommended adding to sales as the current price level is still historically good. It’s been disappointing how the market has been unable to push higher despite the South American production concerns. Because of that, Grain Market Insider’s concern is that, if the weather pattern doesn’t remain adverse, the path of least resistance could be lower. Grain Market Insider will continue to look at additional sales opportunities, as well as potential re-ownership strategies.

  • No new action is recommended for the 2024 crop. The Nov ’24 contract recently broke through the downside of the 1233 – 1320 range that has been in place since the end of July. With this downside breakout, and considering the bullish influence of adverse South American weather, which appears to be improving, Nov ’24 runs the risk of retreating towards 1150 unless another bullish catalyst enters the market.  If prices find support and turn back higher, Grain Market Insider recently recommended buying Nov ’24 1280 and 1360 calls to give you confidence to make sales against anticipated 2024 production and to protect any sales in an extended rally. Grain Market Insider will also continue to watch for any sales opportunities.

  • No Action is currently recommended for 2025 Soybeans. Grain Market Insider isn’t considering any recommendations at this time for the 2025 crop that will be planted two springs from now, 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:

  • Soybeans ended the day significantly lower as a result of softer than expected weekly export sales, scattered showers in Brazil, and a Brazilian cash market that could be pointing to a larger crop than many analysts have been predicting.

  • To start the day, soybean meal was higher and had been trending higher since last Thursday, but reversed lower after export sales were released. Soybean oil was lower as well despite a very strong palm oil market, but it did not help that palm oil was not trading today due to a holiday. With the value of soy products falling, crush margins are narrowing which could slow the record crush numbers that have been recently reported.

  • In Brazil, weather has improved, and even Mato Grosso and Parana are beginning to receive scattered showers again. There has been a lot of talk among analysts of a shrinking Brazilian soy crop, but recent rains and a steep decline in basis today as harvest ramps up may be indicating that total production will be closer to the USDA’s estimate of 157 mmt than the lower estimates by analysts of 145 mmt or below.

  • Export sales for soybeans were on the lower end of expectations with an increase of 20.6 mb for 23/24. This was down 28% from the previous week but up 6% from the prior 4-week average. Last week’s export shipments for soybeans of 41.1 mb were well above the 23.9 mb needed each week to achieve the USDA’s estimates. Primary destinations were to the Philippines, Japan, and South Korea.

Above: After posting the 1201 low, short covering from oversold conditions has enabled March soybeans to rebound. Overhead resistance remains in the 1250 area and again near 1290. If prices turn lower, support comes in around 1200 and then near the November ’21 low of 1181.

Wheat

Market Notes: Wheat

  • After trading both sides of neutral, all three US wheats closed higher. This marks six higher closes out of the past seven sessions for March Chicago wheat. The exception was on Tuesday when prices settled unchanged. This continued recovery for wheat comes despite today’s rebound in the US dollar, as well as lower corn and sharply soybean futures.

  • The USDA reported an increase of 16.6 mb of wheat export sales for 23/24 as well as an increase of 2.2 mb for 24/25. Shipments last week at 11.9 mb were below the 17.0 mb pace needed per week to reach the USDA’s goal of 725 mb. However, commitments are now at 608 mb which is slightly above the USDA’s pace.

  • One of the factors that may have supported the wheat market today is talk that drought in northern Africa could expand, requiring them to import more wheat. A neutral to mostly higher close for Paris milling wheat futures also offered some support.

  • SovEcon has estimated the Russian 2024 wheat crop at 92.2 mmt. For reference the 2023 crop totaled 92.8 mmt. Though this is a decline, it is only a 0.6% drop and is unlikely to have a major impact if true. In addition, SovEcon’s projection for 2024 was actually an increase from their previous estimate by 0.9 mmt. For the time being, Russia is likely to remain aggressive on exports, which may limit upside potential for futures.

Chicago Wheat Action Plan Summary

  • No new action is currently recommended for 2023 Chicago wheat. The wheat market has continued to be dominated by lower world export prices that have stymied US export sales and depressed US prices. In early December, Grain Market Insider recommended taking advantage and making a sale on a short covering rally which was sparked by several Chinese purchases of US wheat. Since then, China has been silent in the US wheat export market, and prices remain somewhat elevated. Any remaining 2023 soft red winter wheat should be getting priced into market strength with the goal of having zero bushels unpriced by the end of January. 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 early December, the July ’24 contract has traded mostly sideways to slightly lower after its brief short covering runup on Chinese buying. Although China has since been absent from the US wheat export market, managed funds continue to hold a sizeable, short position that could trigger another short covering rally if a bullish impetus enters the market. At the end of August, Grain Market Insider recommended purchasing July 590 puts to prepare for further price erosion. Back in June, Grain Market Insider recommended two separate sales that averaged about 720 to take advantage of the brief upswing. If the market receives the needed stimulus to move prices back toward this summer’s highs, Grain Market Insider is prepared to recommend adding to current sales levels and possibly even purchasing call options to protect those sales. Otherwise, the current recommended put position will add a layer of protection if prices erode further, and Grain Market Insider will be prepared to recommend covering some of those puts to offset much of the original cost and move toward a net neutral cost for the remaining position.

  • No action is currently recommended for 2025 Chicago Wheat. Since early September, the July ’25 contract has been rangebound, largely between 650 on the bottom and 675 on the top. Grain Market Insider’s strategy for the 2025 crop year up to this point has been to sit tight. Though if prices break out of the topside of this range toward the 690 – 705 area, we will consider taking advantage of the rally and making sales recommendations.

To date, Grain Market Insider has issued the following Chicago wheat recommendations:

Above: Since uncovering support around 573, March Chicago wheat has rallied through both the 100 and 50-day moving averages and is on track to test the 620 – 625 resistance area. If prices turn back lower, initial support remains near 573, with the next major support level around 556.

KC Wheat Action Plan Summary

  • No new action is recommended for 2023 KC wheat crop.  After posting an 80-cent rally in late November and early December, front month KC wheat has languished and drifted lower while retracing about 50% of the upward move. Managed funds continue to carry a significant short position, and even though bullish headwinds like weak US demand and low world wheat prices remain, this could fuel a return to higher prices as winter weather risks add volatility to the market. Grain Market Insider’s strategy is to look for price appreciation this winter, as weather becomes a more prominent market mover, and may consider suggesting additional sales if prices become over-extended.

  • No new action is recommended for 2024 KC wheat. At the end of August, the July ’24 contract broke out of roughly a one-year trading range and stepped down to a 609 ¼ low in late November, largely driven by managed fund selling in the front month on weak US export demand and lower world wheat prices. Since then, the funds covered part of their large short position which also rallied prices in the July ’24 contract. While bearish headwinds remain, managed funds continue to hold a sizable, short position, and price seasonals remain positive for adding weather risk premium. These are two factors that could fuel additional short covering and rally prices in the months ahead. Back in August, Grain Market Insider recommended buying Jul’24 KC wheat 660 puts to protect the downside following the range breakout. As the market recently got further extended into oversold territory and the July contract showed signs of support near 630, Grain Market Insider recommended exiting 75% of the originally recommended position. Moving forward, Grain Market Insider is prepared to recommend exiting the last 25% on any further supportive market developments.

  • No action is currently recommended for 2025 KC Wheat. Grain Market Insider isn’t considering any recommendations at this time for the 2025 crop that will be planted next fall. It will probably be mid-winter before Insider starts considering the first sales targets.

To date, Grain Market Insider has issued the following KC recommendations:

Above: With little bullish news in the market, KC wheat has been drifting sideways to lower since the middle of December with the 50-day moving average acting as nearby resistance.  If bullish news does enter the scene to move prices higher, major resistance beyond the 50-day moving average lies between 650 and 678. Otherwise, major support below the market remains between 595 and 575.

Mpls Wheat Action Plan Summary

  • No new action is currently recommended for the 2023 New Crop. For much of the second half of last year, driven mostly by fund selling and slow US export demand, front month Minneapolis wheat slowly stair-stepped lower until hitting the November low. During this time, managed funds also established a record net short position. Since then, with the market mostly sideways, the November low of 697 ½ has held, and prices have pierced the 50-day moving average just once. Although bearish headwinds remain, the large fund net short position could fuel a short-covering rally if a bullish catalyst enters the scene to move prices to close above the 50-day moving average. Back in June, Grain Market Insider made a sales recommendation during the July rally near 820, and with that sale in place, Grain Market Insider’s strategy is to look for price appreciation this winter with an eye on considering additional sales around 725 – 775, and again north of 800.

  • No new action is recommended for 2024 KC wheat. In early December the July ’24 contract posted a 70-cent rally mostly on short covering activity in the front month contracts. Since then, July ’24 has drifted lower as growing conditions have seen improvement. Still, much of the growing season remains, and managed funds continue to carry a significant short position in old crop. Even though bullish headwinds remain, this could fuel another short covering rally if any production concerns come to the forefront. Back in August, Grain Market Insider recommended buying Jul ’24 KC wheat 660 puts to protect the downside. As the market got further extended into oversold territory and July ’24 showed signs of support near 630, Grain Market Insider recommended exiting 75% of the originally recommended position. Grain Market Insider remains prepared to recommend exiting the last 25% on any further supportive market developments.

  • No action is currently recommended for the 2025 Minneapolis wheat crop. Grain Market Insider isn’t considering any recommendations at this time for the 2025 crop that will be planted two springs from now. It will probably be mid-winter before Grain Market Insider starts considering the first sales targets.

To date, Grain Market Insider has issued the following Minneapolis wheat recommendations:

Above: Since the March contract closed below 700 support in early January, the 700 area has acted as resistance for the recent rally. If prices close above that area, the next areas of resistance may come in between 721 and 734. Otherwise, below the market support remains near 669.

Other Charts / Weather

|

1-24 End of Day: Technical Buying and Short Covering Lead Wheat and Corn Higher

ByGrain Market Insider

All prices as of 2:00 pm Central Time

Grain Market Highlights

  • A strong wheat market and dry forecast for Argentina brought positive money flow into the corn market, which closed higher for the fifth day in a row despite weak ethanol production data.

  • Soybeans ended the day mixed, as strength from an announced stimulus to the Chinese economy gave way to selling pressure that was likely led by weakness in soybean oil. Bull spreading was also noted as end users seek coverage on light farmer selling.

  • Soybean oil sold off and settled significantly lower after hitting resistance at the 20-day moving average. Soybean meal on the other hand, closed higher on the day with continued strength on concerns over the hot and dry conditions forecast for the next ten days in Argentina.

  • All three wheat classes finished the day in positive territory with Chicago contracts leading the way. Technical trade above Chicago’s 50-day moving average likely spurred additional short-covering with additional strength possibly from the lower US dollar and Chinese economic stimulus measures.   

  • To see the updated US 6-10 day temperature and precipitation outlooks, and the 1-week percent of normal forecast total precipitation for Brazil and Argentina, courtesy of the National Weather Service, Climate Prediction Center, scroll down to the other Charts/Weather section.

Note – For the best viewing experience, some Grain Market Insider content is best viewed with your phone held horizontally.

Corn

Corn Action Plan Summary

  • No new action is recommended for 2023 corn. Front month corn has languished in a sideways to lower trend since printing a high in October, with a general lack of bullish news and an estimated US carryout over 2.1 billion bushels. The failure of the USDA’s January report to provide the bullish news necessary to turn prices higher is disappointing and the market remains at risk of remaining in the same pattern. With that being said, the market does show signs of being oversold, and managed funds hold a sizable net short position, which could trigger a short covering rally if a bullish catalyst enters the scene. For now, Grain Market Insider will continue to hold tight on any further sales recommendations for the next few weeks with the objective of seeking out better pricing opportunities. If the market has not turned around by then, Grain Market Insider may sit tight on the next sales recommendations until spring.

  • No new action is recommended for 2024 corn. Following the January USDA Supply and Demand update, Dec ’24 broke through the bottom end of the 485 ¾ to 602 range that had been in place since February ’22. While this is a disappointing development, bear spreading has allowed Dec ’24 to maintain more of its value versus old crop, as traders attempt to price in a larger 2023 carryout with more uncertainty remaining for the 2024 crop. Additionally, Dec ’24 does show signs of being oversold, which is supportive if a bullish catalyst enters the scene. Grain Market Insider continues to watch for signs of a change in the current trend to look at recommending making additional sales and buying Dec ’24 call options.

  • No Action is currently recommended for 2025 corn. Grain Market Insider isn’t considering any recommendations at this time for the 2025 crop that will be planted two springs from now. It will probably be late winter or early spring of 2024 before Grain Market Insider starts considering the first sales targets.

To date, Grain Market Insider has issued the following corn recommendations:

  • Positive money flow led by strength in the wheat market and some concerns regarding Argentina weather has helped the corn market trade higher for the 5th consecutive day. March corn gained 5 ¾ cents on the session and is now trading 16 cents off the January 18 low.

  • Weather forecasts in Argentina have turned hotter and drier going into February. The change in weather has been enough to trigger some short covering in an oversold market. Argentina is forecasted to produce a record corn crop this season after two years of drought.

  • Like corn, the wheat market has traded nicely higher over the past five sessions supported by a break in the US dollar, and short covering. Chicago wheat futures closed through some key technical barriers today and could leave room for additional upside that could support corn futures.

  • Ethanol production dropped 22.4% last week as snow and extreme cold temperatures limited grain movement affected overall production. Ethanol producers used 81.19 million bushels of corn last week, down significantly from the week prior, but cumulative corn usage is still on target to reach USDA targets.

Above: Since posting a low on January 18, March corn has traded higher from being oversold and appears on track to test nearby resistance around 460. If prices turn back lower, initial support on the downside remains near the recent low of 436 ¾, with the next major support level around 415.

Soybeans

Soybeans Action Plan Summary

  • No new action is recommended for 2023 soybeans. Front month soybeans recent downside breakout of the 1290 – 1400 range indicates that there is risk that prices may continue to retreat toward 1180, as forecasts for improved South American weather lessen the potential for the record large global carryout to be reduced. Given the potential of a downside breakout, Grain Market Insider recently recommended adding to sales as the current price level is still historically good. It’s been disappointing how the market has been unable to push higher despite the South American production concerns. Because of that, Grain Market Insider’s concern is that, if the weather pattern doesn’t remain adverse, the path of least resistance could be lower. Grain Market Insider will continue to look at additional sales opportunities, as well as potential re-ownership strategies.

  • No new action is recommended for the 2024 crop. The Nov ’24 contract recently broke through the downside of the 1233 – 1320 range that has been in place since the end of July. With this downside breakout, and considering the bullish influence of adverse South American weather, which appears to be improving, Nov ’24 runs the risk of retreating towards 1150 unless another bullish catalyst enters the market.  If prices find support and turn back higher, Grain Market Insider recently recommended buying Nov ’24 1280 and 1360 calls to give you confidence to make sales against anticipated 2024 production and to protect any sales in an extended rally. Grain Market Insider will also continue to watch for any sales opportunities.

  • No Action is currently recommended for 2025 Soybeans. Grain Market Insider isn’t considering any recommendations at this time for the 2025 crop that will be planted two springs from now, 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:

  • Soybeans traded on both sides of unchanged today but ultimately closed mixed, with March slightly higher, May and July slightly lower, and November up a cent. March soybeans are up on the week so far by 27 cents after rebounding from oversold conditions with support from a dry 10-day Argentine forecast.

  • Soybean meal has been on a steady trend lower since November but appears to have found support near last June’s low of $355.00. Today, meal ended higher while soybean oil was lower despite gains in crude and palm oil. While crush margins have narrowed recently, they remain profitable to processors.

  • The Chinese government in an effort to boost their struggling economy has announce two rounds of stimulus over the past couple days. The potential help of stimulus has pushed some traders to cover short positions with the optimism that China may be looking into the US market for soybeans.

  • South American weather is mixed with the short-term forecast for Argentina on the dry side, but scattered showers are expected for Brazil. There is quite a bit of debate by private analysts about Brazil’s potential production with the lowest guess at 135 mmt but the general consensus is closer to 153 mmt, still below the USDA’s January estimate of 157 mmt.

  • Argentina weather forecasts have turned warmer and drier going into early February. Though Argentina is still forecasted to produce an above-average soybean crop, the weather concerns have triggered short covering in soybean meal, helping to support soybeans overall this week.

Above: After posting the 1201 low, short covering from oversold conditions has enabled March soybeans to rebound. Overhead resistance remains in the 1250 area and again near 1290. If prices turn lower, support comes in around 1200 and then near the November ’21 low of 1181.

Wheat

Market Notes: Wheat

  • Wheat continues to recover, with Chicago posting double-digit gains at the close. There has not been much fundamental news to support this rally, which may indicate that funds are covering short positions on a technical bounce. However, there are a few supportive factors that may have helped; the US Dollar Index was down sharply today, and there is talk that China is trying to stimulate their economy (which may have a positive impact on the commodity complex).

  • In other global news, there is word that China is attempting to de-escalate Red Sea tensions. Exactly what this means is unclear. But if they succeed, it could mean that more vessels resume using the Suez Canal, which would lower freight costs.

  • According to their trade ministry, Iraq is expecting a wheat harvest exceeding 6 mmt. For reference, production in 2023 was 5.19 mmt. With domestic wheat consumption at 4.5 to 5.0 mmt annually, they may have a surplus if these projections are accurate.  

  • As of January 19, EU soft wheat exports totaled 17.4 mmt since the season began on July 1. Last year, exports for the same timeframe reached 18.8 mmt. North African countries were the leading export destinations, with Morocco in the lead at 2.42 mmt.

Chicago Wheat Action Plan Summary

  • No new action is currently recommended for 2023 Chicago wheat. The wheat market has continued to be dominated by lower world export prices that have stymied US export sales and depressed US prices. In early December, Grain Market Insider recommended taking advantage and making a sale on a short covering rally which was sparked by several Chinese purchases of US wheat. Since then, China has been silent in the US wheat export market, and prices remain somewhat elevated. Any remaining 2023 soft red winter wheat should be getting priced into market strength with the goal of having zero bushels unpriced by the end of January. 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 early December, the July ’24 contract has traded mostly sideways to slightly lower after its brief short covering runup on Chinese buying. Although China has since been absent from the US wheat export market, managed funds continue to hold a sizeable, short position that could trigger another short covering rally if a bullish impetus enters the market. At the end of August, Grain Market Insider recommended purchasing July 590 puts to prepare for further price erosion. Back in June, Grain Market Insider recommended two separate sales that averaged about 720 to take advantage of the brief upswing. If the market receives the needed stimulus to move prices back toward this summer’s highs, Grain Market Insider is prepared to recommend adding to current sales levels and possibly even purchasing call options to protect those sales. Otherwise, the current recommended put position will add a layer of protection if prices erode further, and Grain Market Insider will be prepared to recommend covering some of those puts to offset much of the original cost and move toward a net neutral cost for the remaining position.

  • No action is currently recommended for 2025 Chicago Wheat. Since early September, the July ’25 contract has been rangebound, largely between 650 on the bottom and 675 on the top. Grain Market Insider’s strategy for the 2025 crop year up to this point has been to sit tight. Though if prices break out of the topside of this range toward the 690 – 705 area, we will consider taking advantage of the rally and making sales recommendations.

To date, Grain Market Insider has issued the following Chicago wheat recommendations:

Above: Since uncovering support around 573, March Chicago wheat has rallied through both the 100 and 50-day moving averages and is on track to test the 620 – 625 resistance area. If prices turn back lower, initial support remains near 573, with the next major support level around 556.

KC Wheat Action Plan Summary

  • No new action is recommended for 2023 KC wheat crop.  After posting an 80-cent rally in late November and early December, front month KC wheat has languished and drifted lower while retracing about 50% of the upward move. Managed funds continue to carry a significant short position, and even though bullish headwinds like weak US demand and low world wheat prices remain, this could fuel a return to higher prices as winter weather risks add volatility to the market. Grain Market Insider’s strategy is to look for price appreciation this winter, as weather becomes a more prominent market mover, and may consider suggesting additional sales if prices become over-extended.

  • No new action is recommended for 2024 KC wheat. At the end of August, the July ’24 contract broke out of roughly a one-year trading range and stepped down to a 609 ¼ low in late November, largely driven by managed fund selling in the front month on weak US export demand and lower world wheat prices. Since then, the funds covered part of their large short position which also rallied prices in the July ’24 contract. While bearish headwinds remain, managed funds continue to hold a sizable, short position, and price seasonals remain positive for adding weather risk premium. These are two factors that could fuel additional short covering and rally prices in the months ahead. Back in August, Grain Market Insider recommended buying Jul’24 KC wheat 660 puts to protect the downside following the range breakout. As the market recently got further extended into oversold territory and the July contract showed signs of support near 630, Grain Market Insider recommended exiting 75% of the originally recommended position. Moving forward, Grain Market Insider is prepared to recommend exiting the last 25% on any further supportive market developments.

  • No action is currently recommended for 2025 KC Wheat. Grain Market Insider isn’t considering any recommendations at this time for the 2025 crop that will be planted next fall. It will probably be mid-winter before Insider starts considering the first sales targets.

To date, Grain Market Insider has issued the following KC recommendations:

Above: With little bullish news in the market, KC wheat has been drifting sideways to lower since the middle of December with the 50-day moving average acting as nearby resistance.  If bullish news does enter the scene to move prices higher, major resistance beyond the 50-day moving average lies between 650 and 678. Otherwise, major support below the market remains between 595 and 575.

Mpls Wheat Action Plan Summary

  • No new action is currently recommended for the 2023 New Crop. For much of the second half of last year, driven mostly by fund selling and slow US export demand, front month Minneapolis wheat slowly stair-stepped lower until hitting the November low. During this time, managed funds also established a record net short position. Since then, with the market mostly sideways, the November low of 697 ½ has held, and prices have pierced the 50-day moving average just once. Although bearish headwinds remain, the large fund net short position could fuel a short-covering rally if a bullish catalyst enters the scene to move prices to close above the 50-day moving average. Back in June, Grain Market Insider made a sales recommendation during the July rally near 820, and with that sale in place, Grain Market Insider’s strategy is to look for price appreciation this winter with an eye on considering additional sales around 725 – 775, and again north of 800.

  • No new action is recommended for 2024 KC wheat. In early December the July ’24 contract posted a 70-cent rally mostly on short covering activity in the front month contracts. Since then, July ’24 has drifted lower as growing conditions have seen improvement. Still, much of the growing season remains, and managed funds continue to carry a significant short position in old crop. Even though bullish headwinds remain, this could fuel another short covering rally if any production concerns come to the forefront. Back in August, Grain Market Insider recommended buying Jul ’24 KC wheat 660 puts to protect the downside. As the market got further extended into oversold territory and July ’24 showed signs of support near 630, Grain Market Insider recommended exiting 75% of the originally recommended position. Grain Market Insider remains prepared to recommend exiting the last 25% on any further supportive market developments.

  • No action is currently recommended for the 2025 Minneapolis wheat crop. Grain Market Insider isn’t considering any recommendations at this time for the 2025 crop that will be planted two springs from now. It will probably be mid-winter before Grain Market Insider starts considering the first sales targets.

To date, Grain Market Insider has issued the following Minneapolis wheat recommendations:

Above: Since the March contract closed below 700 support in early January, the 700 area has acted as resistance for the recent rally. If prices close above that area, the next areas of resistance may come in between 721 and 734. Otherwise, below the market support remains near 669.

Other Charts / Weather

Brazil 1-week forecast precipitation, percent of normal, courtesy of the National Weather Service, Climate Prediction Center.

Argentina 1-week forecast precipitation, percent of normal, courtesy of the National Weather Service, Climate Prediction Center.

|

1-23 End of Day: Soybeans Recoup USDA Report Losses While Corn Consolidates

ByGrain Market Insider

All prices as of 2:00 pm Central Time

Grain Market Highlights

  • Quiet two-sided trade kept the corn market in consolidation mode for the fourth day in a row with little news to sway the market significantly in either direction. As prices settled slightly weaker in the front months relative to the deferred.

  • Strength from soybean meal and oil, and poor early yields from Brazil’s soy harvest, helped to lead soybeans higher as they recovered the losses from the USDA’s January report and from being oversold.

  • Recent rains that could bring Australia’s wheat crop to 30 mmt, and a rise in the US dollar to 6-week highs, may have added resistance to the wheat complex. As the wheat complex closed the day mixed with KC leading the strength, while Chicago and Minneapolis lagged.

  • To see the updated US 7-day precipitation forecast, as well as the Brazil 2-week forecast total precipitation and GRACE-Based drought indicator, courtesy of the National Weather Service, Climate Prediction Center, and NDMC scroll down to the other Charts/Weather section.

Note – For the best viewing experience, some Grain Market Insider content is best viewed with your phone held horizontally.

Corn

Corn Action Plan Summary

  • No new action is recommended for 2023 corn. Front month corn has languished in a sideways to lower trend since printing a high in October, with a general lack of bullish news and an estimated US carryout over 2.1 billion bushels. The failure of the USDA’s January report to provide the bullish news necessary to turn prices higher is disappointing and the market remains at risk of remaining in the same pattern. With that being said, the market does show signs of being oversold, and managed funds hold a sizable net short position, which could trigger a short covering rally if a bullish catalyst enters the scene. For now, Grain Market Insider will continue to hold tight on any further sales recommendations for the next few weeks with the objective of seeking out better pricing opportunities. If the market has not turned around by then, Grain Market Insider may sit tight on the next sales recommendations until spring.

  • No new action is recommended for 2024 corn. Following the January USDA Supply and Demand update, Dec ’24 broke through the bottom end of the 485 ¾ to 602 range that had been in place since February ’22. While this is a disappointing development, bear spreading has allowed Dec ’24 to maintain more of its value versus old crop, as traders attempt to price in a larger 2023 carryout with more uncertainty remaining for the 2024 crop. Additionally, Dec ’24 does show signs of being oversold, which is supportive if a bullish catalyst enters the scene. Grain Market Insider continues to watch for signs of a change in the current trend to look at recommending making additional sales and buying Dec ’24 call options.

  • No Action is currently recommended for 2025 corn. Grain Market Insider isn’t considering any recommendations at this time for the 2025 crop that will be planted two springs from now. It will probably be late winter or early spring of 2024 before Grain Market Insider starts considering the first sales targets.

To date, Grain Market Insider has issued the following corn recommendations:

  • The corn market continued to consolidate for the fourth consecutive day, as it closed slightly higher following two-sided trade. Significant market news remains relatively quiet, nor have there been any new private corn export sales reported since last Tuesday, but buying strength in the soybean market did help keep a floor under corn futures during the session.

  • AgRural estimates Brazil’s first corn harvest to be 7.9% complete, as compared to 5.1% last week and 5.9% last year. The agency also estimates that seeding of the second (safrinha) corn crop is 4.9% complete versus 0.4% last week, and 1% last year.

  • A Brazilian crop watcher reduced its estimate of Brazil’s 23/24 corn production in its latest release, by 11% to 118.5 mmt. The reduction is likely due to delays in the soybean crop which would lead to a potential drop in planted area as planting of the second (safrinha) crop gets pushed back. The USDA currently estimates Brazil’s corn production at 127 mmt.

  • It is also estimated that if Brazil’s production does fall that much, it is possible that the country’s 23/24 exports could fall to 35 mmt from last year’s 56 mmt.  An export drop of 21 mmt for Brazil could open the door for increased US exports for the coming year.

  • US corn export prices are currently below both Brazil and Argentina through February, after which Argentina is more competitive.

Above: Earlier in January, March corn broke through 460 support, which is now nearby resistance, and retreated toward nearby support around 440. The market shows signs of being oversold, which can be supportive if bullish information enters the market. If prices break below 440, the next major support level comes in near 415. Overhead, if prices rally above 460, additional resistance may enter in between 470-480.

Soybeans

Soybeans Action Plan Summary

  • No new action is recommended for 2023 soybeans. Front month soybeans recent downside breakout of the 1290 – 1400 range indicates that there is risk that prices may continue to retreat toward 1180, as forecasts for improved South American weather lessen the potential for the record large global carryout to be reduced. Given the potential of a downside breakout, Grain Market Insider recently recommended adding to sales as the current price level is still historically good. It’s been disappointing how the market has been unable to push higher despite the South American production concerns. Because of that, Grain Market Insider’s concern is that, if the weather pattern doesn’t remain adverse, the path of least resistance could be lower. Grain Market Insider will continue to look at additional sales opportunities, as well as potential re-ownership strategies.

  • No new action is recommended for the 2024 crop. The Nov ’24 contract recently broke through the downside of the 1233 – 1320 range that has been in place since the end of July. With this downside breakout, and considering the bullish influence of adverse South American weather, which appears to be improving, Nov ’24 runs the risk of retreating towards 1150 unless another bullish catalyst enters the market.  If prices find support and turn back higher, Grain Market Insider recently recommended buying Nov ’24 1280 and 1360 calls to give you confidence to make sales against anticipated 2024 production and to protect any sales in an extended rally. Grain Market Insider will also continue to watch for any sales opportunities.

  • No Action is currently recommended for 2025 Soybeans. Grain Market Insider isn’t considering any recommendations at this time for the 2025 crop that will be planted two springs from now, 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:

  • Soybeans ended the day significantly higher and are now 38 cents off last Thursday’s low. Support came from higher soybean meal and oil, and some of the early yields from the beginning of Brazil’s soy harvest that have come in poorly.

  • Over the next week, Argentina is expected to be relatively dry, but the good growing conditions they have had so far this season should keep the crop in good shape. Brazil is expected to receive scattered showers over the next week with some dryness in the western region of the country.

  • The big question over the next few months will be the size of South America’s total production as the USDA is likely forecasting Brazilian production too high but may be predicting Argentina’s too low. Their guess of 157 mmt for Brazil is above most analysts’ expectations which range between 150 and 155 mmt, with some much lower, but increases by Argentina could offset some of those losses.

  • Demand has been mixed with domestic crush very strong and December’s crush numbers breaking records, but export demand has been lagging with exports below last year by 20%. Crush margins have narrowed over the past few weeks, and the US’s export window for soybeans is nearing its end with South American harvest underway.

Above: After posting the 1201 low, short covering from oversold conditions has enabled March soybeans to rebound somewhat. Overhead resistance remains in the 1250 area and again near 1290. If prices turn lower, support comes in around 1200 and then near the November ’21 low of 1181.

Wheat

Market Notes: Wheat

  • Wheat closed mixed amongst the three futures classes. Despite being about a dime higher at one point, March Chicago wheat settled unchanged, potentially pressured by another rise in the US Dollar Index. Some weakness may have also stemmed from recent rains in Australia that, according to some private estimates, may boost their crop to 30 mmt. For reference, the USDA is at 25.5 mmt.

  • According to the EU’s Monitoring Agricultural Resources unit, winter crops in northern European countries may experience damage due to a cold front. However, Russian wheat is said to be protected by thick snow cover, so not much damage is expected there.

  • The Canadian wheat production estimate for 24/25 is seen rising 4.2% to 33.3 mmt, according to an estimate from Agriculture and Agri-Food Canada (AAFC). While planted acreage is expected to be down slightly, yields are expected to be higher.

  • China has been encouraging hog producers to reduce capacity after farmers lost about eleven dollars per head on average. While this does not directly affect the wheat market, it is important to note that it may affect the commodity complex as a whole, especially if Chinese hog farmers require less feed grain. Additionally, as they try to become more self-sufficient, there are concerns that down the road China will import less grain in general.

Chicago Wheat Action Plan Summary

  • No new action is currently recommended for 2023 Chicago wheat. The wheat market has continued to be dominated by lower world export prices that have stymied US export sales and depressed US prices. In early December, Grain Market Insider recommended taking advantage and making a sale on a short covering rally which was sparked by several Chinese purchases of US wheat. Since then, China has been silent in the US wheat export market, and prices remain somewhat elevated. Any remaining 2023 soft red winter wheat should be getting priced into market strength with the goal of having zero bushels unpriced by the end of January. 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 early December, the July ’24 contract has traded mostly sideways to slightly lower after its brief short covering runup on Chinese buying. Although China has since been absent from the US wheat export market, managed funds continue to hold a sizeable, short position that could trigger another short covering rally if a bullish impetus enters the market. At the end of August, Grain Market Insider recommended purchasing July 590 puts to prepare for further price erosion. Back in June, Grain Market Insider recommended two separate sales that averaged about 720 to take advantage of the brief upswing. If the market receives the needed stimulus to move prices back toward this summer’s highs, Grain Market Insider is prepared to recommend adding to current sales levels and possibly even purchasing call options to protect those sales. Otherwise, the current recommended put position will add a layer of protection if prices erode further, and Grain Market Insider will be prepared to recommend covering some of those puts to offset much of the original cost and move toward a net neutral cost for the remaining position.

  • No action is currently recommended for 2025 Chicago Wheat. Since early September, the July ’25 contract has been rangebound, largely between 650 on the bottom and 675 on the top. Grain Market Insider’s strategy for the 2025 crop year up to this point has been to sit tight. Though if prices break out of the topside of this range toward the 690 – 705 area, we will consider taking advantage of the rally and making sales recommendations.

To date, Grain Market Insider has issued the following Chicago wheat recommendations:

Above: March Chicago wheat has been consolidating after uncovering initial support just below the market around 573. If that holds, the market may test resistance near the 50-day moving average, and again between 620 and 625, while heavy resistance remains near 650. If 573 does not hold, the market may run the risk of retreating and testing the next level of major support near 556.

KC Wheat Action Plan Summary

  • No new action is recommended for 2023 KC wheat crop.  After posting an 80-cent rally in late November and early December, front month KC wheat has languished and drifted lower while retracing about 50% of the upward move. Managed funds continue to carry a significant short position, and even though bullish headwinds like weak US demand and low world wheat prices remain, this could fuel a return to higher prices as winter weather risks add volatility to the market. Grain Market Insider’s strategy is to look for price appreciation this winter, as weather becomes a more prominent market mover, and may consider suggesting additional sales if prices become over-extended.

  • No new action is recommended for 2024 KC wheat. At the end of August, the July ’24 contract broke out of roughly a one-year trading range and stepped down to a 609 ¼ low in late November, largely driven by managed fund selling in the front month on weak US export demand and lower world wheat prices. Since then, the funds covered part of their large short position which also rallied prices in the July ’24 contract. While bearish headwinds remain, managed funds continue to hold a sizable, short position, and price seasonals remain positive for adding weather risk premium. These are two factors that could fuel additional short covering and rally prices in the months ahead. Back in August, Grain Market Insider recommended buying Jul’24 KC wheat 660 puts to protect the downside following the range breakout. As the market recently got further extended into oversold territory and the July contract showed signs of support near 630, Grain Market Insider recommended exiting 75% of the originally recommended position. Moving forward, Grain Market Insider is prepared to recommend exiting the last 25% on any further supportive market developments.

  • No action is currently recommended for 2025 KC Wheat. Grain Market Insider isn’t considering any recommendations at this time for the 2025 crop that will be planted next fall. It will probably be mid-winter before Insider starts considering the first sales targets.

To date, Grain Market Insider has issued the following KC recommendations:

Above: With little bullish news in the market, KC wheat has been drifting sideways to lower since the middle of December with the 50-day moving average (632) acting as nearby resistance.  If bullish news does enter the scene to move prices higher, major resistance beyond 632 lies between 650 and 678. Otherwise, major support below the market remains between 595 and 575.

Mpls Wheat Action Plan Summary

  • No new action is currently recommended for the 2023 New Crop. For much of the second half of last year, driven mostly by fund selling and slow US export demand, front month Minneapolis wheat slowly stair-stepped lower until hitting the November low. During this time, managed funds also established a record net short position. Since then, with the market mostly sideways, the November low of 697 ½ has held, and prices have pierced the 50-day moving average just once. Although bearish headwinds remain, the large fund net short position could fuel a short-covering rally if a bullish catalyst enters the scene to move prices to close above the 50-day moving average. Back in June, Grain Market Insider made a sales recommendation during the July rally near 820, and with that sale in place, Grain Market Insider’s strategy is to look for price appreciation this winter with an eye on considering additional sales around 725 – 775, and again north of 800.

  • No new action is recommended for 2024 KC wheat. In early December the July ’24 contract posted a 70-cent rally mostly on short covering activity in the front month contracts. Since then, July ’24 has drifted lower as growing conditions have seen improvement. Still, much of the growing season remains, and managed funds continue to carry a significant short position in old crop. Even though bullish headwinds remain, this could fuel another short covering rally if any production concerns come to the forefront. Back in August, Grain Market Insider recommended buying Jul ’24 KC wheat 660 puts to protect the downside. As the market got further extended into oversold territory and July ’24 showed signs of support near 630, Grain Market Insider recommended exiting 75% of the originally recommended position. Grain Market Insider remains prepared to recommend exiting the last 25% on any further supportive market developments.

  • No action is currently recommended for the 2025 Minneapolis wheat crop. Grain Market Insider isn’t considering any recommendations at this time for the 2025 crop that will be planted two springs from now. It will probably be mid-winter before Grain Market Insider starts considering the first sales targets.

To date, Grain Market Insider has issued the following Minneapolis wheat recommendations:

Above: Since the March contract closed below 700 support in early January, the 700 area has acted as resistance for the recent rally. If prices close above that area, the next areas of resistance may come in between 721 and 734. Otherwise, below the market support remains near 669.

Other Charts / Weather

US 7-day precipitation forecast courtesy of NOAA, Weather Prediction Center.

Brazil 2-week forecast total precipitation courtesy of the National Weather Service, Climate Prediction Center.

|

1-22 End of Day: Markets Settle Firm to Higher on Little Fresh News

ByGrain Market Insider

All prices as of 2:00 pm Central Time

Grain Market Highlights

  • Two-sided choppy traded dominated the corn market in a tight 4-cent range with little fresh news to move prices significantly in either direction. Support spilled over from soybeans to help corn prices settle fractionally in the green, as prices continue to consolidate.

  • Solid weekly export inspections and a strong soybean oil market that posted a bullish reversal from Friday’s weakness lent support to soybeans, which closed higher for the third day in a row after testing 1200 support in the March contract.

  • Despite export inspections that came in on the low end of expectations, and weakness in Matif wheat futures. The wheat complex ended the day mostly firm but mixed with Chicago and Minneapolis mostly higher, while nearby KC settled weak relative to the deferred.

  • To see the updated US 7-day precipitation forecast, 8-14 day temperature and precipitation outlooks as well as the Brazil 2 week forecast total precipitation courtesy of the National Weather Service, Climate Prediction Center, scroll down to the other Charts/Weather section.

Note – For the best viewing experience, some Grain Market Insider content is best viewed with your phone held horizontally.

Corn

Corn Action Plan Summary

  • No new action is recommended for 2023 corn. Front month corn has languished in a sideways to lower trend since printing a high in October, with a general lack of bullish news and an estimated US carryout over 2.1 billion bushels. The failure of the USDA’s January report to provide the bullish news necessary to turn prices higher is disappointing and the market remains at risk of remaining in the same pattern. With that being said, the market does show signs of being oversold, and managed funds hold a sizable net short position, which could trigger a short covering rally if a bullish catalyst enters the scene. For now, Grain Market Insider will continue to hold tight on any further sales recommendations for the next few weeks with the objective of seeking out better pricing opportunities. If the market has not turned around by then, Grain Market Insider may sit tight on the next sales recommendations until spring.

  • No new action is recommended for 2024 corn. Following the January USDA Supply and Demand update, Dec ’24 broke through the bottom end of the 485 ¾ to 602 range that had been in place since February ’22. While this is a disappointing development, bear spreading has allowed Dec ’24 to maintain more of its value versus old crop, as traders attempt to price in a larger 2023 carryout with more uncertainty remaining for the 2024 crop. Additionally, Dec ’24 does show signs of being oversold, which is supportive if a bullish catalyst enters the scene. Grain Market Insider continues to watch for signs of a change in the current trend to look at recommending making additional sales and buying Dec ’24 call options.

  • No Action is currently recommended for 2025 corn. Grain Market Insider isn’t considering any recommendations at this time for the 2025 crop that will be planted two springs from now. It will probably be late winter or early spring of 2024 before Grain Market Insider starts considering the first sales targets.

To date, Grain Market Insider has issued the following corn recommendations:

  • Another quiet news day in the grain markets but buying strength in the soybean market did help pull corn futures slightly higher during the session. March corn gained ¼ cents on the day as prices have consolidated the past five sessions around the USDA report day low.

  • Weekly corn export inspections were within expectations at 28.1 mb (713,000 mt). Total inspections for the marketing are now at 579 mb, up 28% from last year. Corn inspections are running ahead of the USDA projections.

  • South American weather is looking to trend a little drier in southern areas, but overall weather patterns are staying favorable for crops.

  • Brazil’s soybean harvest is progressing ahead of average pace. Brazil’s soybean crop is estimated at 6% harvested, up from 1.8% last year. The key crop production state of Mato Grasso is nearly 13% complete. The early soybean harvest is allowing Brazil producers to begin planting of the key second crop corn in an earlier time window.

Above: Earlier in January, March corn broke through 460 support, which is now nearby resistance, and retreated toward nearby support around 440. The market shows signs of being oversold, which can be supportive if bullish information enters the market. If prices break below 440, the next major support level comes in near 415. Overhead, if prices rally above 460, additional resistance may enter in between 470-480.

Above: Corn Managed Money Funds net position as of Tuesday, January 16. Net position in Green versus price in Red. Managers net sold 29,819 contracts between January 10 – 16, bringing their total position to a net short 260,542 contracts.

Soybeans

Soybeans Action Plan Summary

  • No new action is recommended for 2023 soybeans. Front month soybeans recent downside breakout of the 1290 – 1400 range indicates that there is risk that prices may continue to retreat toward 1180, as forecasts for improved South American weather lessen the potential for the record large global carryout to be reduced. Given the potential of a downside breakout, Grain Market Insider recently recommended adding to sales as the current price level is still historically good. It’s been disappointing how the market has been unable to push higher despite the South American production concerns. Because of that, Grain Market Insider’s concern is that, if the weather pattern doesn’t remain adverse, the path of least resistance could be lower. Grain Market Insider will continue to look at additional sales opportunities, as well as potential re-ownership strategies.

  • No new action is recommended for the 2024 crop. The Nov ’24 contract recently broke through the downside of the 1233 – 1320 range that has been in place since the end of July. With this downside breakout, and considering the bullish influence of adverse South American weather, which appears to be improving, Nov ’24 runs the risk of retreating towards 1150 unless another bullish catalyst enters the market.  If prices find support and turn back higher, Grain Market Insider recently recommended buying Nov ’24 1280 and 1360 calls to give you confidence to make sales against anticipated 2024 production and to protect any sales in an extended rally. Grain Market Insider will also continue to watch for any sales opportunities.

  • No Action is currently recommended for 2025 Soybeans. Grain Market Insider isn’t considering any recommendations at this time for the 2025 crop that will be planted two springs from now, 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:

  • Soybeans ended the day higher with the March contract now 23 cents off its low from last Thursday. Soybean meal continued its trek lower today, while soybean oil was supported from higher crude oil and palm oil.

  • Today’s export inspections were decent with 42.7 mb inspected for the week ending January 18. Total inspections are now at 983 mb for 23/24 which is down 22% from the previous year. No flash sales were reported today, but there was a large sale to China last Friday.

  • South American weather is forecast to be slightly drier over the next 10 days with the decline in precipitation mainly in Argentina and Brazil’s Mato Grosso do Sul. The majority of Brazil is expected to continue getting scattered showers as harvest begins.

  • Brazil is currently 6% complete with harvest which is up 2% from last week, and early yields have been poor, but the majority of this early harvested crop is the part that was under the most stress from dry and hot weather. More accurate yield estimates will not be available until harvest is further along.

Above: Soybeans have steadily retreated after leaving a 6-cent gap between 1290 ¾ and 1296 ¾. The market is showing signs of being extremely oversold, which can be supportive if bullish information enters the market to turn prices around. If prices do turn back higher, resistance rests around the price gap and again near the 50-day moving average. Otherwise, the next major support level comes in near the November ’21 low of 1181.

Above: Soybean Managed Money Funds net position as of Tuesday, January 16. Net position in Green versus price in Red. Money Managers net sold 45,549 contracts between January 10 – 16, bringing their total position to a net short 76,797 contracts.

Wheat

Market Notes: Wheat

  • Despite a lack of fresh news, wheat was able to close mostly higher today following a day of two sided trade. This was also in the face of a mostly lower close for Matif wheat futures. With US futures at or very near oversold levels technically, this may indicate that the market has found a near term bottom. This marks the fourth higher session for March Chicago wheat.

  • Weekly wheat inspections totaling 11.6 mb bring the 23/24 total inspections to 394 mb, which is down 16% from last year. Inspections are also running behind the pace needed to meet the USDA’s 725 mb goal for 23/24 wheat exports.

  • According to the CFTC, as of January 16, managed funds were short 68,575 contracts of Chicago wheat. That is an addition of 10,587 contracts from the previous week, representing an 18.3% increase to their short position.

  • Due to the ongoing issues in the Red Sea, more and more European vessels transporting wheat are being re-routed to avoid using the Suez Canal. According to the World Trade Organization, shipments from Russia, Ukraine, and the EU using alternative routes have increased 42% by mid-January. This compares to just 8% in December.

Chicago Wheat Action Plan Summary

  • No new action is currently recommended for 2023 Chicago wheat. The wheat market has continued to be dominated by lower world export prices that have stymied US export sales and depressed US prices. In early December, Grain Market Insider recommended taking advantage and making a sale on a short covering rally which was sparked by several Chinese purchases of US wheat. Since then, China has been silent in the US wheat export market, and prices remain somewhat elevated. Any remaining 2023 soft red winter wheat should be getting priced into market strength with the goal of having zero bushels unpriced by the end of January. 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 early December, the July ’24 contract has traded mostly sideways to slightly lower after its brief short covering runup on Chinese buying. Although China has since been absent from the US wheat export market, managed funds continue to hold a sizeable, short position that could trigger another short covering rally if a bullish impetus enters the market. At the end of August, Grain Market Insider recommended purchasing July 590 puts to prepare for further price erosion. Back in June, Grain Market Insider recommended two separate sales that averaged about 720 to take advantage of the brief upswing. If the market receives the needed stimulus to move prices back toward this summer’s highs, Grain Market Insider is prepared to recommend adding to current sales levels and possibly even purchasing call options to protect those sales. Otherwise, the current recommended put position will add a layer of protection if prices erode further, and Grain Market Insider will be prepared to recommend covering some of those puts to offset much of the original cost and move toward a net neutral cost for the remaining position.

  • No action is currently recommended for 2025 Chicago Wheat. Since early September, the July ’25 contract has been rangebound, largely between 650 on the bottom and 675 on the top. Grain Market Insider’s strategy for the 2025 crop year up to this point has been to sit tight. Though if prices break out of the topside of this range toward the 690 – 705 area, we will consider taking advantage of the rally and making sales recommendations.

To date, Grain Market Insider has issued the following Chicago wheat recommendations:

Above: March Chicago wheat has been consolidating after uncovering initial support just below the market around 573. If that holds, the market may test resistance near the 50-day moving average, and again between 620 and 625, while heavy resistance remains near 650. If 573 does not hold, the market may run the risk of retreating and testing the next level of major support near 556.

Above: Chicago Wheat Managed Money Funds net position as of Tuesday, January 16. Net position in Green versus price in Red. Money Managers net sold 10,587 contracts between January 10 – 16, bringing their total position to a net short 68,575 contracts.

KC Wheat Action Plan Summary

  • No new action is recommended for 2023 KC wheat crop.  After posting an 80-cent rally in late November and early December, front month KC wheat has languished and drifted lower while retracing about 50% of the upward move. Managed funds continue to carry a significant short position, and even though bullish headwinds like weak US demand and low world wheat prices remain, this could fuel a return to higher prices as winter weather risks add volatility to the market. Grain Market Insider’s strategy is to look for price appreciation this winter, as weather becomes a more prominent market mover, and may consider suggesting additional sales if prices become over-extended.

  • No new action is recommended for 2024 KC wheat. At the end of August, the July ’24 contract broke out of roughly a one-year trading range and stepped down to a 609 ¼ low in late November, largely driven by managed fund selling in the front month on weak US export demand and lower world wheat prices. Since then, the funds covered part of their large short position which also rallied prices in the July ’24 contract. While bearish headwinds remain, managed funds continue to hold a sizable, short position, and price seasonals remain positive for adding weather risk premium. These are two factors that could fuel additional short covering and rally prices in the months ahead. Back in August, Grain Market Insider recommended buying Jul’24 KC wheat 660 puts to protect the downside following the range breakout. As the market recently got further extended into oversold territory and the July contract showed signs of support near 630, Grain Market Insider recommended exiting 75% of the originally recommended position. Moving forward, Grain Market Insider is prepared to recommend exiting the last 25% on any further supportive market developments.

  • No action is currently recommended for 2025 KC Wheat. Grain Market Insider isn’t considering any recommendations at this time for the 2025 crop that will be planted next fall. It will probably be mid-winter before Insider starts considering the first sales targets.

To date, Grain Market Insider has issued the following KC recommendations:

Above: With little bullish news in the market, KC wheat has been drifting sideways to lower since the middle of December with the 50-day moving average (632) acting as nearby resistance.  If bullish news does enter the scene to move prices higher, major resistance beyond 632 lies between 650 and 678. Otherwise, major support below the market remains between 595 and 575.

Above: KC Wheat Managed Money Funds net position as of Tuesday, January 16. Net position in Green versus price in Red. Money Managers net sold 4,426 contracts between January 10 – 16, bringing their total position to a net short 38,652 contracts.

Mpls Wheat Action Plan Summary

  • No new action is currently recommended for the 2023 New Crop. For much of the second half of last year, driven mostly by fund selling and slow US export demand, front month Minneapolis wheat slowly stair-stepped lower until hitting the November low. During this time, managed funds also established a record net short position. Since then, with the market mostly sideways, the November low of 697 ½ has held, and prices have pierced the 50-day moving average just once. Although bearish headwinds remain, the large fund net short position could fuel a short-covering rally if a bullish catalyst enters the scene to move prices to close above the 50-day moving average. Back in June, Grain Market Insider made a sales recommendation during the July rally near 820, and with that sale in place, Grain Market Insider’s strategy is to look for price appreciation this winter with an eye on considering additional sales around 725 – 775, and again north of 800.

  • No new action is recommended for 2024 Minneapolis wheat. After trading to a peak of 871 ¾ last August, the Sept ’24 gradually retreated to a low in November in concert with the front month as managed funds built a record large net short position mostly on weak US export demand. And while Sept ’24 has failed to close above the 50-day moving average since late August, the 726 ¼ November low remains intact. Although bearish headwinds remain, the large fund net short position could fuel a short-covering rally if prices move higher and close above the 50-day moving average. Back in August, Grain Market Insider recommended buying July ’24 KC wheat 660 puts to protect the downside following a 1-year range breakout in KC wheat, and in November recommended exiting 75% of the originally recommended position as July ’24 KC wheat showed signs of support around 630. While in the same time frame, Grain Market Insider also recommended making an additional sale as the Sept ’24 Minneapolis contract broke long time 743 support. For now, Grain Market Insider remains prepared to recommend exiting the last 25% of the open puts on any further supportive market developments.

  • No action is currently recommended for the 2025 Minneapolis wheat crop. Grain Market Insider isn’t considering any recommendations at this time for the 2025 crop that will be planted two springs from now. It will probably be mid-winter before Grain Market Insider starts considering the first sales targets.

To date, Grain Market Insider has issued the following Minneapolis wheat recommendations:

Above: The breach of 700 in the March contract could indicate further weakness with the next area of major support down near 669. The market does show signs of being oversold, which is supportive if the market turns back higher. Overhead initial resistance lies around 700 and then again between 721 and 734.

Above: Minneapolis Wheat Managed Money Funds net position as of Tuesday, January 16. Net position in Green versus price in Red. Money Managers net sold 1,074 contracts between January 10 – 16, bringing their total position to a net short 29,711 contracts.

Other Charts / Weather

US 7-day precipitation forecast courtesy of NOAA, Weather Prediction Center.

Brazil 2-week forecast total precipitation courtesy of the National Weather Service, Climate Prediction Center.

|

01-19 End of Day: Corn and Wheat Rebound from Being Oversold on Solid Export Sales

ByGrain Market Insider

All prices as of 2:00 pm Central Time

Grain Market Highlights

  • Export sales that exceeded the top end of expectations gave a lift to the corn market that has been in search of positive news. While the export news was positive and lent support to the front months, corn futures gave back much of the day’s gains, settling 4 cents off the high.

  • Pressured by weaker products, soybeans were unable to hang onto the gains from overnight, but held losses to a minimum, with solid export sales that came in within expectations, and the first flash sale in a month totaling 11.6 mb to China.

  • The losses in both soybean meal and oil (SMH down $4.80 and BOH down 0.72 cents) not only weighed on soybeans, but also Board crush margins. Though they remain profitable, margins dropped 18 ¼ cents in the March contracts, giving up nearly 75% of the year’s gains.

  • Weekly export sales for wheat were well above expectations and likely triggered some short covering ahead of the weekend. All three wheat classes ended the day in positive territory, with Chicago and Minneapolis closing in the upper end of their respective ranges.

  • To see the updated US 6-10 day temperature and precipitation outlooks as well as the Brazil 2 week forecast total precipitation courtesy of the National Weather Service, Climate Prediction Center, scroll down to the other Charts/Weather section.

Note – For the best viewing experience, some Grain Market Insider content is best viewed with your phone held horizontally.

Corn

Corn Action Plan Summary

  • No new action is recommended for 2023 corn. Front month corn has languished in a sideways to lower trend since printing a high in October, with a general lack of bullish news and an estimated US carryout over 2.1 billion bushels. The failure of the USDA’s January report to provide the bullish news necessary to turn prices higher is disappointing and the market remains at risk of remaining in the same pattern. With that being said, the market does show signs of being oversold, and managed funds hold a sizable net short position, which could trigger a short covering rally if a bullish catalyst enters the scene. For now, Grain Market Insider will continue to hold tight on any further sales recommendations for the next few weeks with the objective of seeking out better pricing opportunities. If the market has not turned around by then, Grain Market Insider may sit tight on the next sales recommendations until spring.

  • No new action is recommended for 2024 corn. Following the January USDA Supply and Demand update, Dec ’24 broke through the bottom end of the 485 ¾ to 602 range that had been in place since February ’22. While this is a disappointing development, bear spreading has allowed Dec ’24 to maintain more of its value versus old crop, as traders attempt to price in a larger 2023 carryout with more uncertainty remaining for the 2024 crop. Additionally, Dec ’24 does show signs of being oversold, which is supportive if a bullish catalyst enters the scene. Grain Market Insider continues to watch for signs of a change in the current trend to look at recommending making additional sales and buying Dec ’24 call options.

  • No Action is currently recommended for 2025 corn. Grain Market Insider isn’t considering any recommendations at this time for the 2025 crop that will be planted two springs from now. It will probably be late winter or early spring of 2024 before Grain Market Insider starts considering the first sales targets.

To date, Grain Market Insider has issued the following corn recommendations:

  • Corn futures finished mixed to slightly higher to end the week, as the March contract gained 1 ½ cents on the session. A better-than-expected week of export sales helped push corn markets higher to start the session, but selling pressure limited gains. For the week, March futures finished 3 cents lower and has traded lower for 6 consecutive weeks.

  • Weekly corn export sales were above the top end of analyst estimates at 49.3 mb (1.251 mmt) as sales improved after two weeks of holiday reduced trade. Total sales commitments are now at 1.241 bb for the 23/24 marketing year and up 36% from last year.

  • Mexico continues to be the largest buyer of US corn on the export markets, adding 637,000 mt of new sales last week. China was still absent from the export report for US corn, limiting buying support for the session.

  • China’s total corn imported for the 2023 calendar year reached 27.13 mmt, up 32% year over year.  December saw a large jump in corn imports at 4.950 mmt, up 471% year over year and a large supply of South American corn filled Chinese demand. The large December imports will likely limit China in the US corn export market until the summer months.

  • South America weather looks to maintain a favorable pattern for crop production in the near-term.  The improved weather overall should support a potential second Brazil corn crop and help maintain a forecasted record corn production from Argentina later this spring/summer.

Above: Earlier in January, March corn broke through 460 support, which is now nearby resistance, and retreated toward nearby support around 440. The market shows signs of being oversold, which can be supportive if bullish information enters the market. If prices break below 440, the next major support level comes in near 415. Overhead, if prices rally above 460, additional resistance may enter in between 470-480.

Soybeans

Soybeans Action Plan Summary

  • No new action is recommended for 2023 soybeans. Front month soybeans recent downside breakout of the 1290 – 1400 range indicates that there is risk that prices may continue to retreat toward 1180, as forecasts for improved South American weather lessen the potential for the record large global carryout to be reduced. Given the potential of a downside breakout, Grain Market Insider recently recommended adding to sales as the current price level is still historically good. It’s been disappointing how the market has been unable to push higher despite the South American production concerns. Because of that, Grain Market Insider’s concern is that, if the weather pattern doesn’t remain adverse, the path of least resistance could be lower. Grain Market Insider will continue to look at additional sales opportunities, as well as potential re-ownership strategies.

  • No new action is recommended for the 2024 crop. The Nov ’24 contract recently broke through the downside of the 1233 – 1320 range that has been in place since the end of July. With this downside breakout, and considering the bullish influence of adverse South American weather, which appears to be improving, Nov ’24 runs the risk of retreating towards 1150 unless another bullish catalyst enters the market.  If prices find support and turn back higher, Grain Market Insider recently recommended buying Nov ’24 1280 and 1360 calls to give you confidence to make sales against anticipated 2024 production and to protect any sales in an extended rally. Grain Market Insider will also continue to watch for any sales opportunities.

  • No Action is currently recommended for 2025 Soybeans. Grain Market Insider isn’t considering any recommendations at this time for the 2025 crop that will be planted two springs from now, 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:

  • Soybeans began the day trading higher, with March beans up as much as 14 cents at one point, but faded throughout the day to end with a lower close. Both soybean meal and oil also faded throughout the day to a lower close. Lower crude oil and improved rainfall in Brazil has added to pressure in the soy complex.

  • For the week, March soybeans lost 11 cents, March soybean meal lost $5.60, and March soybean oil lost 1.35 cents. This was the fifth lower consecutive weekly close in soybeans, as non-commercials have established and continue to add to a net short position. There is some support at the 12-dollar level, but if that breaks, last year’s low is down at 1145 ¼.

  • Some encouraging news earlier in the day was the announcement of a large flash sale of 276,000 metric tons of soybeans for delivery to China in the 23/24 marketing year. Chinese imports from Brazil have slowed down, which points to US soybeans becoming more competitive with South America.

  • Today’s export sales report was also stronger than expected for soybeans, with an increase of 28.7 mb of export sales for 23/24 and an increase of 0.1 mb for 24/25. Last week’s export shipments of 61.4 mb were firmly above the 24.7 mb needed each week, and primary destinations were to China, Germany, and Mexico.

Above: Soybeans have steadily retreated after leaving a 6-cent gap between 1290 ¾ and 1296 ¾. The market is showing signs of being extremely oversold, which can be supportive if bullish information enters the market to turn prices around. If prices do turn back higher, resistance rests around the price gap and again near the 50-day moving average. Otherwise, the next major support level comes in near the November ’21 low of 1181.

Wheat

Market Notes: Wheat

  • Wheat was able to manage another close in positive territory. While a lower US Dollar Index helped today, the market may mainly be seeing more short covering by the funds, resulting from a technical correction of oversold conditions. March Chicago wheat, in particular, has had three higher sessions in a row.

  • The USDA reported an increase of 26 mb of wheat export sales for 23/24. Commitments at 592 mb for 23/24 are up 4% from last year. Although, shipments last week of 9 mb were below the pace needed each week of 16.6 mb to meet the USDA’s export goal of 725 mb.

  • Matif wheat futures settled with gains for the third consecutive session, which may be lending some support to US wheat, while also indicating that a near-term bottom may have formed.

  • Argentina’s wheat crop is reported to be 98% harvested, according to the Buenos Aires Grain Exchange. Their production estimate was kept unchanged at 15.1 mmt, which is well above last year’s 12.2 mmt total.

  • According to Strategie Grains, the EU 24/25 soft wheat production estimate was revised lower to 122.7 mmt. They also stated that poor weather conditions are expected to impact the wheat planting area, adding that the decline in production may be offset by a smaller amount of exports.

  • The US Climate Prediction Center has forecasted that the El Nino weather pattern will persist through the month of May. Afterwards, it is expected to transition to neutral (neither El Nino nor La Nina) into the US spring and summer. If true, this may indicate above normal temperatures February through April in the Great Lakes and northern Plains areas.

Chicago Wheat Action Plan Summary

  • No new action is currently recommended for 2023 Chicago wheat. The wheat market has continued to be dominated by lower world export prices that have stymied US export sales and depressed US prices. In early December, Grain Market Insider recommended taking advantage and making a sale on a short covering rally which was sparked by several Chinese purchases of US wheat. Since then, China has been silent in the US wheat export market, and prices remain somewhat elevated. Any remaining 2023 soft red winter wheat should be getting priced into market strength with the goal of having zero bushels unpriced by the end of January. 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 early December, the July ’24 contract has traded mostly sideways to slightly lower after its brief short covering runup on Chinese buying. Although China has since been absent from the US wheat export market, managed funds continue to hold a sizeable, short position that could trigger another short covering rally if a bullish impetus enters the market. At the end of August, Grain Market Insider recommended purchasing July 590 puts to prepare for further price erosion. Back in June, Grain Market Insider recommended two separate sales that averaged about 720 to take advantage of the brief upswing. If the market receives the needed stimulus to move prices back toward this summer’s highs, Grain Market Insider is prepared to recommend adding to current sales levels and possibly even purchasing call options to protect those sales. Otherwise, the current recommended put position will add a layer of protection if prices erode further, and Grain Market Insider will be prepared to recommend covering some of those puts to offset much of the original cost and move toward a net neutral cost for the remaining position.

  • No action is currently recommended for 2025 Chicago Wheat. Since early September, the July ’25 contract has been rangebound, largely between 650 on the bottom and 675 on the top. Grain Market Insider’s strategy for the 2025 crop year up to this point has been to sit tight. Though if prices break out of the topside of this range toward the 690 – 705 area, we will consider taking advantage of the rally and making sales recommendations.

To date, Grain Market Insider has issued the following Chicago wheat recommendations:

Above: The March contract’s closing through the bottom end of the recent range and 100-day moving average lends a bearish tilt to the market, which runs the risk of drifting lower toward the next major level of support near 556. If a bullish catalyst enters the market to turn prices higher, overhead resistance remains near 650.

KC Wheat Action Plan Summary

  • No new action is recommended for 2023 KC wheat crop.  After posting an 80-cent rally in late November and early December, front month KC wheat has languished and drifted lower while retracing about 50% of the upward move. Managed funds continue to carry a significant short position, and even though bullish headwinds like weak US demand and low world wheat prices remain, this could fuel a return to higher prices as winter weather risks add volatility to the market. Grain Market Insider’s strategy is to look for price appreciation this winter, as weather becomes a more prominent market mover, and may consider suggesting additional sales if prices become over-extended.

  • No new action is recommended for 2024 KC wheat. At the end of August, the July ’24 contract broke out of roughly a one-year trading range and stepped down to a 609 ¼ low in late November, largely driven by managed fund selling in the front month on weak US export demand and lower world wheat prices. Since then, the funds covered part of their large short position which also rallied prices in the July ’24 contract. While bearish headwinds remain, managed funds continue to hold a sizable, short position, and price seasonals remain positive for adding weather risk premium. These are two factors that could fuel additional short covering and rally prices in the months ahead. Back in August, Grain Market Insider recommended buying Jul’24 KC wheat 660 puts to protect the downside following the range breakout. As the market recently got further extended into oversold territory and the July contract showed signs of support near 630, Grain Market Insider recommended exiting 75% of the originally recommended position. Moving forward, Grain Market Insider is prepared to recommend exiting the last 25% on any further supportive market developments.

  • No action is currently recommended for 2025 KC Wheat. Grain Market Insider isn’t considering any recommendations at this time for the 2025 crop that will be planted next fall. It will probably be mid-winter before Insider starts considering the first sales targets.

To date, Grain Market Insider has issued the following KC recommendations:

Above: March KC wheat rejected an attempt to move higher near 650 and turned lower to test the bottom end of the recent range around 619. If the market continues to retreat, the next area of support remains near 595 and 575. Overhead, nearby resistance comes in around 650 and again between 675 – 680.

Mpls Wheat Action Plan Summary

  • No new action is currently recommended for the 2023 New Crop. For much of the second half of last year, driven mostly by fund selling and slow US export demand, front month Minneapolis wheat slowly stair-stepped lower until hitting the November low. During this time, managed funds also established a record net short position. Since then, with the market mostly sideways, the November low of 697 ½ has held, and prices have pierced the 50-day moving average just once. Although bearish headwinds remain, the large fund net short position could fuel a short-covering rally if a bullish catalyst enters the scene to move prices to close above the 50-day moving average. Back in June, Grain Market Insider made a sales recommendation during the July rally near 820, and with that sale in place, Grain Market Insider’s strategy is to look for price appreciation this winter with an eye on considering additional sales around 725 – 775, and again north of 800.

  • No new action is recommended for 2024 Minneapolis wheat. After trading to a peak of 871 ¾ last August, the Sept ’24 gradually retreated to a low in November in concert with the front month as managed funds built a record large net short position mostly on weak US export demand. And while Sept ’24 has failed to close above the 50-day moving average since late August, the 726 ¼ November low remains intact. Although bearish headwinds remain, the large fund net short position could fuel a short-covering rally if prices move higher and close above the 50-day moving average. Back in August, Grain Market Insider recommended buying July ’24 KC wheat 660 puts to protect the downside following a 1-year range breakout in KC wheat, and in November recommended exiting 75% of the originally recommended position as July ’24 KC wheat showed signs of support around 630. While in the same time frame, Grain Market Insider also recommended making an additional sale as the Sept ’24 Minneapolis contract broke long time 743 support. For now, Grain Market Insider remains prepared to recommend exiting the last 25% of the open puts on any further supportive market developments.

  • No action is currently recommended for the 2025 Minneapolis wheat crop. Grain Market Insider isn’t considering any recommendations at this time for the 2025 crop that will be planted two springs from now. It will probably be mid-winter before Grain Market Insider starts considering the first sales targets.

To date, Grain Market Insider has issued the following Minneapolis wheat recommendations:

Above: The breach of 700 in the March contract could indicate further weakness with the next area of major support down near 669. The market does show signs of being oversold, which is supportive if the market turns back higher. Overhead initial resistance lies around 700 and then again between 721 and 734.

Other Charts / Weather

Brazil 2 week forecast total precipitation courtesy of the National Weather Service, Climate Prediction Center.

|

01-18 End of Day: Grains Close Higher Across the Board for Just the 2nd Time in 2024

ByCarol Tillmann

All prices as of 2:00 pm Central Time

Grain Market Highlights

  • Corn prices traded higher today after four consecutive sessions lower, this higher close came despite lower week-over-week ethanol production. Continuous corn futures may be finding support this week from the 2015 and 2016 summer highs near the $4.40 futures level.

  • Soybean prices rallied late today from severely oversold levels after testing last week’s lows and the pivotal $12 level on front month March futures this morning.

  • Soybean meal held onto marginal gains today while soybean oil prices slid slightly lower, this came despite crude oil prices posting their highest close of 2024 this afternoon.

  • After trading to new lows this morning, all three wheat classes managed to close higher on the day, likely due to technical buying from extreme oversold levels. The US Dollar was higher yet again today continuing its 2024 rally.

  • To see the updated US Drought Monitor as well as the Brazil 1 week forecast total precipitation courtesy of the National Weather Service, Climate Prediction Center, scroll down to the other Charts/Weather section.

Note – For the best viewing experience, some Grain Market Insider content is best viewed with your phone held horizontally.

Corn

Corn Action Plan Summary

  • No new action is recommended for 2023 corn. Front month corn has languished in a sideways to lower trend since printing a high in October, with a general lack of bullish news and an estimated US carryout over 2.1 billion bushels. The failure of the USDA’s January report to provide the bullish news necessary to turn prices higher is disappointing and the market remains at risk of remaining in the same pattern. With that being said, the market does show signs of being oversold, and managed funds hold a sizable net short position, which could trigger a short covering rally if a bullish catalyst enters the scene. For now, Grain Market Insider will continue to hold tight on any further sales recommendations for the next few weeks with the objective of seeking out better pricing opportunities. If the market has not turned around by then, Grain Market Insider may sit tight on the next sales recommendations until spring.

  • No new action is recommended for 2024 corn. Following the January USDA Supply and Demand update, Dec ’24 broke through the bottom end of the 485 ¾ to 602 range that had been in place since February ’22. While this is a disappointing development, bear spreading has allowed Dec ’24 to maintain more of its value versus old crop, as traders attempt to price in a larger 2023 carryout with more uncertainty remaining for the 2024 crop. Additionally, Dec ’24 does show signs of being oversold, which is supportive if a bullish catalyst enters the scene. Grain Market Insider continues to watch for signs of a change in the current trend to look at recommending making additional sales and buying Dec ’24 call options.

  • No Action is currently recommended for 2025 corn. Grain Market Insider isn’t considering any recommendations at this time for the 2025 crop that will be planted two springs from now. It will probably be late winter or early spring of 2024 before Grain Market Insider starts considering the first sales targets.

To date, Grain Market Insider has issued the following corn recommendations:

  • Corn futures traded higher for the first time in four sessions as the March contract gained 1 ¾ cents on the day. Corn prices shook off a move to new life of contract lows early in the session to post a higher gain. 

  • Corn and grain markets in general are heavily oversold. The firming price action on the session posted a reversal on daily charts and could lead to additional technical strength going into the weekend on Friday.

  • Demand will stay a key focus of the market, and the USDA will release weekly export sales on Friday morning. US corn is moving into a typical window to see export demand as global supplies from competing nations are minimized. Last week’s export sales for corn were disappointing at 488,000 MT, which was at the low end of expectations.

  • The national average corn basis was improving over last week. Currently the National Average basis is trading at 24 cents, up from last week, but still below the 5-year average. Lack of producer selling is likely helping support basis levels.

  • Average ethanol production last week was 1.054 million barrels/day, down 0.8% from last week, but up 4.6% compared to last year. Ethanol stocks were 25.695 million barrels, which was an all-time high for the date. Total corn used to date for ethanol production totaled 1.987 billion bushels which running ahead of the needed pace to reach the USDA target for the marketing year.

Above: Earlier in January, March corn broke through 460 support, which is now nearby resistance, and retreated toward nearby support around 440. The market shows signs of being oversold, which can be supportive if bullish information enters the market. If prices break below 440, the next major support level comes in near 415. Overhead, if prices rally above 460, additional resistance may enter in between 470-480.

Soybeans

Soybeans Action Plan Summary

  • No new action is recommended for 2023 soybeans. Front month soybeans recent downside breakout of the 1290 – 1400 range indicates that there is risk that prices may continue to retreat toward 1180, as forecasts for improved South American weather lessen the potential for the record large global carryout to be reduced. Given the potential of a downside breakout, Grain Market Insider recently recommended adding to sales as the current price level is still historically good. It’s been disappointing how the market has been unable to push higher despite the South American production concerns. Because of that, Grain Market Insider’s concern is that, if the weather pattern doesn’t remain adverse, the path of least resistance could be lower. Grain Market Insider will continue to look at additional sales opportunities, as well as potential re-ownership strategies.

  • No new action is recommended for the 2024 crop. The Nov ’24 contract recently broke through the downside of the 1233 – 1320 range that has been in place since the end of July. With this downside breakout, and considering the bullish influence of adverse South American weather, which appears to be improving, Nov ’24 runs the risk of retreating towards 1150 unless another bullish catalyst enters the market.  If prices find support and turn back higher, Grain Market Insider recently recommended buying Nov ’24 1280 and 1360 calls to give you confidence to make sales against anticipated 2024 production and to protect any sales in an extended rally. Grain Market Insider will also continue to watch for any sales opportunities.

  • No Action is currently recommended for 2025 Soybeans. Grain Market Insider isn’t considering any recommendations at this time for the 2025 crop that will be planted two springs from now, 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:

  • Soybeans ended the day higher after mixed trade that resulted in March soybeans, making a new low at $12.01 before rebounding at the close. The US Senate also passed a bill today to avert a government shutdown which likely supported the markets in general.

  • There have been no flash sales reported for soybeans in weeks as the world’s main buyer, China, seems to be stepping aside from even Brazilian purchases. Tomorrow’s export sales report for soybeans will likely show very weak sales and may pressure the soy complex.

  • Today, soybean meal closed slightly higher while bean oil was lower. Both soy products have been trending lower, but despite that, December’s NOPA crush report showed a record number of soybeans crushed which indicates that domestic demand at least is firm.

  • Last Friday, the USDA projected Brazilian soybean production at 157 mmt, and many analysts agree that this is too high. The majority are estimating production around 150 mmt, but some guesses have come in as low as 135 mmt. The actual numbers won’t start to roll in until combines roll in larger numbers within the next few months.

Above: Soybeans have steadily retreated after leaving a 6-cent gap between 1290 ¾ and 1296 ¾. The market is showing signs of being extremely oversold, which can be supportive if bullish information enters the market to turn prices around. If prices do turn back higher, resistance rests around the price gap and again near the 50-day moving average. Otherwise, the next major support level comes in near the November ’21 low of 1181.

Wheat

Market Notes: Wheat

  • After a rough morning of new lows, all three classes of US wheat reversed by the close to post session gains. KC wheat led the charge higher, gaining more than a dime in the front month March despite a lack of fresh news. This may be more of a technical correction than anything else, as wheat is very oversold. However, support also came from corn and soybeans turning higher.

  • The recent storms brought snow cover which should protect much of the winter wheat crop from another round of sub-zero temperatures expected to hit many areas of the Plains states and Midwest by this weekend. Additionally, soil moisture levels look much better than a year ago, so the crop should be in better shape as well.

  • According to StoneX, the Brazilian 23/24 wheat crop is estimated at 8.25 mmt, down from their previous estimate of 8.59 mmt. Additionally, Brazil is expected to import more wheat at 7.05 mmt vs 6.37 mmt previously.

  • Due to lower Chinese demand, as well as competition from the Black Sea region, French wheat exports for 23/24 are expected to drop according to FranceAgriMer. This includes declines both within and outside of the European Union.

  • Egypt purchased 360,000 mt of wheat in their tender with the majority coming from Russia. One cargo was sourced from France; however, this did not do much to help Matif futures which remain near contract lows. Like US wheat, that market is also very oversold technically, which could mean that the market is searching for a bottom.

Chicago Wheat Action Plan Summary

  • No new action is currently recommended for 2023 Chicago wheat. The wheat market has continued to be dominated by lower world export prices that have stymied US export sales and depressed US prices. In early December, Grain Market Insider recommended taking advantage and making a sale on a short covering rally which was sparked by several Chinese purchases of US wheat. Since then, China has been silent in the US wheat export market, and prices remain somewhat elevated. Any remaining 2023 soft red winter wheat should be getting priced into market strength with the goal of having zero bushels unpriced by the end of January. 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 early December, the July ’24 contract has traded mostly sideways to slightly lower after its brief short covering runup on Chinese buying. Although China has since been absent from the US wheat export market, managed funds continue to hold a sizeable, short position that could trigger another short covering rally if a bullish impetus enters the market. At the end of August, Grain Market Insider recommended purchasing July 590 puts to prepare for further price erosion. Back in June, Grain Market Insider recommended two separate sales that averaged about 720 to take advantage of the brief upswing. If the market receives the needed stimulus to move prices back toward this summer’s highs, Grain Market Insider is prepared to recommend adding to current sales levels and possibly even purchasing call options to protect those sales. Otherwise, the current recommended put position will add a layer of protection if prices erode further, and Grain Market Insider will be prepared to recommend covering some of those puts to offset much of the original cost and move toward a net neutral cost for the remaining position.

  • No action is currently recommended for 2025 Chicago Wheat. Since early September, the July ’25 contract has been rangebound, largely between 650 on the bottom and 675 on the top. Grain Market Insider’s strategy for the 2025 crop year up to this point has been to sit tight. Though if prices break out of the topside of this range toward the 690 – 705 area, we will consider taking advantage of the rally and making sales recommendations.

To date, Grain Market Insider has issued the following Chicago wheat recommendations:

Above: The March contract’s closing through the bottom end of the recent range and 100-day moving average lends a bearish tilt to the market, which runs the risk of drifting lower toward the next major level of support near 556. If a bullish catalyst enters the market to turn prices higher, overhead resistance remains near 650.

KC Wheat Action Plan Summary

  • No new action is recommended for 2023 KC wheat crop.  After posting an 80-cent rally in late November and early December, front month KC wheat has languished and drifted lower while retracing about 50% of the upward move. Managed funds continue to carry a significant short position, and even though bullish headwinds like weak US demand and low world wheat prices remain, this could fuel a return to higher prices as winter weather risks add volatility to the market. Grain Market Insider’s strategy is to look for price appreciation this winter, as weather becomes a more prominent market mover, and may consider suggesting additional sales if prices become over-extended.

  • No new action is recommended for 2024 KC wheat. At the end of August, the July ’24 contract broke out of roughly a one-year trading range and stepped down to a 609 ¼ low in late November, largely driven by managed fund selling in the front month on weak US export demand and lower world wheat prices. Since then, the funds covered part of their large short position which also rallied prices in the July ’24 contract. While bearish headwinds remain, managed funds continue to hold a sizable, short position, and price seasonals remain positive for adding weather risk premium. These are two factors that could fuel additional short covering and rally prices in the months ahead. Back in August, Grain Market Insider recommended buying Jul’24 KC wheat 660 puts to protect the downside following the range breakout. As the market recently got further extended into oversold territory and the July contract showed signs of support near 630, Grain Market Insider recommended exiting 75% of the originally recommended position. Moving forward, Grain Market Insider is prepared to recommend exiting the last 25% on any further supportive market developments.

  • No action is currently recommended for 2025 KC Wheat. Grain Market Insider isn’t considering any recommendations at this time for the 2025 crop that will be planted next fall. It will probably be mid-winter before Insider starts considering the first sales targets.

To date, Grain Market Insider has issued the following KC recommendations:

Above: March KC wheat rejected an attempt to move higher near 650 and turned lower to test the bottom end of the recent range around 619. If the market continues to retreat, the next area of support remains near 595 and 575. Overhead, nearby resistance comes in around 650 and again between 675 – 680.

Mpls Wheat Action Plan Summary

  • No new action is currently recommended for the 2023 New Crop. For much of the second half of last year, driven mostly by fund selling and slow US export demand, front month Minneapolis wheat slowly stair-stepped lower until hitting the November low. During this time, managed funds also established a record net short position. Since then, with the market mostly sideways, the November low of 697 ½ has held, and prices have pierced the 50-day moving average just once. Although bearish headwinds remain, the large fund net short position could fuel a short-covering rally if a bullish catalyst enters the scene to move prices to close above the 50-day moving average. Back in June, Grain Market Insider made a sales recommendation during the July rally near 820, and with that sale in place, Grain Market Insider’s strategy is to look for price appreciation this winter with an eye on considering additional sales around 725 – 775, and again north of 800.

  • No new action is recommended for 2024 Minneapolis wheat. After trading to a peak of 871 ¾ last August, the Sept ’24 gradually retreated to a low in November in concert with the front month as managed funds built a record large net short position mostly on weak US export demand. And while Sept ’24 has failed to close above the 50-day moving average since late August, the 726 ¼ November low remains intact. Although bearish headwinds remain, the large fund net short position could fuel a short-covering rally if prices move higher and close above the 50-day moving average. Back in August, Grain Market Insider recommended buying July ’24 KC wheat 660 puts to protect the downside following a 1-year range breakout in KC wheat, and in November recommended exiting 75% of the originally recommended position as July ’24 KC wheat showed signs of support around 630. While in the same time frame, Grain Market Insider also recommended making an additional sale as the Sept ’24 Minneapolis contract broke long time 743 support. For now, Grain Market Insider remains prepared to recommend exiting the last 25% of the open puts on any further supportive market developments.

  • No action is currently recommended for the 2025 Minneapolis wheat crop. Grain Market Insider isn’t considering any recommendations at this time for the 2025 crop that will be planted two springs from now. It will probably be mid-winter before Grain Market Insider starts considering the first sales targets.

To date, Grain Market Insider has issued the following Minneapolis wheat recommendations:

Above: The breach of 700 in the March contract could indicate further weakness with the next area of major support down near 669. The market does show signs of being oversold, which is supportive if the market turns back higher. Overhead initial resistance lies around 700 and then again between 721 and 734.

Other Charts / Weather