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Grain Market Insider: April 26, 2023

ByGrain Market Insider

Grain Market Highlights

  • The corn market opened the day session in the green and quickly traded lower on improved planting weather and slow demand.

  • Soybeans ended the day mixed with Old Crop trading weaker versus the New Crop, as cheaper Brazilian supplies dominate the world export market.

  • The soybean products ended the day mixed while weighing on Board Crush margins, with the July Crush losing 10 cents/bu.   

  • All three wheat closed in the red as rain falls in some of the driest HRW areas, and Stats Canada’s acreage estimates came in above expectations.

Note – For the best viewing experience, some Grain Market Insider content may be best viewed in horizontal mode.

Corn

Corn Action Plan Summary

  • No action is recommended at this time for Old Crop. China’s recent purchases have slowed, weighing on prices. Our intent is to maximize any remaining opportunities the market may present as we begin to move towards the latter stages of the marketing year when end-users vie for tightly held supplies and weather concerns can build premium.

  • Be patient to take further action for New Crop.  We are moving into a time of year when we may be looking for option-buying opportunities and given market factors that could move the price of corn above $7 or below $5, owning both calls and puts could be warranted for a period of time. 

  • Continue to hold current sales levels for the 2024 crop year.  We will look for opportunities to make further sales as we move through the 2023 growing season as weather volatility builds. 

  • A cool but drier forecast should allow for planting to remain mostly on schedule. Though not an ideal end of April/early May for many. The fact is that based on a five-year average, planting this past week is ahead of schedule, especially in key corn-producing states.

  • Weekly corn used for ethanol production last week at 97 million bushels was lower than expected and below the pace needed to meet the USDA projection of 5.250 billion bushels.

  • Spillover weakness from yesterday’s export cancellation of over 12 million bushels likely added to today’s sluggish price tone.

  • U.S. corn prices (at the Gulf) are still over-priced compared to Brazil and Argentina. Expect exports to remain slow. A potential downgrade from USDA is a likely reality.

  • Wheat’s sixth day in a row lower, and double-digit loss also weighed on corn prices.

Above: While the near-term trend is down, and the market is oversold, resistance now lies near the recent high of 647-1/2, with further resistance between 660 and 670. Support below the market for the July contract rests between 607 and 600, and then again between 568 and 562.  

Soybeans

Soybeans Action Plan Summary

  • We recommend holding current sales levels for Old Crop. We are beginning to push into the May-June seasonal window of opportunity, where prices could bounce as processors begin to push to keep supplies flowing.

  • We recommend not adding to current sales levels for the new 2023 crop. Our research indicates there is about a 74% likelihood of improved prices moving into the June time frame as weather premium is built into the market. 

  • Continue to hold off on pricing the 2024 crop. We look to make sales further into the 2023 growing season when selling opportunities tend to improve seasonally. 

  • Soybeans traded either side of unchanged today before ultimately selling off to make a 6th consecutive lower close.

  • Soybean meal moved to its lowest levels since December, while soybean oil closed higher despite a drop in crude oil of over 2.50 a barrel.

  • Crop consultant, Dr. Michael Cordonnier, said today that he expects soybean planting in the US to reach 88.0 million acres, 500,000 acres above the USDA’s estimate, with a trendline yield of 52 bpa.

  • With Brazil’s soybean harvest nearly concluded at over 95% complete, their soybean premiums have stopped falling this week, which could be supportive of US prices.

  • Early soybean planting should pick up a bit in the middle of the Corn Belt this week, as more favorable weather is forecast in the 7-day outlook.

Above: The market has given back most of the gains from the rally off the March lows. The near-term trend is down, and key support lies near 1405 with further support near 1350. Should support hold and buyers enter the market, resistance may be found between 1460 and 1501.

Wheat

Market Notes: Wheat

  • An improved weather forecast and rain falling in the Southern Plains pressured the wheat markets lower.

  • Stats Canada’s seeding intentions showed all wheat acres up by 1 million (to 27 ma) and that is 6.2% above last year.

  • Offering little support, a group of millers estimated US soft wheat production up 20% at 400 mb this year, up from last year’s roughly 337 mb.

  • Reportedly, Russia has asked vessel owners and captains in the Black Sea to sign a letter, with the understanding that the export corridor deal will be ended on May 18.

  • Russia is also asking to be let back into the SWIFT program and for sanctions against their banks to be dropped before any consideration of renewing the export corridor.

  • Funds are suspected of adding to their already sizable short positions in wheat, which may be confirmed in the next Commitments of Traders report, and could be supportive if the market receives friendly news.

Chicago Wheat Action Plan Summary

  • No action is currently recommended for the 2022 crop. The Chicago wheat contracts are oversold, which can be supportive to prices should buying enter the market to cover short positions. We continue to look for any remaining opportunities the market may present as the marketing year begins winding down.

  • We recommend not taking any action on the 2023 crop at this time. Corn and K.C. wheat are near historic premiums to Chicago wheat, which could lend support to the Chicago contracts if HRW production concerns persist, or if any production concerns develop for corn. 

  • No action is recommended at this time for the 2024 crop. We are looking for stronger markets to present themselves as we move further into the marketing year.

Above: The market broke below the March low of 654 and is oversold. The reversal off the 642-1/2 low could add further support if buyers come into the market to cover short positions. Initial resistance could be found near 668 and again between 718 and 724.  While initial support may be found near 642-1/2 and again near 610.

KC Wheat Action Plan Summary

  • We continue to look for any remaining opportunities the market may present as the marketing year begins winding down for Old Crop. No action is recommended at this time for the 2022 Old Crop.

  • We continue to look for better prices before making any 2023 sales. Crop ratings overall are at historically low levels, and production concerns persist despite the recent rain. 

  • Patience is warranted for the 2024 crop. The 2024 market has limited liquidity, and it may be until mid-summer before recommendations are posted. 

Above: The July contract continues to be under the bearish influence of the key reversal left on 4/03. Support may be found near 791 and again near 772. While initial resistance lies near 835 and then near 886.

Mpls Wheat Action Plan Summary

  • No action is currently recommended for the 2022 crop. We look for better pricing opportunities for the 2022 crop with potential planting concerns and a seasonal tendency for better prices as we move through springtime.

  • No action is recommended on the 2023 crop at this time. The snowy and cold winter has given rise to wet conditions and planting concerns which may present good selling opportunities in the coming weeks.

  • We continue to be patient to market any of the 2024 crop. Due to the lack of liquidity for the 2024 crop, there may not be any recommendations until late spring or early summer. This is the time for patience, not action.

Above: The short-term trend is down, though the July contract is oversold, which can be supportive should buying return to the market. Nearby support may be found near 778 and again near 760, while resistance may be found near 870 and 895.

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Grain Market Insider: April 25, 2023

ByGrain Market Insider

Grain Market Highlights

  • Corn traded lower into support near 600 for the July contract on slow demand but reversed off the lows to close mixed with only the May contract closing lower on the day.

  • Soybeans closed in the red as funds liquidate long positions on demand concerns with Brazilian export prices well below US offers.

  • Soybean meal and oil also continued to slide lower on slowing meal demand, and weaker crude and Malaysian palm oil.

  • The forecast for rain in the Southern Plains continued to weigh on the wheat markets today with KC contracts leading the way.

  • Adding pressure to the grain markets, the US Dollar traded higher, overtaking yesterday’s losses on renewed concerns in the banking system.

Note – For the best viewing experience, some Grain Market Insider content may be best viewed in horizontal mode.

Corn

Corn Action Plan Summary

  • No action is recommended at this time for Old Crop. China’s recent purchases have slowed, weighing on prices. Our intent is to maximize any remaining opportunities the market may present as we begin to move towards the latter stages of the marketing year when end-users vie for tightly held supplies and weather concerns can build premium.

  • Be patient to take further action for New Crop.  We are moving into a time of year when we may be looking for option-buying opportunities and given market factors that could move the price of corn above $7 or below $5, owning both calls and puts could be warranted for a period of time. 

  • Continue to hold current sales levels for the 2024 crop year.  We will look for opportunities to make further sales as we move through the 2023 growing season as weather volatility builds.

  • The May contract was likely pressured due to traders rolling long positions to the July contract to avoid the delivery process which begins with First Notice Day on Friday.

  • The lack of export activity reflects good weather for Brazilian corn production and their cheaper export values versus the US.

  • Most deferred contracts posted a small hook reversal meaning prices closed higher after trading below yesterday’s low price. This might be a signal that selling interest is beginning to wane.

  • The forecast looks drier but still below normal temperatures for most of the Midwest implying many will not get started until the first week of May, or later.

  • The USDA’s planting progress report from Monday indicated 14% of the crop was planted, ahead of the 5-year average of 11%. Illinois is 18% complete versus the 5-year average of 11%. Despite less-than-ideal weather in the north, planting progress, so far, is slightly ahead of schedule.

While the near-term trend is down, and the market is oversold. The firm close off the 601 low could provide additional support if buyers enter the market and take profits. Resistance now lies near the recent high of 647-1/2, with further resistance between 660 and 670. Support below the market for the July contract rests between 607 and 600, and then again between 568 and 562.  

Soybeans

Soybeans Action Plan Summary

  • We recommend holding current sales levels for Old Crop. We are beginning to push into the May-June seasonal window of opportunity, where prices could bounce as processors begin to push to keep supplies flowing.

  • We recommend not adding to current sales levels for the new 2023 crop. Our research indicates there is about a 74% likelihood of improved prices moving into the June time frame as weather premium is built into the market.

  • Continue to hold off on pricing the 2024 crop. We look to make sales further into the 2023 growing season when selling opportunities tend to improve seasonally.

  • Soybeans closed lower for the fifth consecutive day and were under pressure from both soybean meal and oil, but bean oil posted the biggest losses as crude fell over 1.50 a barrel.

  • The US Dollar moved higher today putting pressure on most commodities including the soy complex, but the downward momentum is also coming from major selling of cash beans out of Brazil at relatively much cheaper prices.

  • Brazil’s harvest is now over 95% complete with yields exceeding original estimates, and storage is becoming an issue there prompting many producers to unload on cash sales which has weakened prices and basis.

  • US soybean planting is 9% complete and ahead of the 5-year average of 4% with Illinois at 15%, Iowa at only 5%, Louisiana at 41%, and Mississippi at 34% complete.

The market has given back most of the gains from the rally off the March lows. The near-term trend is down, and key support lies near 1405 with further support near 1350. Should support hold and buyers enter the market, resistance may be found between 1460 and 1501.

Wheat

Market Notes: Wheat

  • Though all three wheat classes posted losses, they all finished roughly 9-10 cents above their daily lows.

  • The forecast for rain in Kansas and Oklahoma offered some weakness, with general coverage of up to 1.5 inches of rain expected, while some areas could see as much as 2 inches.

  • On the Crop Progress report, the USDA rated winter wheat 26% good to excellent, down 1% from last week. Additionally, they said that only 5% of the spring wheat crop has been planted versus 12% on average.

  • The next renewal of the Black Sea grain deal is in a few short weeks, but there is still uncertainty about whether Russia will renew or not.

  • According to APK Inform, Ukraine’s grain production could fall to only 45.6 mmt in 23/24, versus 86 mmt prior to the war.

  • The higher US Dollar Index today offered no help to the wheat market. As of this writing, it is up about 0.52 at 101.87.

Chicago Wheat Action Plan Summary

  • No action is currently recommended for the 2022 crop.  We continue to look for any remaining opportunities the market may present as the marketing year begins winding down.

  • We recommend not taking any action on the 2023 crop at this time.  Corn and K.C. wheat are near historic premiums to Chicago wheat, which could lend support to the Chicago contracts if HRW production concerns persist, or any develop for corn.  There is also a 53% likelihood of better prices in the next 60 days according to our research.

  • No action is recommended at this time for the 2024 crop.  We are looking for stronger markets to present themselves as we move further into the marketing year.

The market broke below the March low of 654 and is oversold.  The reversal off the 642-1/2 low could add further support if buyers come into the market to cover short positions and take profits, with initial resistance near 668 and again between 718 and 724.  While initial support may be found near 642-1/2 and again near 610.   

KC Wheat Action Plan Summary

  • We continue to look for any remaining opportunities the market may present as the marketing year begins winding down for Old Crop. No action is recommended at this time for the 2022 Old Crop.

  • We continue to look for better prices before making any 2023 sales.  Crop ratings overall are at historically low levels, and concerns continue with the dry growing conditions.  Additionally, our research shows there is a 53% likelihood of better prices in the next 30 days. 

  • Patience is warranted for the 2024 crop. The 2024 market has limited liquidity, and it may be until mid-summer before recommendations are posted. 

The July contract continues to be under the bearish influence of the key reversal left on 4/03.  Support may be found near 791 and again near 772.  While initial resistance lies near 835 and then near 886. 

Mpls Wheat Action Plan Summary

  • No action is currently recommended for the 2022 crop.  We look for better pricing opportunities for the 2022 crop with potential planting concerns and a seasonal tendency for better prices as we move through springtime.

  • No action is recommended on the 2023 crop at this time.  The snowy and cold winter has given rise to wet conditions and planting concerns which may present good selling opportunities in the coming weeks.

  • We continue to be patient to market any of the 2024 crop.  Due to the lack of liquidity for the 2024 crop, there may not be any recommendations until late spring or early summer.  This is the time for patience, not action.

The July contract continues to be under the bearish influence of the reversal left on 4/03. Support may be found between 845 and 825.  While resistance could be found between 895 and 913. 

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Grain Market Insider: April 24, 2023

ByGrain Market Insider

Grain Market Highlights

  • Corn briefly traded higher as it opened the overnight session, but turned lower on follow-through selling.  Sluggish demand and cancellations of Chinese purchases reported this morning added further pressure to the market.

  • Reports of Brazilian soybeans being imported into the US weighed heavily on the market as the news accentuates the price difference between the two country’s export prices.

  • Soybean meal and oil also traded lower following weaker Chinese futures and demand concerns, which weighed on Board Crush margins.  

  • Chicago wheat contracts led the way lower with rain in the forecast for later this week for many of the Winter Wheat areas, especially the Southern Plains.

  • The US Dollar offered little to no support to the grain markets as it traded lower in response to strong European economic data.

Note – For the best viewing experience, some Grain Market Insider content may be best viewed in horizontal mode.

Corn

Corn Action Plan Summary

  • No action is recommended at this time for Old Crop.  Our research indicates there is between a 48% – 53% likelihood of better prices in the next 40 days.  Our intent is to maximize any remaining opportunities the market may present as we begin to move towards the latter stages of the marketing year.

  • Be patient to take further action for New Crop.  We are moving into a time of year when we may be looking for option buying opportunities and given market factors that could move the price of corn above $7 or below $5, owning both calls and puts could be warranted for a period of time. 

  • Continue to hold current sales levels for the 2024 crop year.  We will look for opportunities to make further sales as we move through the 2023 growing season as weather volatility builds.

  • China cancelled a previous sale of 327,000 mt (12.88 mb) today. This is not considered friendly news in an already slow export environment, and the USDA may lower export sales on the May WASDE report.

  • Weekly export inspections at 36 mb were considered supportive. Yet, year-to-date inspections are at 880 mb or 47.6% of forecasted total sales of 1.850 bb, behind the pace needed to meet USDA projections.

  • Double-digit losses in the soybean and wheat markets likely spilled over into the corn pit adding to a weak price tone.

  • Rain forecasted for the Southern Plains could help alleviate dry conditions making for better corn planting environment.

  • Cool and wet in the North will delay planting yet the market does not seem too concerned, with the focus on weaker Brazilian corn prices.

Above: The futures market rolled from the May to the July contract and hit resistance near the 50-day moving average and failed.  Resistance now lies near the recent high of 647-1/2, with further resistance between 660 and 670.  Support below the market for the July contract rests between 607 and 600, and then again between 568 and 562.  

Soybeans

Soybeans Action Plan Summary

  • We recommend holding current sales levels for Old Crop.  We are beginning to push into the May-June seasonal window of opportunity, where prices can bounce as processors begin to push to keep supplies flowing.

  • We recommend not adding to current sales levels for the new 2023 crop.  Our research indicates there is about a 74% likelihood of improved prices moving into the June time frame as weather premium is built into the market.

  • Continue to hold off on pricing the 2024 crop.  We look to make sales further into the 2023 growing season when selling opportunities tend to improve seasonally.

  • Soybeans ended the day lower, along with both soybean meal and oil as cheaper Brazilian beans hit the market.

  • Buyers in the US purchased 79,150 tonnes of Brazilian beans after their prices dropped sharply last week, and the shipments are due in the coming days.

  • Soybean export inspections were on the low side last week at 13.8 mb which put total inspections for 22/23 at 1,729 mb, up 1% versus last year. While the USDA is estimating soybean exports for 22/23 at 1,990 mb which is 8% lower than last year.

  • It is still early in the season, but if wet weather continues and corn is delayed, soybeans may get planted in place of corn which would limit the upside for new crop soybeans. However, parts of the Corn Belt are forecast to warm and dry up over the next 7 days.

  • Without much fresh news to go on apart from Brazil’s harvest, funds have not been particularly active but were net buyers of soybeans for the week ending April 18 increasing their net long position by 9,760 contracts to 134,782 contracts.

Above: The market continues to trade within the broad range from late March, between 1405 and 1528.  Nearby resistance sits near 1500, and again between 1528 and 1550.  While nearby support can be found between 1423 and 1405.

Wheat

Market Notes: Wheat

  • It was another risk off day, with all three US futures giving up earlier gains to close in the red, despite Paris milling wheat futures settling neutral to higher before the reopening of US markets.

  • Some weather forecasts are putting rain in parts of the US southern plains, though the amounts are dwindling compared to Friday’s projection.

  • Spring wheat planting is anticipated to remain slow in the near term. Many areas of the northern plains are still dealing with cold and wet conditions.

  • Over the weekend, temperatures in parts of Kansas were as low as 22 degrees, and there is concern about damage to the HRW crop.

  • There appears to be more grumbling from Russia regarding the Black Sea export corridor, as they threaten to back out of the deal. Additionally, the UN reportedly suggested that the West should lift sanctions against Russia.

  • Wheat inspections were pegged at 13.4 mb, bringing the total 22/23 inspections to 656 mb.

Chicago Wheat Action Plan Summary

  • No action is currently recommended for the 2022 crop.  We continue to look for any remaining opportunities the market may present as the marketing year begins winding down.

  • We recommend not taking any action on the 2023 crop at this time.  Corn and K.C. wheat are near historic premiums to Chicago wheat, which could lend support to the Chicago contracts if HRW production concerns persist, or any develop for corn.  There is also a 53% likelihood of better prices in the next 60 days according to our research.

  • No action is recommended at this time for the 2024 crop.  We are looking for stronger markets to present themselves as we move further into the marketing year.

Above: The market appears to be rangebound between the March low of 654 and April’s high of 724.  Upside resistance is near the recent high of 724, and then again near 750.  Below the market, support rests near 654 and then near 610. 

KC Wheat Action Plan Summary

  • No action is currently recommended for the 2022 crop.  We look for better pricing opportunities for the 2022 crop with potential planting concerns and a seasonal tendency for better prices as we move through springtime.

  • No action is recommended on the 2023 crop at this time.  The snowy and cold winter has given rise to wet conditions and planting concerns which may present good selling opportunities in the coming weeks. According to our research, historically there is a 61% likelihood of better prices in the next 20 days.

  • We continue to be patient to market any of the 2024 crop.  Due to the lack of liquidity for the 2024 crop, there may not be any recommendations until late spring or early summer.  This is the time for patience, not action.

Above: The July contract continues to be under the bearish influence of the key reversal left on 4/03.  Support may be found near 791 and again near 772.  While initial resistance lies near 886 and then between 902 and 910. 

Mpls Wheat Action Plan Summary

  • No action is currently recommended for the 2022 crop.  We look for better pricing opportunities for the 2022 crop with potential planting concerns and a seasonal tendency for better prices as we move through springtime.

  • No action is recommended on the 2023 crop at this time.  The snowy and cold winter has given rise to wet conditions and planting concerns which may present good selling opportunities in the coming weeks.

  • We continue to be patient to market any of the 2024 crop.  Due to the lack of liquidity for the 2024 crop, there may not be any recommendations until late spring or early summer.  This is the time for patience, not action.

Above: The July contract continues to be under the bearish influence of the reversal left on 4/03. Support may be found between 845 and 825.  While resistance could be found between 895 and 913. 

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