Corn has turned lower around midday, after news that Russia was withdrawing from the Ukrainian grain deal sent corn, soybeans, and wheat higher. Traders have grown tired of this back and forth, however, and prices are already slipping.
Russia exited the grain deal after an attack on the bridge connecting Russia to Crimea overnight, and now Ukraine will need to send exports through Europe and the Danube River.
Weather forecasts over the next 8 to 14 days have turned drier and warmer, which may add some bullishness to the market. 64% of the corn crop is still experiencing some form of drought.
Last week, China was an active buyer of Brazilian and Ukrainian corn which gave the impression that demand was picking up, but export sales for US corn have still been very sluggish due to higher prices.
As in corn, soybeans were higher to start the day but have slipped at midday and are now near lows of the day. Russia’s decision to exit the grain deal will have an impact on Ukraine’s exports of sunflower meal and oil which could impact soybean meal and oil in the US.
Palm oil exports jumped a whopping 19.3% in June and futures are higher as a result, which adds more bullish sentiment to soybean oil, especially after the grain deal announcement.
The NOPA crush report will be released later today, and traders are looking for a crush of 172 mb and soybean oil stocks to fall 1.780 billion pounds.
Chinese purchases of soybeans picked up last week, but they mainly sourced from Brazil and only bought small amounts from the US. There have been rumors that China has been buying more September and October beans from Brazil in the past week.
Wheat, which should have been the most helped by the withdrawal of Russia from the Ukrainian grain deal, is now trading lower. It appears that traders are tired of the back and forth and quickly went back to selling after the news broke.
Chicago wheat gapped higher on the open after the Russia news but just closed that gap and is sitting right at its 40 and 50-day moving average.
The US Dollar is trading at its lowest levels in over a year which should make the US more competitive regarding exports. Paris milling wheat futures were higher this morning for the third straight day, which is also supportive.
Weather for spring wheat is not looking great, and analysts have said that without substantial rains in the Canadian Prairies, Canadian production could slide another few million tons lower. North Dakota and Minnesota are also in need of rain.
Grain Market Insider is provided by Stewart-Peterson Inc., a publishing company.
Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. The data contained herein is believed to be drawn from reliable sources but cannot be guaranteed. This material has been prepared by a sales or trading employee or agent of Total Farm Marketing by Stewart-Peterson and is, or is in the nature of, a solicitation. Any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to Stewart-Peterson Inc. Reproduction of this information without prior written permission is prohibited. Hypothetical performance results have many inherent limitations. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. The data contained herein is believed to be drawn from reliable sources but cannot be guaranteed. Reproduction and distribution of this information without prior written permission is prohibited. This material has been prepared by a sales or trading employee or agent of Total Farm Marketing and is, or is in the nature of, a solicitation. Any decisions you may make to buy, sell or hold a position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to Total Farm Marketing.
Stewart-Peterson Inc., Stewart-Peterson Group Inc., and SP Risk Services LLC are each part of the family of companies within Total Farm Marketing (TFM). Stewart-Peterson Inc. is a publishing company. Stewart-Peterson Group Inc. is registered with the Commodity Futures Trading Commission (CFTC) as an introducing broker and is a member of National Futures Association. SP Risk Services LLC is an insurance agency. A customer may have relationships with any or all three companies.
Corn is trading higher and gapped slightly higher overnight after Russia announced that it was withdrawing from their participation in the Ukrainian grain deal.
The crucial grain deal was ended abruptly because the Kremlin has claimed that it is not being used for the benefit of countries that it was intended for, but the move also comes as tensions heighten.
Weather has been another bullish factor this morning as a large portion of the Corn Belt is forecast to be dry over the next 7 days with warmer than normal temperatures.
Friday’s CFTC report showed funds increasing their net short position by a whopping 45,000 contracts which now puts them short over 63,000 contracts.
November soybeans are continuing to move higher but still have found resistance at the 14 dollar mark. Crude oil is trading lower below 75 dollars a barrel, but both soybean oil and meal are higher.
Soybeans dipped lower after the USDA report that showed higher ending stocks estimates than expected, and focus has shifted back to weather and world veg oils.
The closing of the Ukrainian grain deal does not impact soybeans directly, but it does impact the value of soybean oil as that region exports a lot of sunflower oil and meal.
Friday’s CFTC data showed funds as net sellers of soybeans by 6,394 contracts reducing their net long position to 82,748 contracts.
Wheat is trading higher this morning after the end of the Ukrainian grain deal which obviously impacts wheat the most, but also comes during the US’s winter wheat harvest.
As winter wheat harvest presses on, the new supplies could make it difficult for futures to rally, and funds have already been content as sellers.
Spring wheat may be facing more weather related challenges as rain is needed in the southern Canadian prairies and in North Dakota with a drier and warmer 8 to 14 day forecast.
Friday’s CFTC data showed funds as net buyers of wheat by just 1,878 contracts, slightly reducing their net short positions to 52,128 contracts.
Grain Market Insider is provided by Stewart-Peterson Inc., a publishing company.
Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. The data contained herein is believed to be drawn from reliable sources but cannot be guaranteed. This material has been prepared by a sales or trading employee or agent of Total Farm Marketing by Stewart-Peterson and is, or is in the nature of, a solicitation. Any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to Stewart-Peterson Inc. Reproduction of this information without prior written permission is prohibited. Hypothetical performance results have many inherent limitations. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. The data contained herein is believed to be drawn from reliable sources but cannot be guaranteed. Reproduction and distribution of this information without prior written permission is prohibited. This material has been prepared by a sales or trading employee or agent of Total Farm Marketing and is, or is in the nature of, a solicitation. Any decisions you may make to buy, sell or hold a position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to Total Farm Marketing.
Stewart-Peterson Inc., Stewart-Peterson Group Inc., and SP Risk Services LLC are each part of the family of companies within Total Farm Marketing (TFM). Stewart-Peterson Inc. is a publishing company. Stewart-Peterson Group Inc. is registered with the Commodity Futures Trading Commission (CFTC) as an introducing broker and is a member of National Futures Association. SP Risk Services LLC is an insurance agency. A customer may have relationships with any or all three companies.
After posting a double bottom on Thursday, December corn broke out of its recent range and surged higher to close the week with a bullish reversal on the weekly chart.
The soybean market closed mixed, with Old Crop lower and New Crop higher. Early strength allowed the market to post a new high for the move before giving way to choppy trade ahead of the weekend, as traders book profits.
Bearish reversals in crude and heating oil likely added to the negativity in soybean oil, which bled over to soybeans and December Board Crush, which suffered a 4-1/4 cent loss, while December meal squeezed out a $1.10 gain.
Reports of India banning rice exports, continued dryness in the northern Plains, and the possible expiration of the Black Sea grain deal added support to the wheat complex today, with all three classes finishing strong to close out the week.
To see maps showing the percentage of crops in drought, courtesy the USDA and US Drought Monitor, 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 Old Crop. The market had a nearly 140-cent swing from the May low to the June high and back on weather. Use any remaining bounces in the market to price what Old Crop bushels you may have, if any. We won’t have any “New Alerts” for 2022 Corn (Cash, Calls, or Puts) as we have moved focus onto 2023 and 2024 Crop Year Opportunities.
No action is recommended for New Crop 2023 corn. In the month of June, December corn experienced a 137-cent high to low, swing primarily on weather and production concerns. Since then, planted acreage figures have increased by about 2 mil. acres and pushed the current 2023 carryout estimate north of 2.2 billion bushels, which hasn’t been seen since the 2018/19 crop year. When Dec corn was trading over 620, Grain Market Insider recommended making a cash sale and buying Dec 580 puts to cover more downside. The Dec 580 puts, paired with the previously recommended Dec 610 calls, yielded a combination of options commonly known as a Strangle, which benefits from dramatic market moves either up or down. Considering crop conditions continue to be low with over 60% of the crop experiencing drought, changing weather can still affect final production and rally prices, at which point the 610 calls should gain in value and protect any already sold bushels if the market makes new highs.
Grain Market Inside sees continued opportunity to sell a portion of your 2024 Corn. While the market has seen some extreme volatility in recent weeks, we are entering a time of year when prices tend to have more headwinds than tailwinds to the upside. Also, with the USDA’s surprise acreage jump, continued rain in the forecast and slow demand, the size of the 2023 crop still has the potential to yield a carryout north of 2 billion bushels. A large 2023 carryout in the US, combined with the large corn crop in Brazil, could pose greater headwinds for 2024 prices. With it being the time of year to start getting early sales for next year on the books, and no recent bullish catalyst from the Stocks or Acreage reports, we are suggesting making a sale for the 2024 corn crop using either a DEC ’24 HTA contract or DEC ’24 futures, so the basis can be set at a later more advantageous date. While $5.00 futures is not the $6.00 or $7.00, we’ve become accustomed to the last few years, it’s still historically a good price to be getting some early sales on the books at.
Corn showed some muscle to finish near session highs, following through from yesterday. This may in part stem from skepticism of the USDA’s latest numbers.
The 8-14 day weather forecast may also have lent some support to futures today, with an outlook for warmer and drier conditions across much of the Midwest. With 64% of the US corn crop said to still be experiencing drought conditions, fundamental support may be building at these lower price levels.
On a bearish note, CONAB increased their estimate of Brazilian corn production to 127.8 mmt from 125.7 mmt previously, which for now, is likely to keep pressure on the export front.
Although the US dollar was slightly higher today, it is still well below where it was a week ago. This decline has likely taken some downward pressure off the grain markets and allowed for some breathing room.
Above: Favorable weather and an estimated 2023 carryout north of 2 bil. bushels pushed the market through support that was in place since January 2021 and posted a double bottom at 474. This, and the fact that the market is oversold, is supportive if reversal action occurs. In that event, initial resistance could be found between 502 – 538, with heavy resistance up towards 595 – 625. Below the market there may not be much support above 390 – 415, the November ’20 lows.
Soybeans
Soybeans Action Plan Summary
No new action is being recommended for Old Crop. Any remaining old crop bushels should be getting priced into this rally. We won’t have any “New Alerts” for 2022 Soybeans (Cash, Calls, or Puts) as we have moved focus onto 2023 and 2024 Crop Year Opportunities.
Grain Market Insider sees an active opportunity to sell a portion of your 2023 soybeans. The USDA shocked the market with bearish expectations for the 2023 soybean crop’s supply and demand. Demand was lowered for both 2022 and 2023 crop years, with an added 25 mbu of 2022 inventory carried over to 2023. The net result being a current ending stocks estimate of 300 mbu for the 2023 crop, a full 50% higher than trade expectations. While the key part of the growing season is still ahead, and production concerns remain, that could turn the market higher again, continued favorable forecasts and improving crop conditions may lead the market to further price erosion. With the very dry conditions that many of you continue to experience, and the tremendous uncertainty that brings to what you’ll have for bushels this fall, we understand if there’s hesitancy to sell anything here. If you are worried about committing physical bushels with a cash sale, consider selling futures or buying put options.
No action is recommended for 2024 crop.Grain Market Insider continues to monitor any developments for the 2024 crop, though it may not be until after harvest or toward year’s end before we will consider recommending any 2024 crop sales.
Led by negativity in the energy markets, weakness in soybean oil weighed on soybeans and likely led to some profit taking and choppy trade after posting a new high for the move. Both Old and New Crop contracts closed the week in relative unison, with August beans showing a 52-1/2 cent gain, while November posted a 53 cent gain, despite the USDA’s bearish report on Wednesday.
Following Wednesday’s surprising USDA report, some are questioning the USDA’s 52 bpa yield estimate with 57% of the US soybean crop experiencing some level of drought, though this is down 3% from last week.
China has reportedly been an active buyer of Brazilian soybeans, purchasing 20 – 25 cargoes for May – July 2024 delivery, in addition to US soybeans purchased off the PNW for October delivery.
Expectations for Monday’s NOPA soybean crush report are for 170.568 mb of soybeans crushed in June, down 4.1% from May, but expected due to seasonal downtime for maintenance and repairs, and if realized, it would be a record for the month.
Updated Consumer Price Index (CPI) and Producer Price Index (PPI) information released this week showed inflation levels are slowing, reducing the possibility of further rate hikes by the Fed, and likely adding early support to prices.
Above: The soybean market is struggling with heavy resistance in the 1490-1505 area and posted a bearish reversal following the July 12 USDA report. The market reversed sharply higher on July 13, but prices need to show continued strength to negate the bearish action from report day. Initial support below the market is near 1425 with further support being in the 1350 – 1390 area.
Wheat
Market Notes: Wheat
News reports that India will ban rice exports may have contributed to the strong close in the wheat market. India generally exports a large percentage of the world’s rice, so if they are short on supply, they may turn to wheat as another food staple. Some believe this could mean they will need to import wheat down the road, offering support.
Early next week, the Black Sea export corridor deal will expire. As of writing, no agreement on an extension has been reached. Russia has allegedly stated that they will offer an extension, but only in exchange for reduced sanctions on their banking system (namely, being let back into the SWIFT program). Either way, this could mean more volatility for wheat next week.
According to the Buenos Aires Grain Exchange, their 23/24 wheat planting estimate for Argentina is unchanged from their last projection at 6.0 mmt.
Canada is still too dry, and it is impacting their spring wheat crop. Much like areas of the northern US Plains that are experiencing the same problem.
Chicago Wheat Action Plan Summary
No new action is recommended for 2023 New Crop. In the month of June, the September Chicago wheat contract posted a 163-cent range and has largely been a follower of the corn market which has been mostly driven by weather. While demand remains weak, production concerns in parts of the country remain, as does uncertainty surrounding the Black Sea region and the potential for major exporting countries’ inventory to hit 16-year lows. While Grain Market Insider will continue to monitor the downside for any violation of major support, following the recent sales recommendation it may be after harvest or near the end of summer before we consider recommending any additional sales for the 2023 crop.
No action is currently recommended for 2024 Chicago wheat. Since the middle of June, price volatility has risen with updated USDA reports, changing weather forecasts, and current events in the Black Sea. While prices have fallen off their recent highs, plenty of time remains to market the 2024 crop. War continues in the Black Sea region, major exporting countries’ stocks are at 11-year lows, and no one knows what the weather will bring, leaving the market vulnerable to many uncertainties. For now, after recommending making a sale for the 2024 crop, and while keeping an eye on the market to see if any major support is broken, Grain Market Insider would need to see prices north of 800 before considering recommending any additional sales.
No Action is currently recommended for 2025 Chicago Wheat. 2025 markets are very illiquid right 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.
Above: September wheat rallied nearly 200 cents from the May low to its June high when it encountered heavy resistance and posted a bearish reversal. This technical formation on the price chart is considered bearish and momentum may be adding to the bearish tone. Support below the market may be found between 650 – 610, while resistance above the market rests between 770 – 810.
KC Wheat Action Plan Summary
We continue to look for better prices before making any 2023 sales. While Crop ratings have improved and the Black Sea export corridor remains open, questions remain about the size of the HRW crop, whether Russia will continue to agree to keep the Black Sea corridor open, and what production looks like in Europe and Australia. We continue to target 950 – 1000 in the July futures as a potential level to suggest the next round of New Crop sales.
Patience is warranted for the 2024 crop. With continued issues in the Black Sea region and with major exporting countries’ stocks expected to fall to 16-year lows, we are willing to be patient with further sales of New Crop HRW wheat. We are targeting just below the 900 level on the upside while keeping an eye on recent lows for any violation of support.
No Action is currently recommended for 2025 Chicago Wheat. 2025 markets are very illiquid right 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.
Above: Balancing both production and demand concerns, the September contract continues to trade within the 736 – 919 range established in May. The recent downturn in the market has established heavy resistance above the market between 890 – 920, with initial support coming in between 778 – 763 and key support near the May low of 736.
Mpls Wheat Action Plan Summary
No new action for 2022 Old Crop MINNEAPOLIS Wheat. The market had a nearly 116-cent swing from the May low to the June high and back on weather. While weather and geopolitical events can still affect Old Crop prices, the marketing year for Old Crop is quickly winding down, and any additional upside opportunities may be more difficult to come by before New Crop harvest. Use any remaining bounces in the market to price what Old Crop bushels you may have, if any. We won’t have any “New Alerts” for the 2022 crop (Cash, Calls, or Puts) as we have moved focus onto 2023 and 2024 Crop Year opportunities.
No action is currently recommended for the 2023 New Crop. Weather dominates the market right now, and though much of the growing season remains, Grain Market Insider suggested making a sale as prices closed below 822 to protect from further downside erosion due to a potential trend change. Seasonally, there isn’t a strong likelihood of higher prices until after harvest, although both weather and geopolitical events can change suddenly to shock the market higher. Insider will consider making sales suggestions if prices improve through this growing season, while also continuing to watch the downside for any further violations of support.
No action is recommended for the 2024 crop. With weather dominating the market right now, 2024 prices can be heavily influenced by 2023 carryover estimates and prices. As dryness increases in the spring wheat areas and with major exporting countries’ stocks at 11-year lows, Grain Market Insider would like to see September futures prices in the 800 – 825 range before we would consider suggesting making any sales recommendations, while keeping an eye on the recent lows for any violation of support.
Above: In the month of June, the September contract rallied towards the 200-day moving average and into resistance between 889 and 940, the April and December highs respectively. The market has since retreated and slowly climbed back, and it will need additional bullish news to be able to trade through the recent highs. Should the market fall back, initial support may be found between 805 – 845 with further downside support between 770 and 730.
There is talk that many traders are in disbelief of the USDA report numbers. This may explain, at least in part, why grains are trying to rebound after a negative report.
The 8-14 day forecast shows warmer and drier than normal conditions across parts of the Midwest, which may also be offering some support to the grain market.
Recent weakness in the US dollar is supportive to com commodity prices. The CPI data showed an easing of inflation, and demand for food and fuel may increase.
About 64% of the US corn crop is still said to be experiencing drought conditions.
CONAB raised their estimate of Brazilian corn production to 127.8 mmt (vs 125.7 previously).
After a higher overnight trade, soybean futures are lower at midday. This could be the result of profit taking after yesterday’s recovery.
China has been an active buyer of Brazilian soybeans for May-July 2024. They have also purchased some from the US Pacific Northwest.
CONAB reduced their estimate of Brazil’s soybean production to 154.6 mmt (vs 155.7 previously).
The expectation for June NOPA soybean crush comes in at 170.568 mb. That would be down 4.1% from May, but that is expected due to seasonal downtime for maintenance and repairs. The actual NOPA data will be released on Monday.
About 57% of the US soybean crop is said to be experiencing drought conditions.
India is reportedly banning rice exports because of shortages. They normally export about 18 mmt of the world’s 55 mmt. This has led to some thought that they will need to import wheat, as it is the next food staple in line.
The forecast looks mostly dry for the Dakotas and Minnesota over the next couple weeks, which may affect spring wheat crop ratings. Spring wheat areas of Canada are also too dry.
The Black Sea Grain Initiative expires on Monday. If an agreement for an extension is not reached, world supplies could tighten. Russia has come out and said they are willing to extend the deal if they are let back into the SWIFT banking program.
Grain Market Insider is provided by Stewart-Peterson Inc., a publishing company.
Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. The data contained herein is believed to be drawn from reliable sources but cannot be guaranteed. This material has been prepared by a sales or trading employee or agent of Total Farm Marketing by Stewart-Peterson and is, or is in the nature of, a solicitation. Any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to Stewart-Peterson Inc. Reproduction of this information without prior written permission is prohibited. Hypothetical performance results have many inherent limitations. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. The data contained herein is believed to be drawn from reliable sources but cannot be guaranteed. Reproduction and distribution of this information without prior written permission is prohibited. This material has been prepared by a sales or trading employee or agent of Total Farm Marketing and is, or is in the nature of, a solicitation. Any decisions you may make to buy, sell or hold a position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to Total Farm Marketing.
Stewart-Peterson Inc., Stewart-Peterson Group Inc., and SP Risk Services LLC are each part of the family of companies within Total Farm Marketing (TFM). Stewart-Peterson Inc. is a publishing company. Stewart-Peterson Group Inc. is registered with the Commodity Futures Trading Commission (CFTC) as an introducing broker and is a member of National Futures Association. SP Risk Services LLC is an insurance agency. A customer may have relationships with any or all three companies.
The corn market is trading higher this morning and near the top end of its range, with support likely coming from a lower US Dollar and slow farmer selling.
US export sales commitments for the 22/23 corn crop at 1.555 bb are down 35% from last year’s levels, and current 23/24 sales commitments at 159 mb are down from year-ago levels of 269 mb, the lowest since 2019.
According to the Rosario Grain Exchange, Argentina’s corn production is seen at 32 mmt, which is down 40% from previous expectations. Additionally, harvest has been slow and is estimated at only 40% complete due to high moisture.
The latest US Drought Monitor shows 64% of the corn crop is in a drought area, though down 3% from last week with the recent rainfall, leading some to question the USDA’s current yield forecast of 177.5 bpa.
Some areas of the Midwest will see enough rain through the middle of next week to boost soil moisture, but some will miss out, creating a mixed bag of conditions for developing corn and soybeans, while long-range forecasts show the possibility of drier conditions in the North/Central Midwest.
Thoughts of a better US economy following yesterday’s friendly inflation data and a lower US dollar are offering support to the soybean complex which is trading near its highs so far this morning.
Updated Producer Price Index, or PPI, information released yesterday showed inflation levels are slowing, reducing the possibility of further rate hikes by the Fed.
Following Wednesday’s surprising USDA report, some are questioning the USDA’s 52 bpa yield estimate with 57% of the US soybean crop experiencing some level of drought, though this is down 3% from last week.
Some areas of the Midwest will see enough rain through the middle of next week to boost soil moisture, but some will miss out, creating a mixed bag of conditions for developing corn and soybeans, while long-range forecasts show the possibility of drier conditions in the North/Central Midwest.
Total export sales commitments for 22/23 are down 11% from last year versus the USDA’s revised estimate of a 8% reduction. Total sales commitments for 23/24 are only 153 mbu which are historically low compared to 509 mbu sold last year at this time.
The wheat markets are trading higher this morning on talk of India banning rice exports, and possibly wheat exports as well.
Considering India is the world’s largest rice exporter this may add demand to wheat as the next closest substitute.
Currently, 52% of the winter wheat crop is experiencing drought, down 2% from last week, while spring wheat areas in drought climbed 6% to 25% as the dryness continues in the northern Plains.
The Northern Plains are expected to have a couple of chances for rain in the next week, but amounts are expected to be below normal with below normal temperatures. The Central/Southern Plains are expected to receive periodic rainfall with a decent frequency of activity for this time of year with mild temperatures, although the rainfall may further disrupt wheat harvest.
Minneapolis wheat could lead the wheat complex higher with the growing dryness in the region and falling crop conditions.
Grain Market Insider is provided by Stewart-Peterson Inc., a publishing company.
Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. The data contained herein is believed to be drawn from reliable sources but cannot be guaranteed. This material has been prepared by a sales or trading employee or agent of Total Farm Marketing by Stewart-Peterson and is, or is in the nature of, a solicitation. Any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to Stewart-Peterson Inc. Reproduction of this information without prior written permission is prohibited. Hypothetical performance results have many inherent limitations. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. The data contained herein is believed to be drawn from reliable sources but cannot be guaranteed. Reproduction and distribution of this information without prior written permission is prohibited. This material has been prepared by a sales or trading employee or agent of Total Farm Marketing and is, or is in the nature of, a solicitation. Any decisions you may make to buy, sell or hold a position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to Total Farm Marketing.
Stewart-Peterson Inc., Stewart-Peterson Group Inc., and SP Risk Services LLC are each part of the family of companies within Total Farm Marketing (TFM). Stewart-Peterson Inc. is a publishing company. Stewart-Peterson Group Inc. is registered with the Commodity Futures Trading Commission (CFTC) as an introducing broker and is a member of National Futures Association. SP Risk Services LLC is an insurance agency. A customer may have relationships with any or all three companies.
US corn export sales last week for both Old and New Crop were above trade expectations and the largest since March. This friendly news helped corn erase nearly all of yesterday’s losses.
A drier long-range forecast and the fact that 57% of the crop remains in drought conditions helped to rally the soybean complex higher today, surpassing yesterday’s losses.
Wheat markets followed corn and soybean prices higher. Spring wheat producing areas experiencing drought now total 25%, rainfall looks limited for these areas over the next week.
The US Dollar Index continued its move lower, falling to its lowest level since April 2022. A weaker US dollar is supportive to commodities.
To see the US 7-day precipitation forecast courtesy of NOAA, Weather 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 Old Crop. The market had a nearly 140-cent swing from the May low to the June high and back on weather. Use any remaining bounces in the market to price what Old Crop bushels you may have, if any. We won’t have any “New Alerts” for 2022 Corn (Cash, Calls, or Puts) as we have moved focus onto 2023 and 2024 Crop Year Opportunities.
No action is recommended for New Crop 2023 corn. In the month of June, December corn experienced a 137-cent high to low, swing primarily on weather and production concerns. Since then, planted acreage figures have increased by about 2 mil. acres and pushed the current 2023 carryout estimate north of 2.2 billion bushels, which hasn’t been seen since the 2018/19 crop year. When Dec corn was trading over 620, Grain Market Insider recommended making a cash sale and buying Dec 580 puts to cover more downside. The Dec 580 puts, paired with the previously recommended Dec 610 calls, yielded a combination of options commonly known as a Strangle, which benefits from dramatic market moves either up or down. Considering crop conditions continue to be low with over 60% of the crop experiencing drought, changing weather can still affect final production and rally prices, at which point the 610 calls should gain in value and protect any already sold bushels if the market makes new highs.
Grain Market Inside sees continued opportunity to sell a portion of your 2024 Corn. While the market has seen some extreme volatility in recent weeks, we are entering a time of year when prices tend to have more headwinds than tailwinds to the upside. Also, with the USDA’s surprise acreage jump, continued rain in the forecast and slow demand, the size of the 2023 crop still has the potential to yield a carryout north of 2 billion bushels. A large 2023 carryout in the US, combined with the large corn crop in Brazil, could pose greater headwinds for 2024 prices. With it being the time of year to start getting early sales for next year on the books, and no recent bullish catalyst from the Stocks or Acreage reports, we are suggesting making a sale for the 2024 corn crop using either a DEC ’24 HTA contract or DEC ’24 futures, so the basis can be set at a later more advantageous date. While $5.00 futures is not the $6.00 or $7.00, we’ve become accustomed to the last few years, it’s still historically a good price to be getting some early sales on the books at.
Buyers returned to the corn market on Thursday, as prices finished with strong double-digit gains. Spillover support from the soybean market, and a short squeeze in the July futures, with expiration on Friday, helped triggered the buying support.
Weekly exports sales reported this morning for corn were slightly above market expectations. The USDA reported Old Crop sales of 18.4 mb and New Crop sales of 19.4 mb. Numbers are still overall disappointing as Old Crop sales need to average 26.5 mb weekly to hit the USDA export sales target of 1.650 billion bushels for the 2022-23 marketing year.
The strong price action with December corn pushing back over the $5.00 price level and closing above the 10-day moving average could likely set up additional buying strength on Fridays open. The key to today’s price movement will be follow-through to end the week.
Traders are questioning final yield projections, as 64% of the corn crop is still experiencing some form of drought, down 3% from last week. In addition, the fungal disease, Tar Spot, is now being found in six states. The spread of this disease will be watched by the market.
The U.S. Dollar Index has broken through the 100-basis point level and traded to its lowest level since April 2022 on the prospects that Fed interest rate hikes may be coming to an end. The weaker dollar has helped trigger some money flow into the commodity and equity markets.
Above: The USDA added a bearish 4 million acres to its planted acreage estimate on June 30. The September contract is now extremely oversold and consolidating in the 480 – 505 support level that has been in place since January 2021. The oversold condition of the market would be considered supportive to higher prices if reversal action occurs; if not, there may not be much support until 390 – 415. Overhead lies strong resistance between 595 and 625.
Soybeans
Soybeans Action Plan Summary
No new action is being recommended for Old Crop. Any remaining old crop bushels should be getting priced into this rally. We won’t have any “New Alerts” for 2022 Soybeans (Cash, Calls, or Puts) as we have moved focus onto 2023 and 2024 Crop Year Opportunities.
Grain Market Insider sees an active opportunity to sell a portion of your 2023 soybeans. The USDA shocked the market with bearish expectations for the 2023 soybean crop’s supply and demand. Demand was lowered for both 2022 and 2023 crop years, with an added 25 mbu of 2022 inventory carried over to 2023. The net result being a current ending stocks estimate of 300 mbu for the 2023 crop, a full 50% higher than trade expectations. While the key part of the growing season is still ahead, and production concerns remain, that could turn the market higher again, continued favorable forecasts and improving crop conditions may lead the market to further price erosion. With the very dry conditions that many of you continue to experience, and the tremendous uncertainty that brings to what you’ll have for bushels this fall, we understand if there’s hesitancy to sell anything here. If you are worried about committing physical bushels with a cash sale, consider selling futures or buying put options.
No action is recommended for 2024 crop.Grain Market Insider continues to monitor any developments for the 2024 crop, though it may not be until after harvest or toward year’s end before we will consider recommending any 2024 crop sales.
Soybeans, along with soybean meal and oil, saw big gains today that surpassed yesterday’s losses after the USDA increased the 22/23 carryout to 255 mb and announced a 23/24 carryout of 300 mb, 50% larger than the 200 mb figure that was expected.
Today’s gains were largely fueled by the fact that 57% of the US soybean crop is experiencing drought conditions with a drier long range forecast for the north central Midwest, and a sharply lower US dollar.
This morning, the USDA announced that private exporters reported a sale of 315,704 metric tons of soybeans for delivery to Mexico during the 2023/2024 marketing year.
Chinese customs data shows that soybean imports in June totaled 10.27 mmt, representing a 24.5% increase versus last June, and year over year imports have risen 13.6% to 52.575 mmt, mostly on large purchases of cheap Brazilian soybeans. Chinese demand may be slowing in the second half of the year though, as hog herds begin to shrink due to the lack of profitability and less feed is needed, according to a Chinese consultant, Sitonia Consulting.
Anec reports that Brazil’s soybean exports are seen reaching 10.45 mmt in July, with soybean meal exports reaching 2.5 mmt for the same period. This compares to just 7 mmt of soybeans and 2.07 mmt of meal exported for the same time last year.
Above: The soybean market is struggling with heavy resistance in the 1490-1505 area and posted a bearish reversal following the July 12 USDA report. The market reversed sharply higher on July 13, but prices need to show continued strength to negate the bearish action from report day. Initial support below the market is near 1425 with further support being in the 1350 – 1390 area.
Wheat
Market Notes: Wheat
The USDA reported an increase of 14.5 mb of wheat export sales for 23/24. The USDA is projecting 725 mb of exports in 23/24, and commitments now total 184 mb (down 29% from last year).
Despite a negative report yesterday, all three US wheat futures classes rebounded today and closed in positive territory. It may have been a case of “follow the leader” though, as corn and soybean futures led the charge higher.
The US Dollar Index continues to decline, breaking below the 100 level today. This is most likely tied to yesterday’s CPI and today’s PPI data, which showed easing inflation. There is thought that the Fed may be close to the end of raising interest rates, and this might be putting some risk premium back into financial and commodity markets.
In the face of a negative report yesterday, global wheat ending stocks (minus China) are still at an 11-year low.
Matif wheat closed a little higher, gaining about 1.50 – 2.00 euros. Support may be building for wheat (both US and abroad) at these lower levels. Additionally, there is still uncertainty surrounding the impending expiration of the Black Sea Grain Initiative. Putin reportedly asked for an extension if Russia is let back into the SWIFT banking program.
Chicago Wheat Action Plan Summary
No new action is recommended for 2023 New Crop. In the month of June, the September Chicago wheat contract posted a 163-cent range and has largely been a follower of the corn market which has been mostly driven by weather. While demand remains weak, production concerns in parts of the country remain, as does uncertainty surrounding the Black Sea region and the potential for major exporting countries’ inventory to hit 16-year lows. While Grain Market Insider will continue to monitor the downside for any violation of major support, following the recent sales recommendation it may be after harvest or near the end of summer before we consider recommending any additional sales for the 2023 crop.
No action is currently recommended for 2024 Chicago wheat. Price volatility has risen in the last couple of weeks due to the changing weather forecasts and current events in the Black Sea. While prices have fallen off their recent highs, plenty of time remains to market next year’s crop. War continues in the Black Sea region, major exporting countries’ stocks expected to fall to 16-year lows, and no one knows what the weather will bring, leaving the market vulnerable to many uncertainties. For now, after recently recommending making a sale for the 2024 crop, and while keeping an eye on the market to see if any major support is broken, Grain Market Insider would need to see prices north of 800 before considering recommending any additional sales.
No Action is currently recommended for 2025 Chicago Wheat. 2025 markets are very illiquid right 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.
Above: September wheat rallied nearly 200 cents from the May low to its June high when it encountered heavy resistance and posted a bearish reversal. This technical formation on the price chart is considered bearish and momentum may be adding to the bearish tone. Support below the market may be found between 650 – 610, while resistance above the market rests between 770 – 810.
KC Wheat Action Plan Summary
We continue to look for better prices before making any 2023 sales. While Crop ratings have improved and the Black Sea export corridor remains open, questions remain about the size of the HRW crop, whether Russia will continue to agree to keep the Black Sea corridor open, and what production looks like in Europe and Australia. We continue to target 950 – 1000 in the July futures as a potential level to suggest the next round of New Crop sales.
Patience is warranted for the 2024 crop. With continued issues in the Black Sea region and with major exporting countries’ stocks expected to fall to 16-year lows, we are willing to be patient with further sales of New Crop HRW wheat. We are targeting just below the 900 level on the upside while keeping an eye on recent lows for any violation of support.
No Action is currently recommended for 2025 Chicago Wheat. 2025 markets are very illiquid right 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.
Above: Balancing both production and demand concerns, the September contract continues to trade within the 736 – 919 range established in May. The recent downturn in the market has established heavy resistance above the market between 890 – 920, with initial support coming in between 778 – 763 and key support near the May low of 736.
Mpls Wheat Action Plan Summary
No new action for 2022 Old Crop MINNEAPOLIS Wheat. The market had a nearly 116-cent swing from the May low to the June high and back on weather. While weather and geopolitical events can still affect Old Crop prices, the marketing year for Old Crop is quickly winding down, and any additional upside opportunities may be more difficult to come by before New Crop harvest. Use any remaining bounces in the market to price what Old Crop bushels you may have, if any. We won’t have any “New Alerts” for the 2022 crop (Cash, Calls, or Puts) as we have moved focus onto 2023 and 2024 Crop Year opportunities.
No action is currently recommended for the 2023 New Crop. Weather dominates the market right now, and though much of the growing season remains, Grain Market Insider suggested making a sale as prices closed below 822 to protect from further downside erosion due to a potential trend change. Seasonally, there isn’t a strong likelihood of higher prices until after harvest, although both weather and geopolitical events can change suddenly to shock the market higher. Insider will consider making sales suggestions if prices improve through this growing season, while also continuing to watch the downside for any further violations of support.
We continue to hold on pricing the 2024 crop. With the September ‘24 contract about 60 cents from its May 22 low, continued issues in the Black Sea region and major exporting countries’ stocks expected to fall to 16-year lows, we are entering the time frame where we would consider suggesting making sales recommendations while also keeping an eye on the recent lows for any violation of support.
Above: The September contract rallied out of its congestion area on the Front Month Continuous chart towards the 200-day moving average and into resistance between 889 and 940, the April and December highs respectively. With the market off those highs, it will need additional bullish news to be able to trade through them. Should the market continue to fall, support may be found between 770 and 730.
The USDA reported an increase of 18.4 mb of corn export sales for 22/23 and an increase of 18.5 mb for 23/24.
CPI data yesterday is leading to some thoughts that the Fed may be nearing the end of the interest rate increases. This is also pressuring the US dollar and maybe putting some risk premium back into financial and commodity markets.
The western Corn Belt looks to be drier and warmer for the second week of the forecast.
The USDA’s increased estimate of Brazilian corn production, at 133 mmt (vs 132 previously), will likely limit upside for US futures. Brazil export values are also cheaper than US, pressuring the export market too.
The USDA reported an increase of 3.0 mb of soybean export sales for 22/23 and an increase of 7.7 mb for 23/24.
Private exporters reported sales of 315,704 mt of soybeans for delivery to Mexico during the 23/24 marketing year.
Yesterday’s USDA estimate of new crop soybean carryout at 300 mb was higher than many anticipated.
Chinese soybean imports in June totaled 10.27 mmt; this is 24.5% above last year for the same timeframe.
The USDA reported an increase of 14.5 mb of wheat export sales for 23/24.
The USDA estimated 4.76 bb of global wheat ending stocks (excluding China). This is the lowest in 11 years.
The 8-14 day forecast is predicting below normal rainfall for spring wheat areas in the northern US plains. Canda is also dry, which may affect their canola and spring wheat production.
According to the Rosario Board of Trade, Argentina is expected to plant 5.4 million hectares of wheat, a 200,000 hectare decline from the June estimate. Production is estimated at 15.6 mmt.
Grain Market Insider is provided by Stewart-Peterson Inc., a publishing company.
Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. The data contained herein is believed to be drawn from reliable sources but cannot be guaranteed. This material has been prepared by a sales or trading employee or agent of Total Farm Marketing by Stewart-Peterson and is, or is in the nature of, a solicitation. Any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to Stewart-Peterson Inc. Reproduction of this information without prior written permission is prohibited. Hypothetical performance results have many inherent limitations. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. The data contained herein is believed to be drawn from reliable sources but cannot be guaranteed. Reproduction and distribution of this information without prior written permission is prohibited. This material has been prepared by a sales or trading employee or agent of Total Farm Marketing and is, or is in the nature of, a solicitation. Any decisions you may make to buy, sell or hold a position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to Total Farm Marketing.
Stewart-Peterson Inc., Stewart-Peterson Group Inc., and SP Risk Services LLC are each part of the family of companies within Total Farm Marketing (TFM). Stewart-Peterson Inc. is a publishing company. Stewart-Peterson Group Inc. is registered with the Commodity Futures Trading Commission (CFTC) as an introducing broker and is a member of National Futures Association. SP Risk Services LLC is an insurance agency. A customer may have relationships with any or all three companies.
December corn traded both sides of unchanged overnight and is now near the top of its 9-1/2 cent range as it recovers somewhat from yesterday’s bearish USDA report.
The USDA lowered the potential corn yield to 177.5 bushels/acres (-4.0 bu/acre), just above market expectations, but did not adjust the demand side of the balance sheet to establish a new carry out projection of 2.262 billion bushels for the 23/24 marketing year. This total was in line with analysts’ expectations. If realized 23/24 ending stocks and stocks/use ratios would be the highest in 7 years.
The USDA lowered old crop export demand by 75 million bushels, and traders in the market pressured corn prices feeling that a projected new crop export demand of 2.100 billion bushels, up 450 mb from 22/23 projections, will be difficult to reach at current corn price levels.
Weekly ethanol production reported by the EIA came in below expectations and slipped to 1,032k barrels/day from the previous week’s 1,060k barrels/day. Ethanol stocks also rose 1.8% to 22.658M barrels.
The Funds were active sellers yesterday following the USDA report, selling an estimated 10,500 contracts. They are now estimated to be short 26,000 contracts.
The soybean complex is trading higher this morning with traders likely covering some short positions after yesterday’s bearish USDA report, with soybean meal and oil also trading higher.
The USDA surprised the market by adding 25 mb to the 22/23 carryout bringing the total to 255 mb (versus 232 mb expected) and only dropping the 23/24 carryout numbers 50 mb from last June to 300 mb, with an estimated yield of 52 bpa. Trade expectations were about 200 mb for 23/24 carry out with a 51.3 bpa yield.
South American production for 22/23 was left unchanged in today’s report with Brazil’s crop estimated at 156 mmt versus 156.2 mmt expected, and Argentina’s crop estimated at 25 mmt versus 23.6 mmt expected.
Funds were active sellers of soybeans following the bearish USDA report, selling an estimated 10,000 contracts. They are now estimated to be long 94,000 contracts.
Export sales will be announced later this morning for soybeans and are expected to range from 10 – 30 mb.
The wheat market is also posting a bit of a recovery from yesterday’s downturn with Chicago and Minneapolis mostly higher, and K.C. mixed.
In yesterday’s report, the USDA estimated 23/24 all wheat production at 1.739 bb versus expectations of 1.677 bb, and 1.665 bb last month. 22/23 wheat carryout was estimated at 580 mb versus expectations of 583 mb, and 23/24 carryout came in at 592 mb when the trade was looking for 565 mb.
The USDA estimated the winter wheat yield at 46.9 bpa, up 2.0 bu from last month’s projection, and for reference, last year’s average yield was 47.0 bpa.
Like corn and beans, funds were active sellers in Chicago wheat, selling an estimated 9,000 contracts. They are now estimated to be short 59,000 Chicago wheat contracts.
Export sales released later this morning are expected to range from 8 – 16 mb.
Grain Market Insider is provided by Stewart-Peterson Inc., a publishing company.
Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. The data contained herein is believed to be drawn from reliable sources but cannot be guaranteed. This material has been prepared by a sales or trading employee or agent of Total Farm Marketing by Stewart-Peterson and is, or is in the nature of, a solicitation. Any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to Stewart-Peterson Inc. Reproduction of this information without prior written permission is prohibited. Hypothetical performance results have many inherent limitations. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. The data contained herein is believed to be drawn from reliable sources but cannot be guaranteed. Reproduction and distribution of this information without prior written permission is prohibited. This material has been prepared by a sales or trading employee or agent of Total Farm Marketing and is, or is in the nature of, a solicitation. Any decisions you may make to buy, sell or hold a position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to Total Farm Marketing.
Stewart-Peterson Inc., Stewart-Peterson Group Inc., and SP Risk Services LLC are each part of the family of companies within Total Farm Marketing (TFM). Stewart-Peterson Inc. is a publishing company. Stewart-Peterson Group Inc. is registered with the Commodity Futures Trading Commission (CFTC) as an introducing broker and is a member of National Futures Association. SP Risk Services LLC is an insurance agency. A customer may have relationships with any or all three companies.
A carryout projection of 2.262 billion bushels for the 23/24 crop year pushed traders into sell mode, sending DEC ‘23 corn prices to levels not seen since September 2021.
The USDA’s carryout estimates for 22/23 and 23/24 crops far exceeded the upper end of trade expectations and sent the soybean complex lower, creating a bearish reversal following today’s report.
The drag of the bearish soybean numbers pulled both soybean meal and oil lower, but had the effect of being friendly to DEC Board Crush, which traded 7-cents higher following the report.
Higher 23/24 production estimates and carryout projections from today’s USDA report sent the wheat markets lower, with Chicago leading the way down with losses nearing 28 cents in the September contract.
The June Consumer Price Index report was released today and showed a 0.2% increase versus an expected increase of 0.3%, reducing the chances of further rate hikes. The US Dollar Index tumbled on the news, which is supportive to commodities, though today’s USDA report outweighed any positive reaction in the grain markets.
To see the current NOAA US 8 – 14 day Temperature and Precipitation outlooks, 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 Old Crop. The market had a nearly 140-cent swing from the May low to the June high and back on weather. Use any remaining bounces in the market to price what Old Crop bushels you may have, if any. We won’t have any “New Alerts” for 2022 Corn (Cash, Calls, or Puts) as we have moved focus onto 2023 and 2024 Crop Year Opportunities.
No action is recommended for New Crop 2023 corn. December corn rallied 139 cents from its May 18 low to its high on June 21 on weather and production concerns. The market is currently off that high on poor export sales figures and a forecast that shows increased chances of rain in the next couple of weeks. When Dec corn was trading over 620, Grain Market Insider recommended making a cash sale and buying Dec 580 puts to cover more downside. The Dec 580 puts, paired with the previously recommended Dec 610 calls, yields a combination of options commonly known as a Strangle, which benefits from dramatic market moves either up or down. Considering it is still early in the season, with drought and crop production uncertainty it is too soon to know if the market high is in or not. Either way, the Strangle position is prepared. If conditions improve from here and prices make new lows, unsold bushels will be protected with the 580 puts. If it doesn’t rain again and prices skyrocket to new highs, already sold bushels will be protected by the 610 calls.
Grain Market Inside recommends selling New Crop 2024 Corn. While the market has seen some extreme volatility in recent weeks, we are entering a time of year when prices tend to have more headwinds than tailwinds to the upside. Also, with last week’s surprise acreage jump, continued rain in the forecast and slow demand, the size of the 2023 crop still has the potential to yield a carryout north of 2 billion bushels. A large 2023 carryout in the US, combined with the large corn crop in Brazil, could pose greater headwinds for 2024 prices. With it being the time of year to start getting early sales for next year on the books, and no recent bullish catalyst from the Stocks or Acreage reports, we are suggesting making a sale for the 2024 corn crop using either a DEC ’24 HTA contract or DEC ’24 futures, so the basis can be set at a later more advantageous date. While $5.00 futures is not the $6.00 or $7.00, we’ve become accustomed to the last few years, it’s still historically a good price to be getting some early sales on the books at.
The corn market saw strong selling pressure with double digit losses on the session after the USDA WASDE report triggered selling. December corn closed 17-¾ cents lower and established a new low for the move. December corn traded to its lowest point since September 2021.
The USDA lowered the potential corn yield to 177.5 bushels/acres (-4.0 bu/acre), just above market expectations, but did not adjust the demand side of the balance sheet to establish a new carry out projection of 2.262 billion bushels for the 2023-24 marketing year. This total was in line with analysts’ expectations.
The USDA lowered old crop export demand by 75 million bushels, and traders in the market pressured corn prices feeling that a projected new crop export demand of 2.100 billion bushels, up 450 mb from 2022-23 projections, will be difficult to reach at current corn price levels.
The weak price action with corn futures trading near the bottom end of the range on the close will likely trigger additional selling pressure in upcoming sessions.
The weather stays negative price as a beneficial rain system moved across key areas of the Corn Belt on Wednesday. Forecasts are still looking at an active weather pattern for the majority of the corn belt through the end of July.
Above: The USDA added a bearish 4 million acres to its planted acreage estimate on June 30. The September contract is now extremely oversold and consolidating in the 480 – 505 support level that has been in place since January 2021. The oversold condition of the market would be considered supportive to higher prices if reversal action occurs; if not, there may not be much support until 390 – 415. Overhead lies strong resistance between 595 and 625.
Soybeans
Soybeans Action Plan Summary
No new action is being recommended for Old Crop. Any remaining old crop bushels should be getting priced into this rally. We won’t have any “New Alerts” for 2022 Soybeans (Cash, Calls, or Puts) as we have moved focus onto 2023 and 2024 Crop Year Opportunities.
Grain Market Insider recommendsselling a portion of your 2023 soybeans today. The USDA shocked the market with bearish expectations for the 2023 soybean crop’s supply and demand. Demand was lowered for both 2022 and 2023 crop years, with an added 25 mbu of 2022 inventory carried over to 2023. The net result being a current ending stocks estimate of 300 mbu for the 2023 crop, a full 50% higher than trade expectations. While the key part of the growing season is still ahead, and production concerns remain, that could turn the market higher again, continued favorable forecasts and improving crop conditions may lead the market to further price erosion. With the very dry conditions that many of you continue to experience, and the tremendous uncertainty that brings to what you’ll have for bushels this fall, we understand if there’s hesitancy to sell anything here. If you are worried about committing physical bushels with a cash sale, consider selling futures or buying put options.
No action is recommended for 2024 crop.Grain Market Insider continues to monitor any developments for the 2024 crop, though it may not be until after harvest or toward year’s end before we will consider recommending any 2024 crop sales.
The USDA surprised the market by adding 25 mb to the 22/23 carryout versus an expected 2 mb (255 mb actual carryout vs 232 mb expected), and only dropping 50 mb from the 23/24 carryout numbers from last June to 300 mb, with an estimated yield of 52 bpa. Trade expectations were about 200 mb for 23/24 carryout with a 51.3 bpa yield.
South American production for 22/23 was left unchanged in today’s report with Brazil’s crop estimated at 156 mmt versus 156.2 mmt expected, and Argentina’s crop estimated at 25 mmt versus 23.6 mmt expected.
Also in today’s USDA report, global ending stocks for the 22/23 season came in above expectations, as well with an increase of 1.6 mmt to 103 mmt. For 23/24, global stocks were estimated to decrease 2.3 mmt from June to 121 mmt, which is still a record.
The USDA reported this morning that private exporters reported sales of 105,000 metric tons of soybean cake and meal for delivery to unknown destinations for the 23/24 marketing year. There has been no confirmation yet of China’s rumored purchase of 10 – 14 cargoes of US soybeans off the PNW for October delivery for their reserves.
Additionally, as of June 29, China has bought just 1.72 mmt of 23/24 US soybeans versus 7.77 mmt for the same time last year.
Above: The soybean market is struggling with heavy resistance in the 1490-1505 area and posted a bearish reversal following the July 12 USDA report. The market reversal is a bearish development and could lead to further price erosion without other bullish information. Initial support below the market is near 1425 with further support being in the 1350 – 1390 area.
Wheat
Market Notes: Wheat
The USDA estimated 23/24 all wheat production at 1.739 bb versus expectations of 1.677 bb, and 1.665 on the June report. 22/23 wheat carryout was estimated at 580 mb versus expectations of 583 mb. 23/24 carryout came in at 592 mb when the trade was looking for 565 mb.
The USDA estimated the winter wheat yield at 46.9 bpa, up 2.0 bu from last month’s projection, and for reference, last year’s average yield was 47.0 bpa.
Aside from today’s WASDE report, weather looks like it will still be a factor for the spring wheat crop. The next 7 days look mostly dry for the northern US Plains and Canadian Prairies.
Recent Russian drone attacks on the Ukraine port of Odessa are leading to increased tensions and concern that the Black Sea export corridor will not be renewed next week.
The sharply lower US Dollar Index was not enough to outweigh the negative results of today’s report. Down the road, however, if it continues to trend lower, it may benefit the export market.
Chicago Wheat Action Plan Summary
No new action is recommended for 2023 New Crop. In the month of June, the September Chicago wheat contract posted a 163-cent range and has largely been a follower of the corn market which has been mostly driven by weather. While demand remains weak, production concerns in parts of the country remain, as does uncertainty surrounding the Black Sea region and the potential for major exporting countries’ inventory to hit 16-year lows. While Grain Market Insider will continue to monitor the downside for any violation of major support, following the recent sales recommendation it may be after harvest or near the end of summer before we consider recommending any additional sales for the 2023 crop.
No action is currently recommended for 2024 Chicago wheat. Price volatility has risen in the last couple of weeks due to the changing weather forecasts and current events in the Black Sea. While prices have fallen off their recent highs, plenty of time remains to market next year’s crop. War continues in the Black Sea region, major exporting countries’ stocks expected to fall to 16-year lows, and no one knows what the weather will bring, leaving the market vulnerable to many uncertainties. For now, after recently recommending making a sale for the 2024 crop, and while keeping an eye on the market to see if any major support is broken, Grain Market Insider would need to see prices north of 800 before considering recommending any additional sales.
No Action is currently recommended for 2025 Chicago Wheat. 2025 markets are very illiquid right 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.
Above: September wheat rallied nearly 200 cents from the May low to its June high when it encountered heavy resistance and posted a bearish reversal. This technical formation on the price chart is considered bearish and momentum may be adding to the bearish tone. Support below the market may be found between 650 – 610, while resistance above the market rests between 770 – 810.
KC Wheat Action Plan Summary
We continue to look for better prices before making any 2023 sales. While Crop ratings have improved and the Black Sea export corridor remains open, questions remain about the size of the HRW crop, whether Russia will continue to agree to keep the Black Sea corridor open, and what production looks like in Europe and Australia. We continue to target 950 – 1000 in the July futures as a potential level to suggest the next round of New Crop sales.
Patience is warranted for the 2024 crop. With continued issues in the Black Sea region and with major exporting countries’ stocks expected to fall to 16-year lows, we are willing to be patient with further sales of New Crop HRW wheat. We are targeting just below the 900 level on the upside while keeping an eye on recent lows for any violation of support.
No Action is currently recommended for 2025 Chicago Wheat. 2025 markets are very illiquid right 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.
Above: Balancing both production and demand concerns, the September contract continues to trade within the 736 – 919 range established in May. The recent downturn in the market has established heavy resistance above the market between 890 – 920, with initial support coming in between 778 – 763 and key support near the May low of 736.
Mpls Wheat Action Plan Summary
No new action for 2022 Old Crop MINNEAPOLIS Wheat. The market had a nearly 116-cent swing from the May low to the June high and back on weather. While weather and geopolitical events can still affect Old Crop prices, the marketing year for Old Crop is quickly winding down, and any additional upside opportunities may be more difficult to come by before New Crop harvest. Use any remaining bounces in the market to price what Old Crop bushels you may have, if any. We won’t have any “New Alerts” for the 2022 crop (Cash, Calls, or Puts) as we have moved focus onto 2023 and 2024 Crop Year opportunities.
No action is currently recommended for the 2023 New Crop. Weather dominates the market right now, and though much of the growing season remains, Grain Market Insider suggested making a sale as prices closed below 822 to protect from further downside erosion due to a potential trend change. Seasonally, there isn’t a strong likelihood of higher prices until after harvest, although both weather and geopolitical events can change suddenly to shock the market higher. Insider will consider making sales suggestions if prices improve through this growing season, while also continuing to watch the downside for any further violations of support.
We continue to hold on pricing the 2024 crop. With the September ‘24 contract about 60 cents from its May 22 low, continued issues in the Black Sea region and major exporting countries’ stocks expected to fall to 16-year lows, we are entering the time frame where we would consider suggesting making sales recommendations while also keeping an eye on the recent lows for any violation of support.
Above: The September contract rallied out of its congestion area on the Front Month Continuous chart towards the 200-day moving average and into resistance between 889 and 940, the April and December highs respectively. With the market off those highs, it will need additional bullish news to be able to trade through them. Should the market continue to fall, support may be found between 770 and 730.
Parts of the central and southern Corn Belt should receive good rains over the next five days, bringing relief to some of the driest areas.
FOB corn prices in Brazil are still cheaper than the US, keeping pressure on exports.
About 30% of China’s corn is said to be in dry areas that could affect their production. This could lead to increased Chinese imports down the road, though where they source the beans from is another question.
July corn on Brazil’s Bovespa Exchange is around the equivalent of $4.80 per bushel. This is near the lowest level in two years.
Private exporters reported sales of 105,000 mt of soybean meal sold to unknown destinations for the 23/24 marketing year.
Both soybean meal and oil are higher this morning, offering a boost to soybean futures. Palm oil is higher as well, providing some support too.
CPI data this morning showed that inflation increased 0.2% in June, which was below expectations.
China is increasing soybean imports from Brazil due to growing concerns about what US supply will look like. As of June 29, China has bought just 1.72 mmt of US soybeans (for 23/24) vs 7.77 mmt for the same time period last year.
Spring wheat areas have a mostly dry forecast for the next 7 days, including the northern US Plains and the Canadian prairies.
Russian drone attacks on the Odessa port in Ukraine led to some support in the wheat market yesterday. Reportedly, of the 20 drones sent, only 2 made it through Ukraine’s air defense system. In any case, this does not bode well for the extension of the export corridor that expires next week.
The US Dollar Index is sharply lower this morning. Wheat does not seem to be responding much, but this could have a bigger impact on exports down the road if the USD continues to decline.
Japan is tendering for 123,770 mt of food-quality wheat from the US, Canada, and Australia.
Grain Market Insider is provided by Stewart-Peterson Inc., a publishing company.
Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. The data contained herein is believed to be drawn from reliable sources but cannot be guaranteed. This material has been prepared by a sales or trading employee or agent of Total Farm Marketing by Stewart-Peterson and is, or is in the nature of, a solicitation. Any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to Stewart-Peterson Inc. Reproduction of this information without prior written permission is prohibited. Hypothetical performance results have many inherent limitations. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. The data contained herein is believed to be drawn from reliable sources but cannot be guaranteed. Reproduction and distribution of this information without prior written permission is prohibited. This material has been prepared by a sales or trading employee or agent of Total Farm Marketing and is, or is in the nature of, a solicitation. Any decisions you may make to buy, sell or hold a position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to Total Farm Marketing.
Stewart-Peterson Inc., Stewart-Peterson Group Inc., and SP Risk Services LLC are each part of the family of companies within Total Farm Marketing (TFM). Stewart-Peterson Inc. is a publishing company. Stewart-Peterson Group Inc. is registered with the Commodity Futures Trading Commission (CFTC) as an introducing broker and is a member of National Futures Association. SP Risk Services LLC is an insurance agency. A customer may have relationships with any or all three companies.
