December corn hit a 1-year low yesterday, likely in anticipation of a record Brazil safrinha crop, as well as a larger US corn crop this fall.
US weather looks mostly favorable for planting, but North Dakota is still behind with only 5% of the crop planted.
Private exporters reported the cancellation of 272,000 mt of corn for delivery to China during the 22/23 marketing year.
North Dakota is said to only have 2% of the soybean crop planted, which could mean prevented acres in 2023.
July soybeans on China’s Dalian Exchange were down 2.3% yesterday, around the equivalent of $15.41 per bushel.
July soybean futures have filled the gap that was left on the chart back in late July of 2022 (from 13.55-3/4)
Brazilian soybean oil is now the world’s cheapest vegetable oil.
The Day 1 yield estimate on the HRW wheat crop tour was 29.8 bpa (this is the worst number since the tour began in 2003 – normal is around 45 bpa).
The last vessel left a Black Sea port Wednesday, as expiration of the corridor deal is upon us. However, some sources are reporting that Turkey has announced another extension.
JP Morgan has stated that a recession is certain, which could mean that commodity demand down the road is still a major concern.
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 lower again after a sharp selloff yesterday that affected the entire grain complex.
Last week’s WASDE report that estimated US corn production at 2.22 billion bushels while also estimating Brazilian corn production at a record high has had a big bearish effect on grains.
US export sales will not have much of a window as Brazilian corn is nearing harvest and is expected to be 130 mmt.
The Black Sea grain deal expires tomorrow and so far there has been no resolution between the countries.
Soybeans sold off sharply yesterday led lower by over a 4% decline in July soybean oil. Soybeans, soybean meal and oil are all lower again this morning.
Soybean oil has been under pressure from the palm oil market which has been floundering as demand from India wanes and supplies remain stout.
In India, oilmeal exports have fallen significantly with soymeal exports falling to 177,243 tons from 235,233 tons in March.
Conditions in Nebraska and Kansas remain dry but have received some showers lately but overall, a record soybean crop is possible in the US barring a weather event.
Wheat is mixed this morning with Chicago lower but KC and Minn slightly higher as the HRW wheat tour finds the crop in Kansas badly damaged by drought and cold.
Argentina’s 23/24 wheat output is being estimated at 18 mmt which would be a 45% increase year over year, and they have expanded acres by 3%.
Crop scouts in Kansas are projecting the average yield for the northern part of the state at just 29.8 bpa, the worst for the tour’s first day since 2003.
With no extension in sight for the Black Sea deal, the corridor is now nearly empty with only seven outbound vessels left in safe passage.
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.
Weighed down by a quick planting pace and favorable weather, corn finished in the bottom two-thirds of its recent range.
With planting well ahead of average and rising South American production estimates, the soybean market posted its largest down day this year, as speculators continue to liquidate long positions.
Also adding pressure to soybeans was a weak world veg oil market that led soybean oil to near 5% losses.
A slower-than-average spring wheat planting pace lent support to Minneapolis contracts, while profit taking on the recent rally led the Chicago and nearby K.C. contracts lower.
To see the updated U.S. 7- day Total Precipitation outlook from the National Weather Service, 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
Updated as of 05/10/2023
No action is recommended at this time for Old Crop. At this point in the crop marketing year most, if not all, of your Old Crop 2022 corn should be sold out. With the substantial inverse between old and new crop contract months, large rallies for Old Crop corn may be difficult to come by as we move forward. Consider using 40 to 50-cent rallies to sell any remaining inventory.
No action is currently recommended for the 2023 new crop. While the crop is going in the ground fast, the most volatile part of the growing season remains ahead. We’re going to maintain an opportunistic posture for now, targeting 590 – 630 versus December corn to suggest any further cash sales.
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.
Grain Market Insider Corn open positions listed above.
Corn markets saw technical selling follow through from the softer price action from Monday’s close. Historically, high corn planting pace and strong selling pressure in the soybean market added to the selling pressure.
US corn planting moved to 65% planted, which was slightly below expectations, but still 6% above the 5-year average. Key corn-producing states of Iowa and Illinois were over 80% complete, while northern states are still lagging the multi-year averages.
Crop emergence was also above 5-year averages as 30% of the crop has germinated. This was up from 12% last year at this time and a 5-year average of 25%.
The overall weather forecast stays supportive for the majority of the Corn Belt with above-average temperatures and rainfall average to below, which should keep the planting window over the next couple weeks very favorable.
July corn could find support on the lack of producer selling and a friendly cash basis as producers are looking to complete crop planting. Selling pressure seemed to slow near the 580 price level, which held into the close. Dec corn charts look more technically challenged, placing a new near-term low on Tuesday, pressured by a potentially growing corn supply picture.
Above: The market is recovering from being oversold and continues to be under the influence of the bullish reversal from 5/03. Nearby resistance sits near 612 and again near the 50-day moving average, while support for the July contract rests between the recent low of 569 and the July ’22 low near 562.
Above: 23/24 Corn Percent Planted (red) versus the 5-year average (green)
Soybeans
Soybeans Action Plan Summary
Updated as of 05/09/2023
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 tight on-hand supplies flowing, and seasonal weather concerns can get priced into the market.
We recommendnot adding to current sales levels for the new 2023 crop at this time. As we work through planting season, our research indicates there is a 66% likelihood of better prices moving into early June. Additionally, weather conditions will begin to dominate the market as we begin to move into the growing season, and we may consider recommending sales in the 1400 to 1450 area if any significant concerns arise.
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 sharply lower led by a big selloff in soybean oil, and though soybean meal was the strongest leg in the complex, it closed lower as well.
Further pressure came from yesterday afternoon’s planting progress which showed soybean planting 49% complete and 13% above the 5-year average. Iowa and Illinois led the way at 69% and 77% respectively, but North Dakota lags at just 2%.
While crude oil was slightly lower, the recent decline in palm oil has been a large bearish factor for soybean oil as demand from India decreases.
South American crop watcher, Dr. Michael Cordonnier, raised his production estimate for Brazil’s crop to 155 mmt, matching the USDA’s estimate, but left his estimate for Argentina’s crop unchanged at 23 mmt, versus the USDA’s 27 mmt.
Outside markets may have been a factor in today’s selloff as fund managers are weary of the future of the economy, though there are upcoming meetings to raise the debt ceiling.
With Argentina’s soybean production so small, they will have trouble meeting export expectations for soybean meal, and the US will likely pick up some of that business which would be friendly. Yesterday there was a reported sale of soybean meal to Poland from the US.
Above: July soybeans posted a bearish reversal on 5/08 and experienced continued downside follow-through. Support lies near the recent low of 1385 with further support near 1350. With support holding, buyers may enter the market, resistance may be found between 1450 and 1460, and again near 1500.
Above: 23/24 Soybeans Percent Planted (red) versus the 5-year average (green)
Wheat
Market Notes: Wheat
Despite heavy selling pressure in the grains, wheat had an overall mixed close. Chicago was red across the board, but both Kansas City and Minneapolis contracts ended the session with some green.
The winter wheat crop was rated 29% good to excellent, which is unchanged from last week. However, the Kansas wheat tour will likely find dismal conditions, with 68% of their crop rated poor to very poor.
According to the USDA, 40% of the spring wheat crop has been planted, compared to 57% average.
There has still not been an agreement on the Black Sea Grain Initiative. The deal is set to expire on May 18th and Ukraine will reportedly host online talks. However, Russia does not appear to want to allow an extension.
Chicago Wheat Action Plan Summary
Updated as of 05/09/2023
No new action is recommended for the 2022 crop. At this point in the crop marketing year most, if not all, of your Old Crop 2022 wheat should be sold out. With large rallies difficult to come by at this time of year, consider using 40 to 50-cent rallies to sell any remaining inventory.
We recommend not taking any action on the 2023 crop at this time. Managed Money funds currently hold their largest net short position since 2018, with a near record of about 40% of the total open interest in the Chicago contracts. Such a large position could be very supportive should the funds buy back their positions if market dynamics change due to HRW concerns or supply concerns in corn.
No action is currently recommended for the 2024 crop. While we are looking for stronger markets to present themselves in this currently weak environment, there are factors that could be supportive, should they occur. Such as any escalation of the Ukraine war or disruption of grain movement in the Black Sea, or a significant devaluation of the US Dollar back to 2021 levels, as that market is showing characteristics of a potential drop.
Above: July wheat has found some support just below the market near 626. If it can break through nearby resistance around 669 and the 50-day moving average, it may be in position to test the April high of 718. Key support may be found near 592.
KC Wheat Action Plan Summary
Updated as of 05/09/2023
No new action is recommended for the 2022 crop. Though most, if not all, of your Old Crop 2022 wheat may be sold, consider storing any remaining Old Crop, if possible, in anticipation of a short new crop this year, and marketing it along with the new 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. Additionally, any unforeseen geopolitical changes in the Black Sea region could cause the market to bounce and retrace 25% towards the 2022 high.
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 show upward momentum, though open interest has fallen off somewhat, indicating some profit taking. If the market can break through the 912, it may make a run towards 966. Initial support may be found near 833, with key support near 740.
Above: 23/24 Winter Wheat Condition Percent Good-Excellent (red) versus the 5-year average (green)
Mpls Wheat Action Plan Summary
Updated as of 05/10/2023
No action is currently recommended for the 2022 crop. With planting concerns and a seasonal tendency for old crop prices to increase over the next 4-5 weeks, we are continuing to wait for better prices to develop. The calendar is becoming a constraint though, and we’ll be looking to part with any remaining old crop bushels by mid-June or so.
No action is recommended on the 2023 crop at this time. Wet conditions have delayed some planting and raised some prevent planting concerns which could continue to influence the market and generate better selling opportunities in the coming months. We are in no hurry to sell right now with everything going on.
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 market continues to show upward momentum with the market nearing the 100-day moving average, which may provide some additional resistance. The market may still encounter resistance above the market near 870 and 895, while initial support may be found near 831 and then between 770 and 760.
Above: 23/24 Spring Wheat Percent Planted (red) versus the 5-year average (green)
The USDA said the corn crop is 65% planted, vs 59% average and 49% last week.
On Brazil’s Bovespa Exchange, July corn is near the lowest level in 2 years, indicating a good safrinha crop.
North Dakota corn is only 5% planted, but a warmer and drier forecast this week should help that pace pick up.
While CONAB’s estimate is 125.5 mmt of Brazilian corn production, the USDA is projecting a 130.0 mmt crop.
The USDA said the soybean crop is 49% planted, vs 36% average and 35% last year.
Brazil’s record soybean harvest is almost complete and if the US has a good growing season as well, there could be significant pressure on soybeans down the road.
Old crop US soybeans supplies will remain limited through the summer, reflected in the premium of July over November.
Competition from rapeseed oil and sunflower oil may be weighing on soybean oil.
The USDA rated the winter wheat crop at 29% good to excellent, unchanged from last week, and up 2% from this time last year.
The USDA said 40% of the spring wheat crop is planted vs 57% average and 24% last week.
There still has not been any agreement on the Black Sea grain export deal, which will expire on the 18th unless a resolution is reached.
The Kansas wheat crop is said to be rated 68% poor to very poor, and dismal conditions are likely to be confirmed by the Kansas wheat crop tour.
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 slightly lower in the December contract but found support yesterday near the 5 dollar level.
Yesterday evening, the USDA said that 65% of the corn crop has been planted which is above the 5-year average of 59%.
Iowa and Illinois are 86% and 84% completed respectively while North Dakota is the most behind at just 5% planted.
With corn production in Brazil expected to be record large at 130 mmt, July corn prices on the Bovespa exchange fell 1.2% yesterday to a new 2-year low.
Soybeans are trading lower with soybean meal and oil lower as well. Soybean oil has the largest percentage loss due to lower crude oil.
Trade is bracing for a record US soybean harvest this fall and Brazil is already highly expected to produce a record crop, but Argentina is expected to produce nearly half of what it would in a normal year due to drought.
The USDA reported a private sale yesterday of 100,000 tonnes of US soybean meal to Poland for the 22/23 marketing year.
The USDA said that the soybean crop is now 49% planted vs 35% last week, and 27% this time a year ago. Emergence is at 20% from 9% last week.
Wheat is slightly lower after yesterday’s rally but is hesitant to move higher until there is some word on the Black Sea grain deal.
The UN has been attempting to get Russia to agree to extend the deal but has not been successful with the deadline just two days away. The final two ships under the agreement will leave the Black Sea today.
The HRW wheat quality tour is beginning today and will shed light on how bad the wheat crop is. Kansas is estimated to have the lowest crop in over 50 years.
The USDA said yesterday that 29% of the winter wheat crop is rated good to excellent while 68% of the Kansas crop is rated poor to very poor, the worst assessment since 1989.
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.
Carryover strength from the wheat market and better weekly export inspections numbers helped corn to close on the positive side of unchanged, with Old Crop gaining on New Crop.
Despite neutral to bearish demand news in last week’s USDA report and weak export inspections numbers today, soybeans found carryover strength from neighboring corn and wheat.
July soybean meal and oil closed mixed, with meal showing a bearish reversal on profit taking from its recent rally, while soybean oil posted gains, trading in sympathy with crude oil.
The buying continued in all three wheat classes on low US crop prospects and the possible ending of the Black Sea Grain Initiative.
While the US Dollar was moderately lower on the day, there are thoughts that the recent rally may be short lived due to the possibility of steady to lower interest rates ahead.
To see the updated U.S. 6-10 day temperature and precipitation outlooks from the National Weather Service, 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
Updated as of 05/10/2023
No action is recommended at this time for Old Crop. At this point in the crop marketing year most, if not all, of your Old Crop 2022 corn should be sold out. With the substantial inverse between old and new crop contract months, large rallies for Old Crop corn may be difficult to come by as we move forward. Consider using 40 to 50-cent rallies to sell any remaining inventory.
No action is currently recommended for the 2023 new crop. While the crop is going in the ground fast, the most volatile part of the growing season remains ahead. We’re going to maintain an opportunistic posture for now, targeting 590 – 630 versus December corn to suggest any further cash sales.
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.
Grain Market Insider Corn open positions listed above.
Corn prices saw some price recovery off overnight lows as a strong wheat market helped trigger some light short covering in the corn market.
The USDA weekly corn export inspections were improved over last week with 1.174 MMT (46.2 mb) being inspected for shipment last week. Even with the lowered USDA projection, this total is still behind the recommended USDA pace and 33% behind last year. Demand remains a concern and limiting factor.
The Mississippi River lock and dam system is back in operation after being closed the past couple weeks for flooding concerns. Improved river movement could help front-end demand and support a firm cash market.
The USDA weekly crop progress numbers are expected to see corn planting at 68% complete, up from 49% last week and still ahead of the 5-year average.
The National Corn Index, which reflects cash markets across the Corn Belt, is trading at $6.21 (+0.034) and a premium to July futures, reflecting a still relatively tight domestic supply of corn and firm cash market tone.
Above: The market is recovering from being oversold and continues to be under the influence of the bullish reversal from 5/03. Nearby resistance sits near 612 and again near the 50-day moving average, while support for the July contract rests between the recent low of 569 and the July ’22 low near 562.
Above: Corn Managed Money Funds net position as of Tuesday, May 9. Net position in Green versus price in Red.
Soybeans
Soybeans Action Plan Summary
Updated as of 05/09/2023
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 tight on-hand supplies flowing, and seasonal weather concerns can get priced into the market.
We recommendnot adding to current sales levels for the new 2023 crop at this time. As we work through planting season, our research indicates there is a 66% likelihood of better prices moving into early June. Additionally, weather conditions will begin to dominate the market as we begin to move into the growing season, and we may consider recommending sales in the 1400 to 1450 area if any significant concerns arise.
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 higher today along with soybean oil, supported in part by carryover strength from the corn market and a higher crude oil market.
In soybean meal, the deferred contracts closed higher, while the Jul and Aug contracts posted bearish reversals, which could lead to additional profit taking on any further weakness.
The USDA reported a private export sale of 100,000 tonnes of US soybean meal for delivery to Poland for the 22/23 marketing year.
April NOPA soybean crush was pegged at 173.232 million bushels, which was down from 185.81 mb in March, but still a record for April. Trade was expecting 174.173 mb.
Weekly soybean inspections for the week ending Thursday, May 11, were poor at 5.4 mb which puts total inspections for 22/23 at 1,764 mb which is down 1% from the previous year.
In Brazil, harvest has wrapped up, but producers are unwilling to sell at current spot prices. Instead of making cash sales, some producers are opting to barter their soybeans in exchange for inputs and fertilizer.
Above: July soybeans posted a bearish reversal on 5/08 and experienced continued downside follow-through. Support lies near the recent low of 1385 with further support near 1350. With support holding, buyers may enter the market, resistance may be found between 1450 and 1460, and again near 1500.
Above: Soybeans Managed Money Funds net position as of Tuesday, May 9. Net position in Green versus price in Red.
Wheat
Market Notes: Wheat
Despite negotiations, there currently has been no resolution to the extension of the Black Sea Grain Initiative, which is set to expire in a few days on May 18th.
The USDA is projecting Kansas winter wheat production at 191.4 mb, the lowest number in 50 years.
Paris milling wheat traded higher today, adding further support to all three classes of US wheat futures.
Wheat inspections of 5.4 mb bring total 22/23 wheat inspections to 688 mb. The USDA is still estimating 775mb of wheat exports.
The strengthening El Nino weather pattern could mean global weather changes, including drought conditions for Australia’s wheat crop.
Chicago Wheat Action Plan Summary
Updated as of 05/09/2023
No new action is recommended for the 2022 crop. At this point in the crop marketing year most, if not all, of your Old Crop 2022 wheat should be sold out. With large rallies difficult to come by at this time of year, consider using 40 to 50-cent rallies to sell any remaining inventory.
We recommend not taking any action on the 2023 crop at this time. Managed Money funds currently hold their largest net short position since 2018, with a near record of about 40% of the total open interest in the Chicago contracts. Such a large position could be very supportive should the funds buy back their positions if market dynamics change due to HRW concerns or supply concerns in corn.
No action is currently recommended for the 2024 crop. While we are looking for stronger markets to present themselves in this currently weak environment, there are factors that could be supportive, should they occur. Such as any escalation of the Ukraine war or disruption of grain movement in the Black Sea, or a significant devaluation of the US Dollar back to 2021 levels, as that market is showing characteristics of a potential drop.
Above: July wheat has found some support just below the market near 626. If it can break through nearby resistance around 669 and the 50-day moving average, it may be in position to test the April high of 718. Key support may be found near 592.
Above: Chicago Wheat Managed Money Funds net position as of Tuesday, May 9. Net position in Green versus price in Red.
KC Wheat Action Plan Summary
Updated as of 05/09/2023
No new action is recommended for the 2022 crop. Though most, if not all, of your Old Crop 2022 wheat may be sold, consider storing any remaining Old Crop, if possible, in anticipation of a short new crop this year, and marketing it along with the new 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. Additionally, any unforeseen geopolitical changes in the Black Sea region could cause the market to bounce and retrace 25% towards the 2022 high.
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 show upward momentum, though open interest has fallen off somewhat, indicating some profit taking. If the market can break through the 912, it may make a run towards 966. Initial support may be found near 833, with key support near 740.
Above: K.C. Wheat Managed Money Funds net position as of Tuesday, May 9. Net position in Green versus price in Red.
Mpls Wheat Action Plan Summary
Updated as of 05/10/2023
No action is currently recommended for the 2022 crop. With planting concerns and a seasonal tendency for old crop prices to increase over the next 4-5 weeks, we are continuing to wait for better prices to develop. The calendar is becoming a constraint though, and we’ll be looking to part with any remaining old crop bushels by mid-June or so.
No action is recommended on the 2023 crop at this time. Wet conditions have delayed some planting and raised some prevent planting concerns which could continue to influence the market and generate better selling opportunities in the coming months. We are in no hurry to sell right now with everything going on.
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 market continues to show upward momentum with the market nearing the 100-day moving average, which may provide some additional resistance. The market may still encounter resistance above the market near 870 and 895, while initial support may be found near 831 and then between 770 and 760.
Above: Minneapolis Wheat Managed Money Funds net position as of Tuesday, May 9. Net position in Green versus price in Red.
The lower HRW wheat crop could suggest higher corn feeding in the southwestern US.
Central Brazil is on the dry side, which raises some question about their safrinha crop.
With the May WASDE report out of the way, the market will likely now focus on weather. Currently, conditions in the Midwest are mostly favorable.
Heavy rains over the weekend in the northern Corn Belt caused some flooding issues and planting delays.
On Friday’s CFTC report, managed funds are still short more than 100,000 contracts (as of last Tuesday).
There is concern about Argentina’s economy with soaring inflation, and there is question as to whether or not they can ship the amount of meal that they do normally.
There is indication that some meal buyers may be shifting demand to the US, with export sales last week higher than expected.
The USDA estimate of 335 mb of US 23/24 soybean carryout would be the highest in 4 years.
The Rosario Exchange estimated Argentina’s soybean crop at 21.5 mmt, which is 5.5 mmt lower than the USDA on Friday’s WASDE report.
On Friday’s report the USDA estimated 1.66 bb of US wheat production, which was lower than expected. This number, if true, will mean the lowest three years of wheat production in 50 years.
So far there has been no new news on the Black Sea export deal and whether or not it will be renewed. The current deal is set to expire in just a few days.
The USDA projected Kansas winter wheat production at 191.4 mb, which would be the lowest number in over 50 years.
The El Nino pattern this year could lead to drought issues for Australia’s wheat crop.
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.
July corn is trading higher this morning and is getting support from the large premium left by May corn now that it is off the board. December is slightly lower under pressure from good US weather and large supplies of Brazilian corn.
Higher wheat prices are giving some support to corn as wheat production in the US is struggling with many producers abandoning fields due to drought.
Rains fell over the northwestern Plains and Minnesota with much of it falling over dry areas but some of the rains causing delays for producers as they wait for fields to dry.
Friday’s CFTC report showed funds lightening up on their short position a bit, buying back 8,503 contracts for a net short position of 109,643 contracts.
Soybeans are finding support this morning after falling to the lowest levels this year in the Nov contract. Soybean meal is higher while soybean oil is lower despite higher crude oil.
The US soybean crush for April is being estimated at 174 mb which is 2.7% higher than April of last year, but down 6.2% from the previous month.
The soybean harvest is now complete in Brazil, and producers are hesitant to sell spot beans when they are able to store them. Some producers are opting to exchange soybeans for inputs and fertilizers for next year’s crop.
Friday’s CFTC report showed non-commercials as sellers of 7,914 contracts, decreasing their net long position to 48,459 contracts.
Wheat is trading higher this morning as the HRW wheat quality tour begins today and traders will get an idea of just how bad the crop is.
The USDA estimated HRW wheat production at 514 mb which was less than expected. Winter wheat production for Kansas was estimated at 191.4 mb, the lowest in 50 years and down 244.3 mb last year.
There has still been no word on whether Russia will agree to extend the Black Sea corridor with a deal that expires this Thursday. Ukrainian officials are preparing for no extension and no talks are planned for this week.
Non-commercials added to their large net short position last week selling 9,418 contracts bringing the total net short position to 116,906 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.
Corn ended mixed as traders absorbed larger than expected carry-outs for both 22/23 and 23/24 US corn while finding carryover strength from wheat.
The USDA left Argentina’s soybean crop size unchanged from last month, this brought world soybean ending stocks in well above pre-report estimates for both the 22/23 and 23/24 crop years, weighing on soybeans.
All three wheat classes rallied to end the week as the USDA estimated US wheat inventories will come in at a 16-year low.
The US Dollar Index rallied sharply to end the week on fears of the US debt ceiling expiry and banking fallouts.
To see the updated U.S. Drought Monitor scroll down to the Other Charts/Weather section.
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Corn
Corn Action Plan Summary
Updated as of 5/10/2023
No action is recommended at this time for Old Crop. At this point in the crop marketing year most, if not all, of your Old Crop 2022 corn should be sold out. With the substantial inverse between old and new crop contract months, large rallies for Old Crop corn may be difficult to come by as we move forward. Consider using 40 to 50-cent rallies to sell any remaining inventory.
No action is currently recommended for the 2023 new crop. While the crop is going in the ground fast, the most volatile part of the growing season remains ahead. We’re going to maintain an opportunistic posture for now, targeting 590 – 630 versus December corn to suggest any further cash sales.
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.
Grain Market Insider Corn open positions listed above.
Despite overall bearish WASDE report numbers, strength in the wheat market supported front month corn futures to end the week. Bull spreading was noted, buying old crop and selling new, helping limit selling pressure in the corn market overall.
USDA estimated Old Crop corn carryout at 1.417 billion bushels, using a 75 mb cut in export demand to increase the supply picture. This total was 51 mb above trade expectations.
The most negative side of the USDA WASDE report was 23/24 carryout projections of 2.222. The USDA used a baseline yield of 181.5 bushels/acre and 92 million planted acres of corn to estimate production at 15.265 billion bushels, up 1.54 billion bushels from last year.
With the USDA report passed, the market will shift its focus back to the weather, which appears mostly favorable for planting pace while still providing adequate moisture to allow this year’s crop to have a strong start.
USDA raised projected Brazilian corn crop to 130 MMT, up 5MMT from last month as acreage has increased, and the crop has been supported by favorable weather overall. The record Brazilian production will be direct competition to U.S. export business well into the summer.
Above: The market is recovering from being oversold and continues to be under the influence of the bullish reversal from 5/03. Nearby resistance sits near 612 and again near the 50-day moving average, while support for the July contract rests between the recent low of 569 and the July ’22 low near 562.
Soybeans
Soybeans Action Plan Summary
Updated as of 05/09/2023
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 tight on-hand supplies flowing, and seasonal weather concerns can get priced into the market.
We recommendnot adding to current sales levels for the new 2023 crop at this time. As we work through planting season, our research indicates there is a 66% likelihood of better prices moving into early June. Additionally, weather conditions will begin to dominate the market as we begin to move into the growing season, and we may consider recommending sales in the 1400 to 1450 area if any significant concerns arise.
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 sharply lower with new crop leading the way down after a bearish WASDE report. Soybean meal closed slightly higher while soybean oil moved lower with crude oil.
Brazilian soybean production estimates were raised to 155 mmt which was above trade guesses and above April’s WASDE by 1 mmt. Surprisingly, Argentinian production was left unchanged at 37 mmt despite many private analysts estimating it much lower near 35 mmt or below.
The USDA estimated the 23/24 soybean ending stocks at 335 mb which was higher than expected, and production was pegged at a record high 4.51 bb. Ending stocks for 22/23 were 215 mb, above the last estimate of 210 mb.
Argentina has imported a record 539,000 mt of Brazilian soybean meal to offset its own lost supplies, but analysts have reported that Argentina’s capacity to import meal is limited to just 8 mmt per year. This has been supportive for US soybean meal prices as the US may be able to export more.
Above: July soybeans posted a bearish reversal on 5/08 and experienced continued downside follow-through. Support lies near the recent low of 1385 with further support near 1350. With support holding buyers may enter the market, resistance may be found between 1450 and 1460, and again near 1500.
Wheat
Market Notes: Wheat
The USDA projected 23/24 US all wheat production at 1.659 bb (vs the average trade guess of 1.782 bb)
The USDA pegged US wheat 22/23 ending stocks at 598 mb, compared with an expectation of 603 mb. For 23/24 carryout is estimated at 556 mb vs the average trade guess of 602 mb.
The Black Sea grain deal negotiations are said to have not gone well, with the talks ending yesterday with no resolution.
July KC wheat rallied sharply to end the week after the USDA estimated HRW production at 514 mb vs an expectation of 591 mb (and 531 mb last year).
Chicago Wheat Action Plan Summary
Updated as of 05/09/2023
No new action is recommended for the 2022 crop. At this point in the crop marketing year most, if not all, of your Old Crop 2022 wheat should be sold out. With large rallies difficult to come by at this time of year, consider using 40 to 50-cent rallies to sell any remaining inventory.
We recommend not taking any action on the 2023 crop at this time. Managed Money funds currently hold their largest net short position since 2018, with a near record of about 40% of the total open interest in the Chicago contracts. Such a large position could be very supportive should the funds buy back their positions if market dynamics change due to HRW concerns or supply concerns in corn.
No action is currently recommended for the 2024 crop. While we are looking for stronger markets to present themselves in this currently weak environment, there are factors that could be supportive, should they occur. Such as any escalation of the Ukraine war or disruption of grain movement in the Black Sea, or a significant devaluation of the US Dollar back to 2021 levels, as that market is showing characteristics of a potential drop.
Above: The market experienced a bearish reversal on 5/08 with follow through selling. Currently, the slow stochastics indicator may be crossing over to the downside, indicating upward momentum has slowed for the time being. Nearby resistance can be found between the recent high of 669 and 718, while key support may be found near 592.
KC Wheat Action Plan Summary
Updated as of 05/09/2023
No new action is recommended for the 2022 crop. Though most, if not all, of your Old Crop 2022 wheat may be sold, consider storing any remaining Old Crop, if possible, in anticipation of a short new crop this year, and marketing it along with the new 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. Additionally, any unforeseen geopolitical changes in the Black Sea region could cause the market to bounce and retrace 25% towards the 2022 high.
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 show upward momentum, though open interest has fallen off somewhat, indicating some profit taking. If the market can break through nearby resistance, it could further test the 886 to 902 resistance area. Otherwise, initial support may be found near 769, with key support near 740.
Mpls Wheat Action Plan Summary
Updated as of 05/10/2023
No action is currently recommended for the 2022 crop. With planting concerns and a seasonal tendency for old crop prices to increase over the next 4-5 weeks, we are continuing to wait for better prices to develop. The calendar is becoming a constraint though, and we’ll be looking to part with any remaining old crop bushels by mid-June or so.
No action is recommended on the 2023 crop at this time. Wet conditions have delayed some planting and raised some prevent planting concerns which could continue to influence the market and generate better selling opportunities in the coming months. We are in no hurry to sell right now with everything going on.
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 market continues to show upward momentum, though open interest has fallen off somewhat, indicating some profit taking. Resistance still resides above the market near 870 and 895, while support may be found between 770 and 760.
Corn is trading lower ahead of today’s WASDE report with Dec futures falling to a new low early this morning.
Expectations for today’s report are that the USDA will lower old crop corn export sales, but also that they will increase new crop corn ending stocks.
Brazil’s safrinha corn crop, which previously has looked very robust, is dealing with dryness in the South which may impact yields and production.
China has canceled a total of 32 mmt of US corn purchases in the past month as they look to South America for significantly cheaper prices.
Soybeans are trading lower along with soybean oil while soybean meal holds on to some slight gains. Crude oil remains slightly higher.
Brazil reportedly exported 943 thousand mt or soybeans to Argentina in January through April so that Argentina can meet their crushing expectations.
There were rumors yesterday that soybean meal sales for Argentina were switched to US origins, and that is potentially what has been supportive for meal.
CONAB has reported that 96% of the Brazilian soy harvest is now complete, and they are estimating production at 153.6 mmt. Friday’s WASDE report has guesses for Brazilian production at 155 mmt, up from the previous estimate.
Wheat is trading higher today ahead of the WASDE report which is expected to show lower winter wheat estimates than what the Dow Jones survey expected.
Most notably, the high-level meetings between Russia, Ukraine, Turkey, and the UN ended yesterday with no resolution to the Black Sea grain deal in sight.
Winter wheat is rated 44% poor to very poor while the number 1 producer, Kansas, is rated a whopping 68% poor to very poor.
Friday’s WASDE report is expected to show old crop ending wheat stocks at 603 mb, up 5 mb from April due to smaller exports. The USDA will provide a production estimate as well which is projected to be 602 mb for all wheat.
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.
