Correction to morning comments – a reduction in corn acres was inadvertently mentioned. On the June 30th report, corn acres were increased by roughly 2 million.
The weather forecast for the next 10 days is drier for much of the western Corn Belt, but there could be showers farther to the East (including central Illinois).
Given the weather so far, this growing season, many believe that the USDA could reduce their corn yield estimate on this Wednesday’s WASDE report.
China is said to be experiencing dryness and elevated temperatures, which could reduce their crops.
July corn on Brazil’s Bovespa exchange is near the equivalent of $4.64 per bushel, keeping pressure on US exports.
Soybeans are sharply higher this morning, possibly in anticipation of friendly data on Wednesday’s USDA report. Traders expect 23/24 carryout to fall near to 200 mb.
Both soybean oil and palm oil are higher, offering support to soybeans. Bean oil may be rallying due to the anticipated increase in biofuel demand, while palm oil saw lower production and higher exports in June.
Crop conditions may be improving due to recent rain in eastern areas, including central Illinois, and parts of Nebraska and Indiana.
Funds remain net long soybeans, meal, and oil as of July 3rd.
Canda is seeing drier than normal conditions that will likely impact the spring wheat crop. Globally, there could be lower production in Russia and northern China as well.
Wheat has traded both sides of steady so far today, but weakness may stem from lower Matif futures. Paris milling wheat is on track for what will be the third lower close in a row.
Expiration of the Black Sea Grain Initiative is next week. There is still much uncertainty of what will happen, given the fact that Russia has said they see no reason for an extension, but Turkey is trying to encourage an agreement.
As of July 3rd, managed funds remain net short 56,000 contracts of Chicago 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.
The corn market is mostly higher this morning as it continues to consolidate following the USDA’s surprise increase in acres and ahead of Wednesday’s USDA July supply and demand update.
Expectations call for increased 2023 corn production in Wednesday’s report. The average estimate is for a 15,149 bil. bu. crop versus 13,730 in 2022, with an average yield guess of 175.8 bpa versus the USDA’s June estimate of 181.5 bpa.
The average guess for 2022 ending stocks is a reduction of 42 mil. bu. from the June estimate to 1,406 mil. bu., with an average guess for 2023 ending stocks coming in at 2,166 mil. bu.
The managed funds were big sellers following the USDA’s Stocks and Acreage report. Friday’s Commitment of Traders report showed as of Wednesday, July 5, Funds sold 71,000 contracts to flip their positions from net long 53k to net short 18k contracts.
The most current US 6 – 10 day forecast calls for mostly normal precipitation in northern Corn belt with slightly above in the southern Corn Belt, southern Plains and Southeast. While below average temperatures are called for in much of the central Corn Belt and Minnesota, Wisconsin, Nebraska, and Kansas. The extended 8 – 14-day forecast shows above normal temperatures moving in for most of the US with normal precipitation in Midwest and slightly above normal precipitation in Southeast.
Soybeans are higher across the board led largely by soybean oil with 1.42 cent gains in December, with meal up $4.50 per ton, as warm temperatures are expected to move in across the US in the 8 – 14-day forecast.
The market may likely continue to consolidate ahead of Wednesday’s USDA July WASDE report. The trade is expecting slightly lower 2023 production at 4,250 mil. bu. versus 4,276 for 2022 with a 51.4 bpa compared to 49.5 last year.
The average trade guess for 2022 ending stocks is up 5 mil bu. at 235 mbu. versus the USDA’s June estimate of 230, largely due to reduced export demand. As for 2023, the average trade estimate is for 206 mil. bu. due to lower acreage and production.
In Friday’s COT report, managed funds were sellers of soybeans, but not to the extent of corn. The report showed Funds sold a total of about 10,000 contracts, reducing their net long to an estimated 89,000 contracts as of Wednesday July 5.
The wheat market is mixed as we come out of the overnight session with Chicago and K.C. mostly higher and Minneapolis mixed with the deferred contracts trading lower. While nearby contracts are higher.
Trade estimates for Wednesday’s USDA report have the 2023 US wheat crop at 1,683 mil. bu. versus June’s 1,665 mil. bu. While 2023 total Winter Wheat is estimated at 1.154 mil. bu. versus 1,136 mil. bu. The first HRS estimate is near 477 mil. bu. versus 446 mil bu. last year.
The average trade guess for 2022 ending stocks for all wheat is down 15 mil bu. to 583 mbu. versus the USDA’s June estimate of 598 mil. bu. As for 2023, the average trade estimate is for 565 mil. bu., up 3 mil. from June’s estimate.
Last Friday’s COT report didn’t show a large overall change in the fund’s Chicago wheat position. In total, as of Wednesday July 5, the funds added 2,000 contracts to their short positions bring their total net short to 54,000 contracts.
The expected moisture in the 6 – 10 day forecast in the southern Plains may add a level of concern for additional delays and quality issues for any unharvested HRW wheat in the region. While there remains a level of concern for wheat crops in Canada, Central Russia and Northern China.
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.
Disappointing weekly export sales and a more favorable weather forecast for the Corn Belt continue to add pressure to corn prices.
A friendly forecast for rain in the central Midwest, including much of Iowa and Illinois, helped to pressure the soybean complex lower across the board.
Percentage losses in soybean meal nearly equaled those of soybeans. Higher energy markets were unable to rescue soybean oil from its losses today, as it followed suit along with lower palm oil prices.
Despite a huge break in the US dollar, better than expected yields in France and a meeting between Turkish and Ukrainian leaders to discuss the Black Sea Export deal helped press all three wheat classes lower.
Today’s jobs numbers showed fewer than expected US jobs created in June, while also revising the number of jobs created in May down by 33,000. The news may have weighed negatively on commodities with the perception of a slowing economy, even though the US dollar traded sharply lower.
To see the current NOAA US 6 – 10 day and 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.
Selling pressure returned to the corn market to end the week, influenced by weakness across the grain markets and weather models forecasting better rain potential through the weekend. Dec corn finished ¼ cent lower on the week as prices consolidated this week around the $5.00 level.
The USDA weekly export sales are still disappointing overall. The USDA announced new sales of 251,700 MT of old crop and 418,000 MT of new crop sales last week. Weekly exports were 707,500 MT, down 17% from last week and 24% from the four-week average.
The USDA announced a flash sale of corn to Mexico this morning. Mexico bought 180,000 MT of corn, which 135,000 MT was for new crop and 45,000 MT for old crop.
Brazil shipped just over 1 MMT of corn in the month of June, but U.S. prices continue to struggle on talk of Chinese buying of Brazilian corn as the window for Brazil corn exports is about to rally to its peak over the next few months.
Long range forecasts limit corn market rallies as 6-10 day and 8-14 day outlook forecasts from the NOAA are staying cooler and wetter than average.
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.
No action is being recommended for New Crop 2023 soybeans. No action is being recommended for New Crop 2023 soybeans. While changing weather forecasts will continue to dominate price action, a potentially much lower than anticipated 2023 carryout looms over the market due to low crop condition ratings and a reduced planted acreage estimate. Grain Market Insider is still eyeing a rally to the 1400 – 1450 area before considering any additional 2023 cash sales. Yet given the time of year and how fast prices can change direction, we’re willing to change that plan at a moment’s notice. In view of the current crop conditions and carryout situation and that we recently recommended making a cash sale, we suggest holding tight on further cash sales for now.
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.
An outlook for rain and cool temperatures for much of the northern and central Midwest in the 6 – 10 day forecast led the soybean complex lower, with the hope of reduced crop stress and some much needed moisture.
The area of the US soybean crop that is in drought areas dropped 3% to 60%. While this is still a significant area, given the recent rain throughout the Corn Belt, it is expected to drop further.
Weekly Export sales came in within expectations, but toward the low end, with net sales of 6.9 mb for 22/23, down 17% from last week’s report and 45% below the 4-week average. On the other hand, 23/24 sales came in above expectations at a friendly 21.8 mb.
According to Brazil’s grain exporters association, Anec, Brazil is expected to export 9.4 mil metric tons of soybeans in July, which is down from June’s 13.9 mt total. For the year, its expected that the country may export a total of 96.3 mil mt, an increase of 17- 18 mmt over last year’s total.
According to OilWorld, an analytical agency based in Germany, world biodiesel production is estimated to grow 8% this year. That is largely due to increases in the US with soybean oil being the primary feedstock, and Indonesia where palm oil is primarily used. The increased use of both feedstocks is supportive to bean oil and soybeans to maintain current world supplies.
China’s Shanghai Securities News stated that the country’s sow herd shrank by 1.68% in June. This being the largest decline in months, suggests that farmers are culling more and more of their sows to cut losses, further reducing their feed demand.
Above: The USDA’s Stocks and Acreage estimate came in well below expectations and gave the market a solid push to the upside. The market has now fallen back and is struggling to continue higher without additional bullish input. If the market can rebound, resistance above the market continues to rest between 1500 – 1550, while support below the market could be found between 1340 and 1300 with further support near 1270.
Wheat
Market Notes: Wheat
Despite a sharp drop in the US dollar today, all three classes of US wheat futures posted losses, and despite the lowest US wheat stocks in 16 years, which should also offer support, the wheat market looks weak.
The USDA reported an increase of 14.9 mb of wheat export sales for 23/24 and a decrease of 0.1 mb for 24/25.
Better than expected yields of French wheat are weighing on both US and Paris futures. So far, the French crop is reported to be about 10% harvested.
A meeting between leaders of Ukraine and Turkey to discuss an extension of the Black Sea grain deal took place Friday. They reportedly also discussed a prisoner swap and efforts to end the war. This comes despite Russia insisting they will not extend the agreement that ends on July 17th.
From a technical perspective, Chicago wheat futures are at or near oversold levels on daily stochastics. This could mean that a technical correction to the upside is due.
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 9.9 mb of corn export sales for 22/23 and an increase of 16.5 mb for 23/24.
Private exporters reported sales of 180,000 tons of US corn sold to Mexico.
The 6-10 day forecast has some decent rain for parts of the west-central Corn Belt. The 8-14 day map has that weather shifting more to the East, into the Tennessee / Ohio river valley.
Ethanol data yesterday showed higher production, lower stocks, and improved margins (due to lower corn prices).
Next week’s WASDE report on July 12th is likely to show a reduction in the corn yield estimate. The question is how much of an impact this will have given the higher acreage estimate last week.
The USDA reported an increase of 6.9 mb of soybean export sales for 22/23 and an increase of 21.8 mb of 23/24.
Soybean meal is lower this morning – a lower close would mark the fourth day in a row. This is putting pressure on soybean futures. Palm oil futures are trending lower as well, not helping the situation.
About 60% of the US soybean crop is still said to be experiencing drought, despite the drought monitor showing some slight improvements.
September soybeans on China’s Dalian exchange are trading around the equivalent of $17.04 per bushel.
The USDA reported an increase of 14.9 mb of wheat export sales for 23/24 and a decrease of 0.1 mb of 24/25.
More rain for the southern Plains will slow HRW wheat harvest, which is already well behind the average pace. However, slow export demand means that the market will likely not respond much to this.
Despite weakness in the wheat market, ending stocks are at the lowest level in 16 years, which should provide some support.
French wheat harvest is said to be 10% complete with better than expected yields so far.
The presidents of both Ukraine and Turkey will be meeting to discuss an extension of the Black Sea grain deal. This is despite Russia’s recent statements that they will not extend the corridor again.
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 starting the day lower following yesterday’s short covering rally as it struggles to gain positive footing with mostly favorable weather forecasts and the surprise jump in acres.
The front moving through the Midwest has produced some moisture, but amounts have largely been disappointing. Temperatures are expected to stay mild with the potential for more showers next week.
The latest release of the US Drought Monitor indicated that 67% of the corn crop remains in drought conditions, down 3% from the week prior. With more rain in the forecast for the Corn Belt, it could be expected to fall further.
Brazil’s corn basis levels have seen some significant improvement with harvest only 20% complete, and active soybean sales taking precedence to make room for the safrinha corn crop. This improvement has likely added some support to US corn prices, and though they remain 25 – 35 cents/ bu. above Brazil, the gap has narrowed.
Yesterday the managed funds were active buyers in the corn market, purchasing upwards of 8,000 contracts. They are currently estimated to be long 26,000 contracts.
Soybeans are trading lower this morning as traders continue to take a breather and reduce long positions. Like soybeans, soybean meal is also lower this morning, while bean oil is higher.
The front moving through the Midwest has produced some moisture, but amounts have largely been disappointing. Temperatures are expected to stay mild with the potential for more showers next week. Weather conditions in the Northern Plains are mostly favorable and may see some isolated showers over the next five days with cooler temperatures to help ease crop stress.
The area of the US soybean crop that is in drought areas dropped 3% to 60%. While is still a significant area, given the recent rain in throughout the Cornbelt, it is expected to drop further.
The managed funds were active sellers in yesterday’s session, reducing their long position by an estimated 6,500 contracts. They are now estimated to be long 86,500 contracts.
The wheat market is mostly lower this morning in all three classes, with deferred contracts in K.C. and Minneapolis trading higher.
Weather conditions in the Northern Plains are mostly favorable and may see some isolated showers over the next five days with cooler temperatures to help ease crop stress.
The Central and Southern Plains will continue to see showers and thunderstorms over the next week with mild temperatures. Though the conditions are largely favorable, the rain may slow the wheat harvest.
Managed Funds were net sellers yesterday in the wheat market, adding an estimated 6,000 contracts to their short position, which is now estimated to be short 61,000 contracts.
Ukraine’s Ag Ministry reported current 23/24 grain exports at 497k tons, which compares to 318k tons for 2022. Of the total, 177k is reported to be wheat and 273k tons of corn, most of which was exported via the Black Sea.
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.
Driven by updated crop conditions and weather conditions, the corn market traded both sides of unchanged before settling on the positive side in sympathy with soybeans and wheat.
Oversold conditions and the unwinding of short corn and long soybean spreads likely added to the short covering bounce in the corn market, as traders covered positions and took profits following the market’s fall from the June highs.
A non-threatening forecast and weak demand took the soybean complex lower with December soybean oil leading the way with a 3.5% loss.
After making new highs for the move in yesterday’s trade, soybean oil traded through yesterday’s lows as traders booked profits from the recent rally on overbought conditions.
Better than expected yields in Illinois and continued low Russian export prices weighed on Chicago and K.C., wheat while Minneapolis was able to maintain small gains.
To see the current US Drought Monitor and the NOAA US 7-day precipitation forecast map, 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.
Continue to hold current sales levels for the 2024 crop year.The Dec 24 contract is trading weather much like the rest of the market and posted nearly an eighty-cent range between 5/18 and 6/21 as dry conditions affect the ’23 crop and the potential carryout for the 2024 crop year. For now, continue to be patient as Grain Market Insider would like to see prices in the 570 – 600 level before considering making additional sales recommendations for the 2024 crop.
Corn futures saw short covering in an oversold market to finish with double digit gains on Thursday. With both weakness in the soybean and wheat trade overall, corn futures were likely the backside of that trade.The market saw a risk off mentality overall, and that meant covering short corn positions.
Chinese corn prices have been on the rise since April due to adverse weather, and rumors of China purchasing Brazilian corn for November delivery has helped support global corn prices, aiding the short covering rally.
Weather will stay as a focus. The short-term weather forecast is showing some concerns about the northwestern Corn Belt staying on the dry side, bringing concerns regarding overall crop yield.
A potential forecast for cooler temperatures next week should only help those areas that did receive recent rainfall, as corn looks to enter the pollination stage in the central Corn Belt.
The USDA will release weekly corn export sales numbers on Friday morning. Expectations are for old crop and new crop sales to range from 0-500,000 MT each respectively, as export demand is still lacking overall.
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 has pierced the 490 – 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.
No action is being recommended for New Crop 2023 soybeans. No action is being recommended for New Crop 2023 soybeans. While changing weather forecasts will continue to dominate price action, a potentially much lower than anticipated 2023 carryout looms over the market due to low crop condition ratings and a reduced planted acreage estimate. Grain Market Insider is still eyeing a rally to the 1400 – 1450 area before considering any additional 2023 cash sales. Yet given the time of year and how fast prices can change direction, we’re willing to change that plan at a moment’s notice. In view of the current crop conditions and carryout situation and that we recently recommended making a cash sale, we suggest holding tight on further cash sales for now.
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 ended the day lower, along with both soybean meal and oil after futures became overbought during the past week, and weather forecasts turn wetter in the South over the next week.
Brazil’s export group, ANEC, reported that June soy exports rose to 9.44 mmt, which compares with 7 mmt in June of last year. With Brazil taking so much control of the soy export market, US export remain very sluggish.
The 10-day forecast is showing rain for Iowa, northern Illinois, the northern Plains, and Great Lakes regions. The northern areas are the hardest pressed for moisture right now and these rains could provide some needed relief.
Soy conditions are currently the worst rated for this time of year since 2012 at only 50% good to excellent, falling 1% from the previous week. The decline in ratings came after a week of beneficial rain, so it is unknown what ratings will look like after this week’s rain amounts which are forecasted to be decent but better in the South.
Above: The USDA’s Stocks and Acreage report gave the market a bullish shot in the arm with a much-reduced acreage estimate. If the market can continue to rally beyond the 1450 area, 1500 – 1550 could be its next target. If not, support could be found between 1340 and 1300 with further support near 1270.
Wheat
Market Notes: Wheat
Despite the uncertainty in the Black Sea, US wheat futures closed mostly lower today. Not only are there worries about sabotage of Ukrainian nuclear power plant, but overnight Russian missile strikes hit the city of Lviv. Russia is also said to be taking back parts of eastern Ukraine.
Better than expected yields of SRW wheat in Illinois may have put pressure on the Chicago market today. Higher yields of French wheat also offered resistance. Reportedly, that crop yield is 5% above the 10 year average.
Cheap Russian wheat exports continue to act as the anchor for US futures. Russian FOB values are said to be as low as $232 per metric ton. Additionally, one estimate of Russia’s wheat crop (Agritel) was increased by 2.5 mmt to 85.7 mmt. For reference the USDA is using a figure of 85 mmt.
Tunisia is reported to have purchased 100,000 mt of wheat from Russia. The US was not totally left on the sidelines, however. Taiwan flour millers purchased 56,000 mt of US wheat.
A Canadian port strike in British Columbia could eventually slow grain movement there, although it is not a major concern so far.
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.
Corn is trading higher at midday as weather forecasts are becoming questionable and the drought monitor is not showing as much relief as had been hoped after recent rains.
The northern Corn Belt is expected to receive less rainfall than hoped over the next 7 days, but the southern half of the Corn Belt is forecast to receive beneficial rains.
National soil moisture remains an issue with 48% short to very short. Missouri is at 83%, Wisconsin at 71%, and Illinois and Michigan both at 67%.
Brazil has reportedly harvested 20% of their second crop corn and based on yield data, analysts raised production estimates again.
Soybeans are trading lower today, along with both soybean meal and oil after futures became a bit too overbought, and funds are likely taking a breather.
Brazilian FOB offers are now at over a dollar discount to US values and will be there for the next few months making export sales even more difficult for the US.
Brazil’s export group, ANEC, reported that June soy exports rose to 9.44 mmt, which compares with 7 mmt in June of last year.
The USDA’s forecast for 83.5 million acres of beans has kept prices elevated, and next week’s WASDE could add to the bullishness with a small ending stocks number.
Wheat is still mixed with Chicago posting the most losses followed by KC, but Minn wheat is managing to stay slightly higher.
Russia attacked the city of Lviv overnight and Ukrainian forces have said that Russia is making slow progress in taking back eastern Ukraine.
Russia’s wheat crop estimates were raised by 2.5 mmt and are now at 85.7 mmt on good weather.
The French 2023 soft wheat yield is seen at 5% above the 10-year average and was helped by good sowing conditions and frequent rains in early spring.
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 beginning the day higher but is still near its lowest prices of the year after the USDA estimated 94.1 million acres planted.
Rains are currently falling in southern Kansas and the Oklahoma Panhandle and the rains are expected to move east over the Corn Belt in the next five days.
Areas North of the Corn Belt are expected to remain drier, but temperatures will also be lower giving some relief.
Brazil has reportedly harvested 20% of their second crop corn and based on yield data, analysts raised production estimates again.
Soybeans are trading slightly higher this morning apart from the front month which is lower, while soybean meal trades higher and soybean oil is lower.
The rains falling in Kansas are forecast to move into the southern Midwest and are expected to miss most of Missouri, but the 6 to 10 day forecast looks wet for the central Corn Belt.
The USDA’s forecast for 83.5 million acres of beans has kept prices elevated, and next week’s WASDE will likely add to the bullishness with a small ending stocks number.
Exports have been poor with Brazil keeping a firm grasp on the competition, but US soybeans are getting support from renewed soybean oil demand.
Wheat is mixed this morning with Chicago lower bur KC and Minn higher as rain in Kansas is expected to delay harvest for another couple of days.
Russia attacked the city of Lviv overnight and Ukrainian forces have said that Russia is making slow progress in taking back eastern Ukraine.
Russia’s wheat crop estimates were raised by 2.5 mmt and are now at 85.7 mmt on goods weather.
The French 2023 soft wheat yield is seen at 5% above the 10-year average and was helped by good sowing conditions and frequent rains in early spring.
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.
Driven by updated crop conditions and weather conditions, the corn market traded both sides of unchanged before settling on the positive side in sympathy with soybeans and wheat.
After trading on both sides of unchanged like corn, November soybeans settled just 1 ¼ cents higher with strength being drawn from a higher soybean oil market, while lower soybean meal added resistance to prices.
Soybean oil likely found support from much higher crude and heating oil prices that were 3.2% and 5.1% higher respectively, implying higher demand for bean oil may be ahead.
Continued concerns regarding explosives being placed at the Zaporizhzhia nuclear power plant in Ukraine likely supported all three wheat classes to close sharply higher on the day.
To see the current US NOAA 6 – 10 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.
Continue to hold current sales levels for the 2024 crop year.The Dec 24 contract is trading weather much like the rest of the market and posted nearly an eighty-cent range between 5/18 and 6/21 as dry conditions affect the ’23 crop and the potential carryout for the 2024 crop year. For now, continue to be patient as Grain Market Insider would like to see prices in the 570 – 600 level before considering making additional sales recommendations for the 2024 crop.
After trading both sides of unchanged and making a new low for the move. December corn found support below the market on very oversold conditions and a sharply higher wheat market to close unchanged.
The USDA released their updated crop ratings for corn Monday afternoon, raising the Good/Excellent rating 1%, to 51%. While the overall rating came in as expected, Illinois’ G/E rating improved 10% to 36%.
Although the current crop conditions have improved, they continue to be the lowest since 2012, with some feeling that current conditions imply a yield closer to 171.5 bpa. This would suggest a crop size of 14.75 billion bushels based on the updated USDA acreage numbers and imply a 300 mil. bu increase to carryout based on current USDA usage.
Corn used in ethanol production for the month of May was weak and only came in at 437.5 mil. bu, bringing this year’s total used to 3.835 bil bu, which is down 4% from the USDA’s current estimate of down 4%. At this point in the marketing year, it seems unlikely that usage will reach USDA estimates without any adjustments lower.
Cooler temperatures are expected to move through the Midwest in the next 24 – 36 hours. While normal to slightly below normal temperatures are expected this weekend, with above average rain in the southwest Corn Belt and 1 – 1.5 inches of rain expected in IL and IN.
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 has broken through the 490 – 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.
2023/24 Corn condition percent good-excellent (red) versus the 5-year average (green) and last year (pink).
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.
No action is being recommended for New Crop 2023 soybeans. No action is being recommended for New Crop 2023 soybeans. While changing weather forecasts will continue to dominate price action, a potentially much lower than anticipated 2023 carryout looms over the market due to low crop condition ratings and a reduced planted acreage estimate. Grain Market Insider is still eyeing a rally to the 1400 – 1450 area before considering any additional 2023 cash sales. Yet given the time of year and how fast prices can change direction, we’re willing to change that plan at a moment’s notice. In view of the current crop conditions and carryout situation and that we recently recommended making a cash sale, we suggest holding tight on further cash sales for now.
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 ended mixed today with the July contract fading lower as its in the delivery process. While November closed slightly higher as trade seems to be focusing less on the recent acreage report and more on upcoming weather which should be wet over the next 7 days.
Crop progress was released late on Monday and showed soybean conditions declining surprisingly, despite the very beneficial rains that fell over the Corn Belt last week. Soybeans are now at 50% good to excellent and 29% poor to very poor. 24% of the crop is blooming and 4% is setting pods, both below average.
News today was relatively quiet, and the market is trying to find direction. After Friday’s Stocks and Acreage reports and Monday’s Crop Progress report, there is a lot of data for traders to digest. The next USDA supply and demand report on July 12 may help the market to find direction.
Palm oil reserves in Malaysia may rise to a four-month high. June inventory grew 11% from the previous month to 1.86 million tons. Down the road, El Nino could have an impact on palm oil production, however.
Above: The USDA’s Stocks and Acreage report gave the market a bullish shot in the arm with a much-reduced acreage estimate. If the market can continue to rally beyond the 1450 area, 1500 – 1550 could be its next target. If not, support could be found between 1340 and 1300 with further support near 1270.
2023/24 Soybeans condition percent good-excellent (red) versus the 5-year average (green) and last year (pink).
Wheat
Market Notes: Wheat
Wheat posted strong gains today, seemingly on concern about the situation in the Black Sea. Explosives have reportedly been planted at the Zaporizhzhia nuclear power plant in Ukraine. Both Russia and Ukraine are blaming each other, and naturally this is causing an increase in tensions and concern for the welfare of the region.
Aside from the nuclear plant, there is also question as to whether the Black Sea export corridor will be renewed on July 18th. There continues to be talk out of Russia that they will not renew the agreement, but traders have heard that story before.
Monday’s crop progress report showed spring wheat condition down 2% from last week, now at 48% good to excellent. This also was supportive to the wheat market today. As for winter wheat, condition was left unchanged at 40% G/E, but harvest pace is still well behind at only 37% complete versus 46% on average.
Argentina is planting wheat, with the Argentina Secretariat of Agriculture saying that 23/24 will have 6.1 million hectares planted. For the 23/24 marketing year, Argentina wheat production may increase to 18 – 19 mmt versus 12.6 mmt in 22/23.
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.
2023/24 Winter wheat percent harvested (red) versus the 5-year average (green) and last year (purple).
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.
There continues to be an opportunity to sell 2023 New Crop MINNEAPOLIS Wheat. Weather dominates the market right now, and friendlier forecasts have pushed prices below the 822 support level. Closing below that 822 support signals that the recent uptrend off the May lows may have ended, which poses the risk that the change in trend could erode the price further in the weeks ahead. The first risk being, price drops to the May low of 771, which is where first support comes in. If that level doesn’t hold, then the next risk could be in the 680-710 window. Although making a sale in a down market may be uncomfortable, it’s important at times to have a Plan B with the objective of trying to avoid having to sell bushels at even lower prices in the future if a downtrend takes hold.
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 trading lower, it will need additional bullish news to turn it back around. Should the market continue to fall, support may be found between 770 and 730.
Corn is trading lower this morning following rains over the Independence Day holiday and continued pressure from Friday’s NASS seeding report.
The USDA said that the planting estimate for corn was 94.1 million acres which would increase ending stocks and has caused selling in corn futures.
On Friday, crop progress was released showing the corn crop rated 51% good to excellent, up just one point from a week ago. Illinois, Iowa, and Indiana showed improvement from a week ago.
Illinois crop ratings improved by 10 points to 36% good to excellent, but Missouri came in at just 23% and 37% of the crop poor to very poor. Missouri is expected to receive beneficial rains this week, which should help next week’s ratings.
Soybeans are trading higher after Monday’s Crop Progress report, which showed conditions worsening, but Friday’s acreage report is still giving buying momentum with acres projected to be tight.
August soybean oil closed at a new high for the year on Monday as demand picks up. Yesterday, both canola and rapeseed traded higher.
Despite the recent beneficial rains in the driest areas of the Corn Belt, crop progress showed soybeans falling by 1% in the good to excellent rating and is now at 50%, the lowest rating for this time of year since 2012.
In China, soybeans on the Dalian exchange showed September futures rising nearly 3% to $17.12 per bushel, which is a four-month high.
Wheat is trading up this morning with KC leading the charge higher after crop progress results came in showing conditions worsening.
On Monday, the USDA said that 37% of winter wheat was harvested, which is down from a five-year average of 46% for this time of year. Winter wheat good to excellent ratings were steady at 40%.
Spring wheat good to excellent ratings slipped 2% to 48% good to excellent, and in North Dakota, ratings slipped from 49% to 40%.
There is increased tension between Russia and Ukraine right now concerning the nuclear power plant with both countries accusing each other of plotting imminent attacks on the plant. This comes as it appears the Black Sea grain deal may not be renewed.
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.
