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Grain Market Insider: May 8, 2023

ByGrain Market Insider

All prices as of 1:45 pm Central Time

Grain Market Highlights

  • Weak export inspections and expectations of lower export demand dragged on the corn market, while a strong US domestic basis is helping keep Old Crop firm relative to New Crop as end users need to keep their supplies flowing.

  • Anticipation of higher 23/24 ending stocks and lower soybean oil prices had traders selling soybeans with New Crop leading Old Crop lower.

  • Despite higher Malaysian palm oil and higher crude oil, soybean oil traded lower, likely on profit taking following the recent rally and ahead of Friday’s USDA report. Lower bean oil prices pressed July Board Crush margins 3 cents lower per bushel.

  • K.C. and Minneapolis wheat contracts continued their march north on poor crop and planting conditions in their respective areas, while Chicago contracts found pressure on continued fund selling and good crop conditions.

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 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.

  • There is continued opportunity to buy December ’23 560 and 610 calls. The December corn contract shows signs of support with a hook reversal after making a new low for the move, and with the market approximately 50 cents off the recent high and 115 cents off the fall high, it has eroded enough risk premium ahead of the long growing season that call valuations look attractive here.

  • 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.

  • Spread trading between Old Crop and New Crop corn futures was the setup of the market on Monday. Old crop prices, supported by the supportive cash market and expected planting pace and favorable weather, pressured the New Crop futures.

  • Cash basis levels on the National Average Corn basis were trading near 36 cents over July as of last Friday, and well over the 5-year average of 15 cents. This reflects the tightness of old crop supplies available and the current front-end demand for corn.

  • The expected planting pace for last week is that 48% of the corn crop will be planted as of Sunday versus a 5-year average of 42%. Favorable weather forecasts overall should help maintain a good pace of planting despite rain in the Corn Belt on Monday.

  • Weekly export inspections for corn were disappointing at 963,000 MT, well below last week’s totals. Year-over-year, export inspections are down 35% of last year and behind the pace needed to reach the USDA forecast for the marketing year.

  • The corn market and grain markets in general will be looking towards Friday’s USDA WASDE report for near-term direction and the market’s first look at 2023-24 marketing year supply/demand numbers. The report will be released on Friday, May 12 at 2:00 CST.

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 Tues. May 2. Net position in Green versus price in Red.

Soybeans

Soybeans Action Plan Summary

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

  • We recommend not adding to current sales levels for the new 2023 crop at this time. Our research indicates there is about a 74% likelihood of improved prices moving into the June time frame. Also, weather conditions will begin to dominate the market as we begin to move through planting and 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, along with soybean meal and oil, began the day higher but faded to a lower close for all but soybean meal, which ended slightly higher. Lower export inspections were not supportive.

  • Soybean inspections totaled 14.5 mb for the week ending Thursday, May 4, at the lower end of expectations. Total inspections are now at 1,758 mb and are even with the previous year.

  • Crop progress will be released this afternoon, and the average trade estimate is that 34% of the soybean crop has been planted. Progress was 19% planted as of last week.

  • Today, palm oil futures surged by 4.3% to the highest price in three weeks, while crude oil worked higher as well. Depressed world veg oil prices have negatively affected the soy complex.

  • While Brazilian soybean premiums have risen slightly from a few weeks ago, their prices are low enough to spur Chinese demand and for China to cancel US purchases for cheaper Brazilian soybeans. Brazilian producers are scaling back on sales, however, which could drive prices back up.

Above: July soybeans have recovered from being severely oversold and posted a bearish reversal on 5/08 which indicates recent buying could be exhausted and the market may turn lower. Support lies near the recent low of 1392 with further support near 1350. Should support hold and buyers enter the market, resistance may be found between 1450 and 1460, and again near 1500.

Above: Soybeans Managed Money Funds net position as of Tues. May 2. Net position in Green versus price in Red.

Wheat

Market Notes: Wheat

  • K.C. contracts led the market higher on the continued concern of lower production in the southern Plains. Some believe total HRW production could be as low as 200 mb.

  • Adding support to the Minneapolis contracts are dry conditions in Canada, while the northern Plains continue to be wet, with growing concerns about the number of prevent plant acres.

  • The Wheat Quality Council Tour will begin on May 15, which will give the market a much better understanding of the Kansas wheat crop’s condition. So far, Oklahoma’s wheat crop is thought to be the smallest in nearly 70 years.

  • The Black Sea grain deal continues to be in negotiations, though there are thoughts that any renewal may be unlikely. If so, it could be a bullish influence in the market as other world exporters would need to fill the gap.

  • The CFTC reported on Friday that Managed Money fund positions as of Tuesday, May 2 were net short 126,324 contracts of Chicago wheat, which comprises nearly 40% of the commodity’s total open interest, and the second highest percentage in 17 years.

Chicago Wheat Action Plan Summary

  • 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. Corn and K.C. wheat are near historic premiums to Chicago wheat, which could lend support to the Chicago contracts if HRW production concerns persist, or if any production concerns develop for corn. 

  • No action is 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 is correcting from being oversold and open interest has been declining on the rally, indicating traders are covering short positions and the rally may be short lived. Further short covering activity could be fuel for a test of the 718 to 724 resistance area if fresh buyers enter the market on additional bullish news. Initial resistance could be found near 668 and again between 718 and 724, while key support may be found near 592.

Above: Chicago Wheat Managed Money Funds net position as of Tues, May 2. Net position in Green versus price in Red.

Above: Managed Money Funds net Chicago Wheat position as a percentage of total open interest.

KC Wheat Action Plan Summary

  • 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 despite the recent rain.  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 is recovering from being oversold and has gained momentum on the rally with open interest on the rise, which indicates new buyers could be getting long the market. If the market can break through the 835 to 850 resistance area, it could further test the 886 to 902 resistance area. Otherwise, initial support may be found near 769, with key support near 740.

Above: K.C Wheat Managed Money Funds net position as of Tues, May 2. Net position in Green versus price in Red.

Mpls Wheat Action Plan Summary

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

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

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

Above: The market continues to recover from being oversold, and with open interest on the rise, it appears that new buyers may be entering, and getting long the July contract. Resistance still resides above the market near 870 and 895, while support may be found between 770 and 760.

Above: Minneapolis Wheat Managed Money Funds net position as of Tues, May 2. Net position in Green versus price in Red.

Other Charts / Weather

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Midday Update May 8, 2023

ByGrain Market Insider

All prices as of 10:30 am Central Time

Corn
JUL ’23 582.75 -13.75
DEC ’23 517.5 -12.25
DEC ’24 508.25 -7
Soybeans
JUL ’23 1411.25 -22.5
NOV ’23 1252 -20.5
NOV ’24 1220.5 -13
Chicago Wheat
JUL ’23 636.25 -17.75
SEP ’23 648.5 -17.5
JUL ’24 682 -16
K.C. Wheat
JUL ’23 841 -3.25
SEP ’23 829 -5.25
JUL ’24 791.5 -9.75
Mpls Wheat
JUL ’23 839.5 -4.25
SEP ’23 844 -2.75
SEP ’24 779 -2.5
S&P 500
JUN ’23 4140.5 -12.25
Crude Oil
JUL ’23 72.02 -1.05
Gold
AUG ’23 2051.2 -1.6

  • Corn is trading sharply lower following a Chinese cancellation of 10.7 mb of previously purchased US corn for 22/23. Brazilian corn remains cheaper than US offers enticing Chinese buyers.

  • Planting progress was faster than expected at 49% complete, above the average and above trade guesses. Illinois is 73% complete, Iowa at 70%, but Minnesota at only 38% and Indiana 36%.

  • The upcoming weather should allow a good seeding pace to continue with some intermittent rain, and Thursday and Friday widespread showers are expected.

  • Brazil’s forward sales of their second crop corn are behind the average pace at just 24.3%. The crop is currently estimated at 92.2 mmt and usually makes up 70 to 75% of Brazilian corn production.

  • Soybeans, along with soybean meal and oil, are all lower today under pressure from the faster than expected planting pace, lower crude oil, and a higher US dollar.

  • 35% of the soybean crop is planted, which is 14 points higher than the 5-year average pace. Illinois is 66% complete, Iowa at 49%, but North Dakota and Minnesota lagging at 0% and 13% respectively.

  • Soybean oil is still under pressure, but palm oil has continued its rally for the fifth consecutive day. This should be supportive for soybean oil in the shorter term.

  • News that China’s April imports of soybeans is down 10% versus a year ago at just 7.26 mmt has been weighing on the market and makes it unclear if their economy is recovering as much as they have claimed.

  • Wheat is trading lower, led down by Chicago wheat with KC and Minn wheat only slightly lower. Pressure comes from a gap lower on Paris milling wheat futures.

  • Crop conditions continue to worsen for US winter wheat. The good to excellent rating improved by 1%, but the poor to very poor rating jumped 2% to 44%.

  • In Kansas, the wheat crop is rated just 11% good to excellent while the poor to very poor rating is at a whopping 68%, with Texas and Oklahoma not much better.

  • Russian state media said that high level meetings will take place on May 10-11 between Russia, Ukraine, Turkey, and the UN, most likely to try to come to an agreement about the Black Sea corridor agreement.

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. 

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Opening Update: May 8, 2023

ByGrain Market Insider

All prices as of 6:30 am Central Time

Corn

JUL ’23 598.75
2.25
DEC ’23 534.25
-0.5
DEC ’24 519
-1.75

Soybeans

JUL ’23 1442
5.5
NOV ’23 1281.75
1.75
NOV ’24 1237.75
-0.5

Chicago Wheat

JUL ’23 662.75
2.5
SEP ’23 674
2.5
JUL ’24 700
0.75

K.C. Wheat

JUL ’23 843.75
10.75
SEP ’23 833
9
JUL ’24 801.75
4.75

Mpls Wheat

JUL ’23 846
10
SEP ’23 850
10.25
SEP ’24 781.5
18.75

S&P 500

JUN ’23 4158.75
8.5

Crude Oil

JUL ’23 73.12
1.85

Gold

AUG ’23 2051.2
7

  • Corn is trading mixed this morning with July a bit higher and Dec lower. With the recent selloff in US corn prices, the US is becoming more competitive with Brazil.

  • In both Brazil and the US corn production estimates are positive due to favorable weather and corn sowing that is being favored in the US.

  • The recent rainfall in the US has slowed planting a bit but helped soil moisture in areas like Nebraska and western Iowa which were very dry.

  • Friday’s CFTC report showed funds adding to the their net short position in corn by 102,849 contracts bringing their total net short position to 118,146 contracts.

  • Soybeans are trading higher along with both soybean meal and oil, and crude oil is higher again as well which is offering support along with Argentina’s perpetually shrinking crop.

  • Argentina’s struggling crop is providing an offset to Brazil’s record crop which is keeping soybean supplies tighter than expected, and Brazilian soybeans are being shipped to Argentina to their crushing plants.

  • Brazilian soy exports reached 12.08 mmt in May versus just 10.27 mmt for the same month a year ago.

  • Friday’s CFTC report showed funds as sellers of soybeans by 30,835 contracts reducing their net long position to 56,373 contracts.

  • Wheat is trading higher again this morning as traders grow more concerned about the Black Sea grain deal’s potential non-renewal on May 18. Poor crop ratings in the US have also been supportive.

  • No new ships were authorized to carry out Black Sea grain exports last Friday after a meeting with Ukraine, Russia, Turkey, and the UN. Daily inspections of previously authorized ships continue however. 

  • An estimate for Oklahoma wheat production was cited at 54 mb earlier this week, far less than the 68.6 mb last year and the 115.1 mb produced the year before.

  • Friday’s CFTC report showed funds adding to their net short position by 13,312 contracts, increasing that net short position to 126,324 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. 

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Grain Market Insider: May 5, 2023

ByGrain Market Insider

All prices as of 1:45 pm Central Time

Grain Market Highlights

  • Technical short covering and carryover strength from wheat helped the corn market continue its rally after posting a reversal earlier this week.

  • Soybean oil led the soybean complex higher today in concert with higher Malaysian palm oil and crude oil, while soybean meal posted minor gains, weighed down by global demand concerns.

  • Argentina reported early yield estimates of only 17 bpa, which added support to soybean prices.

  • Hard Red Winter and Spring wheat crop concerns in addition to the technical short covering after posting market reversals earlier in the week helped to rally all three wheat classes further to end the week.

  • To see the updated National Weather Service 6-10 day forecast and National Drought Monitor, scroll down to the Other Charts / Weather section.

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

Corn

Corn Action Plan Summary

  • No 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.

  • There is continued opportunity to buy December ’23 560 and 610 calls. The December corn contract shows signs of support with a hook reversal after making a new low for the move, and with the market approximately 50 cents off the recent high and 115 cents off the fall high, it has eroded enough risk premium ahead of the long growing season that call valuations look attractive here.

  • 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.

  • Buyer strength led by good front month spread action and short covering in the wheat market spilled over into the corn market again on Friday, as July corn closed the week with double digit gains.

  • The corn market forged a good rally in the second half of the week as money moved into the long side of the market despite a fundamental picture that is negative in the short term.

  • Demand concerns stay a focus of the corn market as weekly export sales totals this past week posted net cancellations for the first time in 20 years. There was talk on Friday that China was a buyer of South African corn, still looking away from the U.S. for corn supplies.

  • Despite some areas of potential rainfall, extended forecasts are favorable for improved planting pace for this year’s corn crop. The market will be watching the planting pace in northern states closely next week.

  • Next week will set up a battle between favorable technical signals and possible bearish fundamentals as the market prepares for the May 12 USDA WASDE report and our first projection for the 2023-24 marketing year.

Above: The market is severely oversold and has exhibited a second reversal after making a new low for the move, indicating short-term selling may be exhausted, which could be seen as supportive. 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

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

  • We recommend not adding to current sales levels for the new 2023 crop at this time. Our research indicates there is about a 74% likelihood of improved prices moving into the June time frame. Also, weather conditions will begin to dominate the market as we begin to move through planting and 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. 

  • Argentina’s soybean harvest is estimated to be about 20% complete with yields coming in near 17 bpa, suggesting a crop of only 18 mmt versus the USDA’s April estimate of 27 mmt.

  • Lending further support to soybeans, soybean oil gained on follow through strength from strong weekly export sales and palm oil, which was up nearly 5% overnight. Additionally, crude oil posted gains of about $2.95, or about 4.25%.

  • With Brazil’s offers for September delivery having rallied about 60 cents in the last few days for September and making US offers more attractive, it has been rumored that China has purchased US soybeans out of the PNW for October delivery.

  • Soybeans continue higher with follow through buying from Wednesday’s reversal. Strong resistance lies near Tuesday’s high of 1440, and if the market can break through that area, it could be set up to test the 50-day moving average near 1462.

Above: July soybeans traded lower to post a new low for the move and reversed to settle near unchanged. The market will need further confirmation to continue in either direction following two consecutive reversals. Support lies near the recent low of 1392 with further support near 1350. Should support hold and buyers enter the market, resistance may be found between 1450 and 1460, and again near 1500.

Wheat

Market Notes: Wheat

  • Strong short covering in the three classes of wheat futures continues to push prices higher into the end of the week. Wheat futures have likely found a near-term bottom on Wednesday, and prices have rallied into today’s close.

  • Fueled by crop concerns, KC hard red winter wheat prices have rallied nearly $1.00 off Wednesday’s lows fueled by the Oklahoma crop tour forecasting the worst Oklahoma winter wheat crop since 1955. The Kansas wheat tour kicks off on May 15 with similar results expected.

  • The wheat market will stay focused on the May 18 deadline for a possible disruption of the Black Sea grain deal, as increased tensions and constant rhetoric out of Russia may put the agreement lasting in jeopardy.

  • In the northern Plains, spring wheat planting is delayed, and forecast for precipitation over the weekend might further stall progress and concerns for production of the crop.

  • Despite the late week rally, managed funds are likely to show a near record short position in the wheat market on Tuesday when the Commitment of Traders report is calculated, giving the market more potential room for short covering rally to grow.

Chicago Wheat Action Plan Summary

  • 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. Corn and K.C. wheat are near historic premiums to Chicago wheat, which could lend support to the Chicago contracts if HRW production concerns persist, or if any production concerns develop for corn. 

  • No action is 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 is correcting from being oversold and open interest has been declining on the rally, indicating traders are covering short positions and the rally may be short lived. Further short covering activity could be fuel for a test of the 718 to 724 resistance area if fresh buyers enter the market on additional bullish news. Initial resistance could be found near 668 and again between 718 and 724, while key support may be found near 592.

KC Wheat Action Plan Summary

  • 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 despite recent the recent rain.  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 is recovering from being oversold and has gained momentum on the rally with open interest on the rise, which indicates new buyers could be getting long the market. If the market can break through the 835 to 850 resistance area, 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

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

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

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

Above: The market continues to recover from being oversold, and with open interest on the rise, it appears that new buyers may be entering, and getting long the July contract. Resistance still resides above the market near 870 and 895, while support may be found between 770 and 760.

Other Charts / Weather

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Midday Update May 5, 2023

ByGrain Market Insider

All prices as of 10:30 am Central Time

Corn
JUL ’23 595.5 6.5
DEC ’23 533.5 5
DEC ’24 519.5 1.75
Soybeans
JUL ’23 1433.5 15.75
NOV ’23 1277.75 9.25
NOV ’24 1239 6.75
Chicago Wheat
JUL ’23 657.75 12.75
SEP ’23 669.25 12.5
JUL ’24 696.75 7.25
K.C. Wheat
JUL ’23 825.75 27.5
SEP ’23 817.25 25.75
JUL ’24 789.75 14.5
Mpls Wheat
JUL ’23 836.5 24.5
SEP ’23 840.75 25.25
SEP ’24 780 17.25
S&P 500
JUN ’23 4135.25 59.5
Crude Oil
JUL ’23 71.1 2.59
Gold
AUG ’23 2039 -36

  • Corn is continuing higher today after yesterday morning’s announcement of a net sales cancellation as technicals became oversold, and non-commercials are likely doing some short covering ahead of the weekend.

  • Much of the strength in the corn market is owed to gains in wheat as the Black Sea grain deal ends on the May 18 with little hope that Russia will agree to renew.

  • China’s corn prices fell again today and, notably, China made its first ever purchase of corn from South Africa in an attempt to diversify their suppliers.

  • Warming temperatures this week should allow for more favorable planting conditions across much of the Midwest.

  • Soybeans, soybean meal and oil are trading higher today, fueled by gains in crude oil of nearly 3.00 a barrel in an apparent reversal where the bottom may have been put in yesterday.

  • The Fed signaled that they may be done with rate hikes for the rest of the year barring further inflationary news which is bullish for crude and most commodities.

  • In Argentina, the Buenos Aries Grain Exchange has hinted at a further cut their estimates of soy production which is already a record low 22.5 mmt due to the extreme drought. Final production could be under 20 mmt.

  • Old crop soybean supply may be limited this summer, which should lend some support to the market.

  • Wheat is leading the grain market higher with the main catalyst being the alleged Ukrainian drone strike on the Kremlin which Russia claims was meant as an assassination attempt on Vladimir Putin.

  • The increase in tensions right as the Black Sea grain deal is set to expire does not bode well for their exports, and the number of vessels coming in and out of the region is falling.

  • Non-commercials are currently net short wheat, and this may be the trigger for short covering in a big way between technicals and the political climate.

  • The Wheat Quality Council Tour begins on May 15 which will give a better idea to the damage of the Kansas crop, but the Oklahoma crop is already reportedly the smallest since 1955.

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. 

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Opening Update: May 5, 2023

ByGrain Market Insider

All prices as of 6:30 am Central Time

Corn

JUL ’23 592.5
3.5
DEC ’23 530.25
1.75
DEC ’24 520
2.25

Soybeans

JUL ’23 1427
9.25
NOV ’23 1270.25
1.75
NOV ’24 1232.25
-6.5

Chicago Wheat

JUL ’23 647.75
2.75
SEP ’23 659.25
2.5
JUL ’24 690.25
0.75

K.C. Wheat

JUL ’23 805.25
7
SEP ’23 798
6.5
JUL ’24 783
7.75

Mpls Wheat

JUL ’23 820.75
8.75
SEP ’23 824.5
9
SEP ’24 762.5
-0.25

S&P 500

JUN ’23 4103.25
27.5

Crude Oil

JUL ’23 70.32
1.81

Gold

AUG ’23 2065.8
-9.2

  • Corn is trading higher this morning and has recovered from yesterday mornings export sales net cancellations which drove prices lower. 

  • Non-commercials were net short corn as of last Friday’s CFTC report but with corn technically oversold and the Black Sea grain deal potentially not getting renewed, it is finding some support.

  • Global corn stockpiles at the end of the 22/23 season have been raised and are at 288.2 mmt which is up from an April estimate of 285.4 mmt thanks to a bigger India harvest.

  • China imported its first cargo of corn from South Africa this week of 53,000 tonnes as they seek to diversify their purchasing markets.

  • Soybeans are higher again today along with both soybean meal and oil as crude oil begins to mover higher back above 70 dollars a barrel.

  • Palm oil has finally made a reversal gaining 5% due to an expected drop in palm oil stocks and increased demand. Soybeans and soybean oil have been looking to world veg oil prices for direction.

  • Brazil’s lack of storage for their record crop are pressuring premiums in both corn and beans, and the negative premiums may result in losses of 2.30 billion dollars this year for the sector.

  • Barge shipments down the Mississippi River have fallen to 595k tons for the week ending April 29 from 657k tons the previous week as high water levels remain an issue.

  • Wheat is trading higher for what would be the third consecutive day as poor US crop conditions, an attempted drone attack on Russia, and the potential non-renewal of the Black Sea grain deal bolster prices.

  • The Taiwan Flour Millers’ Association purchased an estimated 52,225 tonnes of milling wheat to be sourced from the United States in a tender on Friday.

  • The FAO raised the EU’s wheat crop outlook to 139.5 mmt for 2023, but they cut the outlook for Turkey and Pakistan’s crop due to drought.

  • An estimate for Oklahoma wheat production was cited at 54 mb earlier this week, far less than the 68.6 mb last year and the 115.1 mb produced the year before.

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. 

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Grain Market Insider: May 4, 2023

ByGrain Market Insider

All prices as of 1:45 pm Central Time

Grain Market Highlights

  • Corn ended mixed as traders absorbed net negative weekly corn export sales reflecting Chinese corn cancellations from last week.

  • Soybeans closed slightly lower matching similar quiet price changes from other commodities such as corn and crude.

  • Soybean meal and oil prices closed fractionally lower; US Census data showed record high soybean meal exports in the month of March which lent support.

  • All three wheat markets continued higher following yesterday’s bullish key reversals as tensions continue to rise in the Black Sea region.

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 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.

  • There is continued opportunity to buy December ’23 560 and 610 calls. The December corn contract is extremely oversold and shows signs of support with a hook reversal after making a new low for the move. Additionally, with the market approximately 50 cents off the recent high and 115 cents off the fall high, it has eroded enough risk premium ahead of the long growing season that call valuations look attractive here.

  • 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.

  • The USDA reported net cancellations of 12.4 mb of corn export sales for 22/23 as expected following Chinese cancellations last week. Export sales for next year came in at 4.8 mb.

  • Although the Fed raised interest rates again yesterday, the comments by Fed Chairman Powell that there may be a pause on further rate hikes was viewed as supportive to financial and commodity markets.

  • Much of the Midwest is forecast to see favorable weather conditions ahead; this should lead to a continued uptick in planting progress.

  • The Brazilian safrinha corn crop is looking good. Harvest typically begins in early July, and a lack of domestic storage capacity could lead to a flood of Brazilian corn into the world export market.

Above: The market is severely oversold and has exhibited a second reversal after making a new low for the move, indicating short-term selling may be exhausted, which could be seen as supportive. 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

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

  • We recommend not adding to current sales levels for the new 2023 crop at this time.  Our research indicates there is about a 74% likelihood of improved prices moving into the June time frame. Also, weather conditions will begin to dominate the market as we begin to move through planting and 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. 

  • July soybeans ended the day slightly higher after trading lower for the better part of the day. The higher close came despite losses in both soybean meal and oil, with crude oil a bit lower as well.

  • US soybean meal exports in March were a record high for the month and up 22% from March of 2022 according to US Census Bureau data released this week.

  • Export sales for soybeans were low but were at the higher end of the trade guesses. The USDA reported an increase of 10.6 mb of soybean export sales in 22/23 and an increase of 2.5 mb for 23/24. Last week’s export shipments of 20.6 mb were above the 13.1 mb needed each week.

  • Crude oil has fallen by over 7 dollars a barrel since Monday as traders nurse concerns about recession and the new bank failures. Demand for crude oil is expected to fall, which has pressured the soy complex.

  • Weather in most of the country is forecast to warm up, and rains are expected to fall near normal levels. Soybean plantings remain ahead of pace for this time of year, and the improved weather will give northern states a chance to catch up.

Above: July soybeans traded lower to post a new low for the move and reversed to settle near unchanged. The market will need further confirmation to continue in either direction following two consecutive reversals. Support lies near the recent low of 1392 with further support near 1350. Should support hold and buyers enter the market, resistance may be found between 1450 and 1460, and again near 1500.

Wheat

Market Notes: Wheat

  • Wheat may have found a near term bottom after the strong reversal yesterday and a higher close across the board today.

  • The USDA reported an increase of 7.8 mb of wheat export sales for 22/23 and an increase of 10.3 mb for 23/24.

  • The increase in tensions between Russian and Ukraine after yesterday’s news suggests that the Black Sea export deal may not be renewed on May 18.

  • The May 15-18 Kanas winter wheat crop tour is likely to show poor conditions, which could be supportive to prices.

Chicago Wheat Action Plan Summary

  • 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. Corn and K.C. wheat are near historic premiums to Chicago wheat, which could lend support to the Chicago contracts if HRW production concerns persist, or if any production concerns develop for corn. 

  • No action is 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: While the market is considered extremely oversold, it did post an outside-day up pattern, where the range is larger than that of the previous day/s and closed higher than it opened. This market set-up could be considered bullish and be supportive. Initial resistance could be found near 668 and again between 718 and 724, while key support may be found near 592.

KC Wheat Action Plan Summary

  • 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 despite recent the recent rain.  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 is oversold, and posted an outside day up, which is a type of reversal pattern where the current price action overtook the previous day’s and closed near the day’s highs. This pattern could be supportive should buyers enter the market on new positions or to cover existing short positions. Support may be found near 742 with further chart support near 690. Initial resistance lies between 835 and 850 and then near 886.

Mpls Wheat Action Plan Summary

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

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

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

Above: While the market is considered extremely oversold, it did post an outside-day up pattern, where the range is larger than that of the previous day/s and closed higher than it opened. This market set up could be considered bullish and can be supportive should buying return to the market. Nearby support may be found between 770 and 760, while resistance may be found near 870 and 895.

Other Charts / Weather

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Midday Update May 4, 2023

ByGrain Market Insider

All prices as of 10:30 am Central Time

Corn

JUL ’23 585.75
-2.75
DEC ’23 526.75
-3.75
DEC ’24 516.75
-3.75

Soybeans

JUL ’23 1409.5
-8
NOV ’23 1262.25
-10
NOV ’24 1229.25
-9.5

Chicago Wheat

JUL ’23 643.75
4
SEP ’23 655
4.25
JUL ’24 686.5
2

K.C. Wheat

JUL ’23 795.25
10.25
SEP ’23 788.75
10.75
JUL ’24 764
1.25

Mpls Wheat

JUL ’23 808.5
5
SEP ’23 810.75
3.75
SEP ’24 762.5
2.5

S&P 500

JUN ’23 4078.25
-29.25

Crude Oil

JUL ’23 68.38
-0.17

Gold

AUG ’23 2076.4
20.2

  • The USDA reported net cancellations of 12.4 mb of corn export sales for 22/23, and an increase of 4.8 mb for 23/24.

  • Yesterday the market had a knee jerk reaction to news that there was an attempted drone strike on the Kremlin. Grains did not follow through overnight, with corn, soybeans, and wheat all in the red to start the morning. At midday, however, wheat is turning positive.

  • The Fed did raise interest rates one quarter percent yesterday. But Chairman Powell’s comments about a pause in increasing rates could offer support to financial and commodity markets.

  • Warming temperatures this week should allow for more favorable planting conditions across much of the Midwest.

  • The USDA reported an increase of 10.6 mb of soybean export sales for 22/23, and an increase of 2.5 mb for 23/24.

  • Brazil soybeans are cheaper than US, especially to China. This could further reduce US export demand.

  • Old crop soybean supply may be limited this summer, which should lend some support to the market.

  • There is renewed concern about the banking crisis, with the sharp drop in Pac West share price. This could weigh on financial markets and spill over into commodities.

  • Based on July futures, the crush premium for soybeans is about $1.88 per bushel.

  • The USDA reported an increase of 7.8 mb of wheat export sales for 22/23 and an increase of 10.3 mb for 23/24.

  • Russia said they shot down the drone attack yesterday, but the increase in tensions suggest that there will not be an extension of the Black Sea export deal on May 18.

  • Speculators are said to hold short positions of SRW wheat that amount to over 130,000 contracts.

  • The Kansas winter wheat crop tour will be May 15-18. It is likely to show poor conditions.

  • A Turkish bank has agreed to process payments for Russian exports, but a signed agreement is needed.

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. 

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Opening Update: May 4, 2023

ByGrain Market Insider

All prices as of 6:30 am Central Time

Corn

JUL ’23 585.5
-3
DEC ’23 527
-3.5
DEC ’24 519.25
-1.25

Soybeans

JUL ’23 1413
-4.5
NOV ’23 1265
-7.25
NOV ’24 1235.5
-3.25

Chicago Wheat

JUL ’23 635.75
-4
SEP ’23 647
-3.75
JUL ’24 683
-1.5

K.C. Wheat

JUL ’23 777.25
-7.75
SEP ’23 770.75
-7.25
JUL ’24 760.75
-2

Mpls Wheat

JUL ’23 798.75
-4.75
SEP ’23 805.5
-1.5
SEP ’24 762.5
2.5

S&P 500

JUN ’23 4092
-15.5

Crude Oil

JUL ’23 68.46
-0.09

Gold

AUG ’23 2069.7
13.5

  • Corn is a bit lower this morning after rallying yesterday following an alleged assassination attempt by Ukraine on Vladimir Putin and attack on the Kremlin. No one was hurt and it is unclear who was behind the attack.

  • Estimates for today’s export sales report for corn are between  negative 300k and 900k tons with an average of 175k. Net sales cancellations could pressure prices.

  • Ethanol stocks have fallen by 3.9% to 23.363 mln bbl while analysts were expecting 24.423. Plant production is at 0.976 m b/d vs the survey average of 0.963 m

  • Unfavorable weather and harvest delays have cut Argentinian corn production with an average estimate of 34.6 mmt, down 1% from the previous update. 

  • Soybeans are trading lower this morning but essentially have gone nowhere in the past week despite plenty of volatility. Both soybean meal and oil are lower while crude oil is slightly lower.

  • Estimates for today’s USDA export sales report in soybeans are between 100k and 500k tons with an average of 332k. Good exports for soybeans may begin to trend slightly higher as Brazilian farmers begin to slow sales.

  • The 6-day forecast for most of the Corn Belt calls for slightly above average precipitation but warmer than normal temperatures with the warm temperatures moving North as well.

  • July soybean meal closed at a new 5-month low yesterday and crush premiums have continued to slide lower, near the lowest in a year.

  • Wheat rallied sharply yesterday after the Kremlin accused Ukraine of launching a drone attack in order to assassinate Putin. The attack was shot down and no one was hurt, but it is unclear if Ukraine was even involved.

  • The deadline for the Black Sea grain deal is approaching on May 18, and yesterday’s stunt doesn’t lend much confidence that Russia will agree to extend the deal.

  • Ukraine’s next wheat crop is expected to be the lowest since 2012/13 at just 15.04 mmt, and yield estimates are below the 5-year average.

  • Adding more support to the wheat complex yesterday was the crop tour which expects Oklahoma to raise the smallest wheat crop since 1955 due to the extreme drought.

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. 

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Grain Market Insider: May 3, 2023

ByGrain Market Insider

All prices as of 1:45 pm Central Time

Grain Market Highlights

  • Corn ended higher on the day on carryover strength from the wheat markets as historically low crop numbers were noted in the Oklahoma crop tour.

  • Soybeans closed higher on strength in soybean oil, and neighboring corn and wheat markets.

  • Soybean meal and oil continued in their reactions to yesterday’s record March crush numbers, as meal struggled from large supplies and weakening demand. Soybean oil gained strength from higher inferred biofuel demand on lower-than-expected supplies.

  • All three wheat markets were sharply higher following KC contracts, as Oklahoma was noted as potentially having its smallest crop since 1955.

  • The grain markets appeared to add a level of “war premium” on reports of a foiled drone attack on the Kremlin by Ukraine.  Ukraine denies the attacks, but the result is more concern over the world’s grain supply.

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

Corn

Corn Action Plan Summary

  • No action is recommended at this time for Old Crop.  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.

  • There is continued opportunity to buy December ’23 560 and 610 calls. The December corn contract is extremely oversold and shows signs of support with a hook reversal after making a new low for the move. Additionally, with the market approximately 50 cents off the recent high and 115 cents off the fall high, it has eroded enough risk premium ahead of the long growing season that call valuations look attractive here.

  • 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 futures reversed off early session lows, and the results of the Oklahoma Winter Wheat crop tour revealed one of the worst crops since 1955, triggering a strong short covering reaction in the wheat market, spilling over and supporting the corn market.

  • The planting pace of this year’s crop is expected to be more complete across the corn belt this week as forecasts are calling for warmer and drier weather into the second week of May.

  • The weekly Ethanol Production report saw mixed numbers, as weekly production was improved over last week, and ethanol stockpiles were lower than expected. The overall pace of corn usage for ethanol is trending below USDA projections at this point of the marketing year.

  • Demand concerns will still be a focus with the release of weekly export sales totals on Thursday morning. Expectations are for corn sales to be from -450,000 mt to 800,000 mt for the next two marketing years. Export sales totals will be influenced by the cancellations of Chinese purchases last week.

  • The strong closing price action posted a bullish reversal on the corn charts after retesting previous lows. With a market holding an oversold status, this could allow for additional price strength on technical buying and covering of short positions.

Above: The market is severely oversold and has exhibited a second reversal after making a new low for the move, indicating short-term selling may be exhausted, which could be seen as supportive. 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

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

  • We recommend not adding to current sales levels for the new 2023 crop at this time.  Our research indicates there is about a 74% likelihood of improved prices moving into the June time frame. Also, weather conditions will begin to dominate the market as we begin to move through planting and 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 traded lower for most of the day but ultimately ended higher along with soybean oil following the Federal Reserve announcement that cast a bearish shadow over the markets.

  • The Federal Reserve raised rates by 25 basis points but hinted that they may be done with hikes for the year. The US Dollar reacted well to the news, but crude oil stayed suppressed, down 3 dollars a barrel.

  • Brazil’s basis levels had fallen sharply in the past two months but recently have improved by 75 cents as harvest wraps up and farmers slow selling. This has added some support to the soy complex.

  • In the US, soy planting is ahead of schedule at 20% complete with northern states showing the most sluggish pace. Temperatures in the North are forecast to warm over the next two weeks, which should speed up planting.

Above: July soybeans traded lower to post a new low for the move and reversed to settle near unchanged. The market will need further confirmation to continue in either direction following two consecutive reversals. Support lies near the recent low of 1392 with further support near 1350. Should support hold and buyers enter the market, resistance may be found between 1450 and 1460, and again near 1500.

Wheat

Market Notes: Wheat

  • The wheat market saw significant reversals today in all three US wheat futures classes with gains of 30 or more cents.

  • News outlets are reporting an attempted drone attack on the Kremlin in Russia. This may have been the catalyst behind today’s rally, as war premium was added back into the market.

  • Offering support to wheat price is the Oklahoma wheat tour’s projection of their crop at 54.3 mb. This would be the lowest production since 1955.

  • The American weather model predicts up to seven inches of rain next week in parts of Nebraska and Kansas. The European model is somewhat in conflict, though, with a drier forecast.

  • Egypt fulfilled their tender from Romania and Russia. US SRW wheat was cheaper but was also at a freight cost disadvantage. Additionally, the Russian wheat was purchased at $260 per ton, whereas Russia previously encouraged a $275 export price floor.

Chicago Wheat Action Plan Summary

  • 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. Corn and K.C. wheat are near historic premiums to Chicago wheat, which could lend support to the Chicago contracts if HRW production concerns persist, or if any production concerns develop for corn. 

  • No action is 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: While the market is considered extremely oversold, it did post an outside-day up pattern, where the range is larger than that of the previous day/s and closed higher than it opened. This market set-up could be considered bullish and be supportive. Initial resistance could be found near 668 and again between 718 and 724, while key support may be found near 592.

KC Wheat Action Plan Summary

  • 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 despite recent the recent rain.  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 is oversold, and posted an outside day up, which is a type of reversal pattern where the current price action overtook the previous day’s and closed near the day’s highs. This pattern could be supportive should buyers enter the market on new positions or to cover existing short positions. Support may be found near 742 with further chart support near 690. Initial resistance lies between 835 and 850 and then near 886.

Mpls Wheat Action Plan Summary

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

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

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

Above: While the market is considered extremely oversold, it did post an outside-day up pattern, where the range is larger than that of the previous day/s and closed higher than it opened. This market set up could be considered bullish and can be supportive should buying return to the market. Nearby support may be found between 770 and 760, while resistance may be found near 870 and 895.

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