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Grain Market Insider: April 24, 2023

ByGrain Market Insider

Grain Market Highlights

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

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

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

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

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

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Corn

Corn Action Plan Summary

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

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

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

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

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

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

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

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

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

Soybeans

Soybeans Action Plan Summary

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

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

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

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

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

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

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

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

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

Wheat

Market Notes: Wheat

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

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

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

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

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

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

Chicago Wheat Action Plan Summary

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

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

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

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

KC Wheat Action Plan Summary

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

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

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

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

Mpls Wheat Action Plan Summary

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

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

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

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

Other Charts / Weather

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Midday Update: REVISION 2023-04-24

ByGrain Market Insider

All prices as of 10:30 am Central Time

Corn

MAY ’23 655.5
-7.75
JUL ’23 608
-7.25
DEC ’23 545.75
-2.25

Soybeans

MAY ’23 1492.25
8.75
JUL ’23 1456.25
7.25
NOV ’23 1285.5
0.25

Chicago Wheat

MAY ’23 655.25
-6.5
JUL ’23 667.25
-5.75
JUL ’24 690.75
-7.5

K.C. Wheat

MAY ’23 845.5
4.75
JUL ’23 828
2.5
JUL ’24 780.5
-3.5

Mpls Wheat

MAY ’23 850
3
JUL ’23 848
2.25
SEP ’24 783
-3

S&P 500

JUN ’23 4147.75
-9

Crude Oil

JUN ’23 78.24
0.37

Gold

JUN ’23 1993.4
2.9

  • Corn is trading lower as better rain is forecast in the Southern Plains over the next 7 days and temperatures in the Corn Belt are expected to warm up.

  • US corn export demand is still very sluggish with export commitments down 33% from a year ago.

  • Conditions for Brazil’s second crop corn have been beneficial, and they are now offering corn at a sharp discount to US prices

  • Russia is threatening to end the Black Sea grain deal if the G7 decides to ban Russian exports.

  • Soybeans are trading higher with some help from soybean meal while soybean oil is lower despite higher crude oil.

  • The US has purchased Brazilian soybeans after their prices dropped significantly, but this should not come as a shock considering that this happens nearly every year.

  • The CFTC’s Commitment of Traders showed funds as net buyers the previous week, increasing their net long position to 135,000 contracts.

  • There is talk that Ukraine will plant more oilseeds, which is offering resistance to global vegetable oil markets.

  • Wheat futures are mixed to lower as weather forecasts vary with some rain in the Texas panhandle, but Kansas is still painfully dry and spring wheat areas received more snow.

  • Last week’s crop progress for hard red winter wheat was only rated 27% good-to-excellent and those numbers are unlikely to improve with the recent weather conditions.

  • Russia is threatening to end Ukrainian grain shipments through the Black Sea which could be supportive for US prices.

  • Friday’s CFTC report showed funds holding a net short position of 105,000 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. 

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Opening Update: 2023-04-24

ByGrain Market Insider

All prices as of 6:30 am Central Time

Corn

MAY ’23 660.5
-2.75
JUL ’23 610
-5.25
DEC ’23 546.75
-1.25

Soybeans

MAY ’23 1488.5
5
JUL ’23 1450.25
1.25
NOV ’23 1282
-3.25

Chicago Wheat

MAY ’23 662
0.25
JUL ’23 674.5
1.5
JUL ’24 700
1.75

K.C. Wheat

MAY ’23 844
3.25
JUL ’23 827.75
2.25
JUL ’24 787
3

Mpls Wheat

MAY ’23 854
7
JUL ’23 852.25
6.5
SEP ’24 783
-3

S&P 500

JUN ’23 4153.25
-3.5

Crude Oil

JUN ’23 77.7
-0.17

Gold

JUN ’23 1994.2
3.7

  • Corn is trading lower this morning as the 7-day forecast for much of the Corn Belt shows less rainfall and warmer temperatures that should get planting moving.

  • Basis bids for corn shipped by barge to US Gulf Coast export terminals declined last Friday, and export premiums fell due to large supplies coming out of South America.

  • Friday’s CFTC report showed non-commercials as net buyers the previous week increasing their net long position by 22,322 contracts to 49,434 contracts.

  • The spike in spring fieldwork and near-term demand caused fertilizer supplies to tighten at New Orleans and inland, contributing to higher prices for urea, phosphates, and potash.

  • Soybeans are mixed this morning with front months slightly higher but deferred contracts lower as domestic demand keeps nearby prices supported but the Brazilian harvest pressures new crop.

  • The US has bought Brazilian soybeans after their prices dropped significantly, and two vessels carrying a combined 79,150 tonnes of Brazilian soybeans are heading to the US within the next few days.

  • Soybean meal is trading slightly higher while soybean oil is trading lower along with a slight drop in crude oil as palm oil slips as well.

  • Friday’s CFTC data showed funds buying 9,760 contracts of soybeans which increased their net long position to 134,782 contracts.

  • All three wheat classes are trading higher this morning as more unfavorable weather is forecast. Texas is not forecast to receive rain that they need, and Kansas and Oklahoma are receiving some scattered showers tomorrow but it is likely not enough.

  • Jordan’s state grain buyer issued an international tender to buy up to 120,000 tonnes of milling wheat that can be sourced from optional origins.

  • IKAR has cut Russian wheat production by 2.3% to 84 m tons from an earlier forecast of 86 m tons due to problems in eastern Russia and the Volga region.

  • Friday’s CFTC data showed that funds bought back some of their net short position, buying back 1,264 contracts and reducing their net short position to 102,983 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.