Grain Market Insider: April 28, 2023
All prices as of 1:45 pm Central Time
| Corn | ||
| MAY ’23 | 636 | 9 |
| JUL ’23 | 585 | 3.5 |
| DEC ’23 | 527.75 | -3 |
| Soybeans | ||
| MAY ’23 | 1444.25 | 17.5 |
| JUL ’23 | 1419.25 | 15.5 |
| NOV ’23 | 1263.5 | 8 |
| Chicago Wheat | ||
| MAY ’23 | 619.75 | 5 |
| JUL ’23 | 633.75 | 4.5 |
| JUL ’24 | 676.5 | 5.75 |
| K.C. Wheat | ||
| MAY ’23 | 807.25 | 28.5 |
| JUL ’23 | 776.25 | 11 |
| JUL ’24 | 751 | 9.75 |
| Mpls Wheat | ||
| MAY ’23 | 788 | 19 |
| JUL ’23 | 803.75 | 18.75 |
| SEP ’24 | 779 | 19 |
| S&P 500 | ||
| JUN ’23 | 4176.25 | 22.5 |
| Crude Oil | ||
| JUN ’23 | 76.67 | 1.91 |
| Gold | ||
| JUN ’23 | 1998.6 | -0.4 |
Grain Market Highlights
- Corn finished the day mixed with Old Crop contracts firmer and New Crop weaker. Traders covering short positions in the July contract, and the lack of deliveries versus the May contract, helped the market reverse after making a new low for the move.
- Soybeans closed the session near the upper end of the 27-cent range, as profit taking on short positions ensued following 7 straight days with lower prices.
- Both soybean meal and oil joined the fun by trading higher and supported soybeans with higher crush margins.
- All three classes of wheat closed higher on the day from deeply oversold conditions as traders covered short positions and took month end profits.
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Corn
Action Plan: Corn
Calls
2022
No Action
2023
No Action
2024
No Action
Cash
2022
No Action
2023
No Action
2024
No Action
Puts
2022
No Action
2023
No Action
2024
No Action
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.
- 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 given the market is very oversold and weather-related issues could pop up at any time to move the market significantly. Additionally, owning both calls and puts could be warranted depending on market conditions and volatility.
- 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.
Market Notes: Corn
- Corn futures lifted off early session lows as prices saw some recovery off the recent selling pressure and early session lows to finish mixed on the day.
- The May/July spreads became active again on Friday supported by short covering in the front month contracts and by the lack of deliveries versus the May contract, reflecting a tight near-term corn supply.
- Deferred contracts stayed under pressure as crop planting will likely be supported overall by the weather forecast, and the concerns for demand because of competition against the cheaper Brazil corn that will be harvested in late June/July.
- A cool but drier forecast for most of the Midwest will allow planting to stay on or ahead of the 5-year average pace. This will keep the pressure on the deferred corn futures contracts.
- Old crop charts (May, July) turned more technically friendly with the close on Friday as price action posted a hook reversal, which could lead to additional strength and short covering going into next week.
Above: The market is severely oversold and has exhibited a 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 of 639, while support for the July contract rests near the recent low of 572.
Soybeans
Action Plan: Soybeans
Calls
2022
No Action
2023
No Action
2024
No Action
Cash
2022
No Action
2023
No Action
2024
No Action
Puts
2022
No Action
2023
No Action
2024
No Action
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.
Market Notes: Soybeans
- Soybeans finally broke their downward trend and closed higher today as funds take end-of-the-month profits and Brazilian premiums rise. For the week, July soybeans lost 29 cents.
- Both soybean meal and oil moved higher and were supportive along with crude oil which rose over 2 dollars a barrel.
- Malaysian palm oil fell by 11% in April which put significant pressure on soybean oil.
- Last week, Brazilian FOB basis levels had plunged due to a lack of storage for the record crop and producers were flooding the market with whatever they could not store, but basis levels have started to rise since yesterday as Brazilian farmers hold on to what they can store.
- While the Brazilian harvest is nearly complete, in Argentina the harvest is only 28% complete with production estimated between 20 and 23 mmt. Last year Argentina produced 43.5 mmt, and the USDA’s most recent estimate was 27 mmt so they will most likely lower that number in the next WASDE.
Above: The market has retraced itself back to the March lows and has exhibited a reversal after making a new low for the move. This reversal indicates short-term selling may be exhausted and could be seen as supportive. Support lies near the recent low of 1396 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
- After trading both sides of unchanged, wheat made a nice recovery with all three US classes posting gains at the close on month-end profit-taking.
- Russia is said to have encouraged a $275 per ton price floor on wheat exports. US FOB prices of soft red winter are now cheaper than those offers, which could lead to increased US export demand.
- Though the Southern Plains had good rainfall this week, more will be needed in the region to see conditions improve.
- The bleeding appears to have stopped today in the wheat market, but there are legitimate concerns about inflation and recession further down the road, which could continue to weigh on commodities.
- French soft wheat crop conditions are the best since 2011; 94% of the crop is rated good to excellent.
Action Plan: Chicago Wheat
Calls
2022
No Action
2023
No Action
2024
No Action
Cash
2022
No Action
2023
No Action
2024
No Action
Puts
2022
No Action
2023
No Action
2024
No Action
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 broke below the March low of 654 and is oversold. Initial resistance could be found near 668 and again between 718 and 724. While key support may be found near 592.
Action Plan: KC Wheat
Calls
2022
No Action
2023
No Action
2024
No Action
Cash
2022
No Action
2023
No Action
2024
No Action
Puts
2022
No Action
2023
No Action
2024
No Action
KC 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 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.
- 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 short-term trend is down, and the July contract is oversold, which could be supportive. Support may be found near 753 and again near 742, while initial resistance lies between 835 and 850 and then near 886.
Action Plan: Mpls Wheat
Calls
2022
No Action
2023
No Action
2024
No Action
Cash
2022
No Action
2023
No Action
2024
No Action
Puts
2022
No Action
2023
No Action
2024
No Action
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 short-term trend is down, though the July contract is oversold, which can be supportive should buying return to the market. Nearby support may be found near 778 and again near 760, while resistance may be found near 870 and 895.
