Grain Market Insider: August 10, 2023
All prices as of 1:45 pm Central Time
| Corn | ||
| SEP ’23 | 483.25 | 2.25 |
| DEC ’23 | 496.25 | 2 |
| DEC ’24 | 514.5 | 0.5 |
| Soybeans | ||
| NOV ’23 | 1318.25 | 9.75 |
| JAN ’24 | 1328.25 | 9.75 |
| NOV ’24 | 1267.75 | 9.5 |
| Chicago Wheat | ||
| SEP ’23 | 637.75 | 2.75 |
| DEC ’23 | 663.75 | 2 |
| JUL ’24 | 709 | -0.5 |
| K.C. Wheat | ||
| SEP ’23 | 767 | 5.5 |
| DEC ’23 | 779.25 | 3.25 |
| JUL ’24 | 773 | 5.5 |
| Mpls Wheat | ||
| SEP ’23 | 817 | -2.75 |
| DEC ’23 | 833.25 | -2.25 |
| SEP ’24 | 822 | -5 |
| S&P 500 | ||
| SEP ’23 | 4489.25 | 3.5 |
| Crude Oil | ||
| OCT ’23 | 82.27 | -1.42 |
| Gold | ||
| OCT ’23 | 1927.5 | -4 |
Grain Market Highlights
- Consolidation ahead of tomorrow’s USDA report kept price action quiet in the corn market. Traders expect a two-bushel cut to national yield and carryout staying above 2.1 billion bushels.
- Soybeans ended mixed with the two front months lower and deferred contracts trading higher. Traders expect national soybean yield to fall 0.8 bpa from the July estimate of 52 bpa in tomorrow’s USDA report.
- Front month soybean oil traded sideways and near the 200-day moving average for a ninth consecutive session, while soybean meal traded higher finding support near the 50-day moving average on its continuous chart.
- Despite today’s reported marketing year high, export sales last week for 23/24 wheat prices were quietly mixed across the board as traders squared positions ahead of tomorrow’s USDA report.
- To see the updated US Corn Areas in Drought as of August 8th, and the current US 1–3-day precipitation forecast, scroll down to the other Charts/Weather Section.
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Corn
Action Plan: Corn
Calls
2023
No Action
2024
No Action
2025
No Action
Cash
2023
No Action
2024
No Action
2025
No Action
Puts
2023
Active
Exit Half DEC ’23 580 Puts ~ 87c
2024
No Action
2025
No Action
Corn Action Plan Summary
- For the 2023 corn crop, Grain Market Insider sees an active opportunity to sell half of the previously recommended DEC ‘23 580 puts. At the end of June, Insider recommended buying DEC ’23 580 puts for approximately 30 cents in premium, plus fees and commission. At the time, the US Drought Monitor was showing dryness across the Midwest and weather forecasts were calling for hot and dry conditions. Since then, forecasts have turned more favorable and DEC ’23 corn has dropped over 100 cents, with the recommended 580 puts gaining nearly 200% in value. The growing season isn’t over yet, and the Drought Monitor still shows dry conditions. Following the recent market drop and pick up in export sales, any further yield loss could rally prices. Insider recommends selling half of the previously recommended DEC ’23 580 puts to lock in gains in case prices rally back and holding the remainder, which will continue to protect any unsold bushels if prices erode further going into harvest.
- No action is currently recommended for 2024 corn. In 2012, the best pricing opportunities for Dec 2013 corn were during the 2012 summer runup. Despite the significant yield losses to the 2012 crop, and the fear of running out of corn, the Dec 2013 contract peaked in the summer of 2012, and by Jan 2 of 2013, the price was already down about 12% from the high. We continue to watch the calendar for 2024 corn as this 2023 summer volatility could provide some additional opportunities to get some good early sales on the books in the event of a 2013 type repeat. Insider recently recommended making a sale on your 2024 crop, and we’ll be watching for another opportunity to suggest adding to prior early sales levels between now and the beginning of September.
- No Action is currently recommended for 2025 corn. 2025 markets are very illiquid right now, and it may be some time before conditions are conducive to consider making any recommendations. Be patient as we monitor the markets for signs of improvement.
Market Notes: Corn
- An overall quiet session in the corn market as market participants squared positions and prices consolidated prior to Friday’s USDA Crop Production and Supply/Demand reports. December futures had an 8-cent trading range, finishing with small gains on the session.
- Friday’s USDA report will be anticipating potential yield changes with this summer’s overall dry weather. Expectations are for yield to be lowered to 175.5 bushels/acre, which reduce carryout to 2.162 billion bushels. The USDA could make some demand adjustments, as demand has been lacking.
- Weekly export sales were improved for new crop corn sales at 29.9 mb, and old crop at 5.9 mb. Mexico was the largest buyer of US corn last week. Though sales improved, new crop sales are still trending below last year’s pace at this time frame on soft demand tone.
- Brazil’s CONAB raised their forecast for Brazil corn production to 129.96 MMT vs 127.77 MMT. This is an increase of 86.2 million bushels. Corn exports were targeted at 50 MMT.
- The weather forecast remains non-threatening going into the second half of August with temperature forecasted to stay near normal with rainfall to be normal to above-normal for much of the Corn Belt.
Above: Since mid-July, the market retraced about 62% of the prior down move, hit resistance around the 50-day moving average, and turned lower. The market is approaching oversold status on the stochastic indicator with key support near the September contract’s 474 low. If the market receives more bullish input and turns back higher, heavy resistance lies near 555 – 565.
Soybeans
Action Plan: Soybeans
Calls
2023
No Action
2024
No Action
2025
No Action
Cash
2023
No Action
2024
No Action
2025
No Action
Puts
2023
No Action
2024
No Action
2025
No Action
Soybeans Action Plan Summary
- No action is recommended for 2023 soybeans. This season the market has experienced a lot of volatility, not only from USDA reports but also from the changing weather forecasts, crop conditions, and export sales. We ended the month of July experiencing hot conditions with little rainfall and weak export sales. Since then, conditions have become more favorable, and export sales have picked up. While much of the crop remains in drought conditions, which can maintain upside potential, timely rains may come and push prices lower. Much like in 2012, when July was dry, and the pattern changed in August, when decent rain fell in parts of the western Corn Belt and IL, sending Nov ’12 soybeans down 20%. For now, Insider may not consider suggesting any additional sales until after harvest. Although, we will continue to monitor the market for any upside opportunities in the coming weeks.
- No action is recommended for 2024 crop. Grain Market Insider continues to monitor any developments for the 2024 crop, though it may not be until after harvest or toward year’s end before we will consider recommending any 2024 crop sales.
- No Action is currently recommended for 2025 Soybeans. 2025 markets are very illiquid right now, and it may be some time before conditions are conducive to consider making any recommendations. Be patient as we monitor the markets for signs of improvement.
Market Notes: Soybeans
- Soybeans began the day higher but declined and ended mixed with the two front months lower but the deferred contracts higher. Soybean oil was also bear spread but soybean meal was higher. Trade has been relatively quiet ahead of tomorrow’s WASDE report.
- Expectations for tomorrow’s USDA report are for the national soybean yield to fall to 51.2 bpa from 52.0 bpa in the last report, and new crop ending stocks to fall to 261 mb from 300 mb in the last report. The USDA’s yield estimates may end up incorrect, especially after the recent and forecasted rains.
- Malaysian palm oil futures were down 1.17% today, and palm oil is now cheaper than both soybean and sunflower oil by $100 to $150 per metric ton which has incentivized India to import 60% more palm oil in July than in the previous month.
- The US has become more competitive with Brazil for soybean exports in the fall, and the recent string of Chinese purchases from the US has been encouraging. Yesterday, another sale was announced for the 23/24 marketing year of 9.2 mb.
Above: The market posted a bullish reversal on 8/08 after trending lower since 7/27 and trading through 1350 support. Additionally, the fact that the market is showing signs of being oversold is supportive to prices. If prices continue to the upside, resistance can be found near 1400 and again around 1450. If not, initial support below the market may be found near 1328 with further support between 1318 – 1300.
Wheat
Market Notes: Wheat
- The USDA reported an increase of 20.9 mb of wheat export sales for 23/24, a marketing year high, but a decrease of 0.2 mb for 24/25.
- Matif wheat closed lower, despite consultancy Strategie Grains lowering their EU soft wheat production estimate to 124.7 mmt (vs 126.2 mmt previously) due to heat and dryness this growing season.
- India’s domestic wheat prices are on the rise, so they will reportedly release 5 mmt of wheat from their reserves to help combat these higher prices. It is also possible that in tomorrow’s report, the USDA will lower wheat production in India (and China) due to the weather problems they have experienced.
- Pre-report estimates suggest US 23/24 all wheat production at 1.740 bb, up just slightly from 1.739 in July. US wheat ending stocks are anticipated to come in at 579 mb (vs 580 last month) for 22/23 and 594 mb (vs 592 last month) for 23/24.
- Ukraine’s Navy has designated temporary corridors for trade ships to pass through, despite the risks of a Russian attack. The question is, will there be vessels (and crews) willing to take on that risk? In any case, these routes will allow for movement in and out of Ukrainian ports.
Action Plan: Chicago Wheat
Calls
2023
No Action
2024
No Action
2025
No Action
Cash
2023
No Action
2024
No Action
2025
No Action
Puts
2023
No Action
2024
No Action
2025
No Action
Chicago Wheat Action Plan Summary
- No new action is recommended for 2023 crop. Since the end of May, the wheat market has been largely rangebound, influenced by weak demand, changing headlines from the Black Sea region, and the corn market with its own demand and weather concerns. With harvest mostly in the rearview mirror, US production has been better than expected and demand remains weak. Still, many supply questions remain unanswered from the Black Sea region, which could push prices in either direction. While Insider will continue to monitor the downside for any breach of major support, we would need to see prices pushed toward the 700 level before considering any additional sales.
- No action is currently recommended for 2024 Chicago wheat. Since the middle of June, price volatility has risen with updated USDA reports, changing weather forecasts, and current events in the Black Sea. While prices continue to be volatile, plenty of time remains to market the 2024 crop. The war continues in the Black Sea region, major exporting countries’ stocks are at 11-year lows, and no one knows what the weather will bring, leaving the market vulnerable to many uncertainties. For now, after recommending making a sale for the 2024 crop, and while keeping an eye on the market to see if any major support is broken, Grain Market Insider would need to see prices north of 800 before considering recommending any additional sales.
- No Action is currently recommended for 2025 Chicago Wheat. 2025 markets are very illiquid right now, and it may be some time before conditions are conducive to consider making any recommendations. Be patient as we monitor the markets for signs of improvement.
Above: Since testing the June high on 7/25, the market has retreated and support near 620 has held. September wheat is oversold and appears to be consolidating at the lower end of the 622 – 777 range. If the market breaks out to the downside, psychological support could be found near 600 with key support near 573, while heavy resistance remains above the market around 777 – 808.
Action Plan: KC Wheat
Calls
2023
No Action
2024
No Action
2025
No Action
Cash
2023
No Action
2024
No Action
2025
No Action
Puts
2023
No Action
2024
No Action
2025
No Action
KC Wheat Action Plan Summary
- We continue to look for better prices before making any 2023 sales. As harvest winds down and more becomes known about this year’s crop with some reports of better-than-expected yields, questions remain about the world wheat supply. The war continues in the Black Sea region, Ukraine’s export capabilities remain uncertain, and dryness continues in key production areas of the world. With world supplies currently seen at 11-year lows, we continue to target 950 – 1000 in the July futures as a potential level to suggest the next round of New Crop sales. At the same time, we continue to watch the bottom end of the range that prices have traded in since late 2022. A close below the bottom end would reduce the probability of getting to 950 – 1000 and would increase the risk of prices falling into the 600 – 650 range.
- No action is currently recommended for the 2024 crop. Demand and supply concerns out of the Black Sea continue to dominate the market right now, and Insider suggested making a sale as prices closed below 817 to protect from further downside erosion due to a potential change in trend with cheap supplies continuing to flow from Russia and Ukraine hampering US export demand. While prices continue to be volatile, plenty of time remains to market the 2024 crop. The war continues in the Black Sea region, major exporting countries’ stocks are at 11-year lows, and no one knows what the weather will bring, leaving the market vulnerable to many uncertainties. For now, after recommending making a sale for the 2024 crop, Grain Market Insider would need to see prices north of 850 before considering recommending any additional sales, while also keeping an eye on the market to see if any major support is broken.
- No Action is currently recommended for 2025 KC Wheat. 2025 markets are very illiquid right now, and it may be some time before conditions are conducive to consider making any recommendations. Be patient as we monitor the markets for signs of improvement.
Above: September KC wheat has retreated following the key reversal on 7/25 and is poised to test the 735 – 745 support area, which coincides with this year’s lows. Additionally, the market is showing signs of being oversold, and is considered supportive if prices reverse higher. If prices do reverse to the upside, overhead resistance lies near 830.
Action Plan: Mpls Wheat
Calls
2023
No Action
2024
No Action
2025
No Action
Cash
2023
No Action
2024
No Action
2025
No Action
Puts
2023
No Action
2024
No Action
2025
No Action
Mpls Wheat Action Plan Summary
- No action is currently recommended for the 2023 New Crop. Weather has been a dominant feature to price volatility this growing season with continued dryness concerns in not only the US, but also Canada and Australia. As we enter harvest season, there isn’t a strong likelihood of higher prices until after harvest, although both weather and geopolitical events can change suddenly to move prices higher. Insider will consider making sales suggestions if prices improve, while also continuing to watch the downside for any further violations of support.
- No action is recommended for the 2024 crop. This year has been marked with volatility from adverse weather to geopolitical disruptions and has given us historically good prices to begin making early sales. While prices continue to be volatile, plenty of time remains to market the 2024 crop. The war continues in the Black Sea region, major exporting countries’ stocks are at 11-year lows, and no one knows what the weather will bring, leaving the market vulnerable to many uncertainties. For now, after recommending making a sale for the 2024 crop, Grain Market Insider will continue to consider making sales recommendations if prices improve, while also keeping an eye on the downside should prices break support.
- No Action is currently recommended for the 2025 Minneapolis wheat crop. 2025 markets are very illiquid right now, and it may be some time before conditions are conducive to consider making any recommendations. Be patient as we monitor the markets for signs of improvement.
Above: Following the bearish reversal on 7/25, the market has retreated and is oversold, which could be supportive if prices reverse higher. For now, support below the market may be found near the psychological support level of 800, while resistance remains above the market near 950.
Other Charts / Weather
