Grain Market Insider: August 14, 2023
All prices as of 1:45 pm Central Time
| Corn | ||
| SEP ’23 | 475.75 | 1.25 |
| DEC ’23 | 487.75 | 0.5 |
| DEC ’24 | 510.25 | 1 |
| Soybeans | ||
| NOV ’23 | 1326 | 18.5 |
| JAN ’24 | 1334.75 | 17.5 |
| NOV ’24 | 1265.75 | 10.75 |
| Chicago Wheat | ||
| SEP ’23 | 616 | -10.75 |
| DEC ’23 | 653.75 | -10 |
| JUL ’24 | 689.5 | -13.5 |
| K.C. Wheat | ||
| SEP ’23 | 750.5 | -5.25 |
| DEC ’23 | 759.25 | -6.75 |
| JUL ’24 | 752 | -14 |
| Mpls Wheat | ||
| SEP ’23 | 805.5 | -9.5 |
| DEC ’23 | 820 | -10.25 |
| SEP ’24 | 812.25 | -4.75 |
| S&P 500 | ||
| SEP ’23 | 4494.5 | 13.75 |
| Crude Oil | ||
| OCT ’23 | 81.93 | -0.64 |
| Gold | ||
| OCT ’23 | 1921.9 | -5.8 |
Grain Market Highlights
- After trading on both sides of unchanged and testing technical support on weak U.S. export inspections, the corn market was able to close mid-range and in positive territory on a warmer, drier forecast.
- Strong U.S. export inspections, a new flash sale reported from the USDA this morning, and a hot and dry forecast for the second half of August, with temperatures possibly reaching triple digits, lent support to the soybean complex which closed near the day’s highs.
- Despite rising tensions in the Black Sea region over the weekend, weak U.S. export inspections and a higher Russian wheat export forecast weighed heavily on all three wheat classes, which all closed lower on the day.
- The U.S. dollar traded to its highest level in over five weeks, possibly adding some resistance to grain futures, on hawkish comments from Federal Reserve officials remarking that additional interest rate hikes may still be needed. So far, the financial futures markets are predicting an 88% likelihood that rates will stay unchanged at the next Fed meeting on Sept. 20.
- To see the current U.S. 1-5 day precipitation forecast and the 6 – 10-day Temperature and Precipitation outlooks, 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
No Action
2024
No Action
2025
No Action
Corn Action Plan Summary
- No action is recommended for the 2023 corn crop. This year’s growing season has been marked by dry conditions and changing weather forecasts, which have swung prices nearly 150 cents from high to low. Though dry conditions remain with a great amount of variability in crop conditions from region to region, weather forecasts remain favorable for now, and it may not be until after harvest before we know the full effect this growing season had on yields. Just as Insider recently recommended selling half of the previously recommended DEC 580 puts to lock in gains in case the market turns higher, Insider will continue to monitor market conditions and may consider recommending selling the remaining DEC 580 puts if conditions warrant it. While many unknowns could still shock the market higher, seasonality and current trends suggest we may not see a shift to higher prices until after 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
- Corn futures fought off session lows and selling pressure from the wheat market to finish slightly higher on the session. Technical support and a possible hotter forecast may have helped bring some buying into the oversold corn market.
- Friday’s USDA crop production numbers remain bearish even with the reduced yield, as demand cuts keep carryout over 2 billion bushels, which indicates an overall potential heavy corn supply picture.
- Weekly export inspections were within expectations at 15.7 mb last week. Total corn inspections are slightly behind the pace to reach the USDA marketing year target, and down 33% from last year with the marketing year ending on Aug 30.
- December futures held the July 13 low of $4.81 during the session, which may have led to some technical buying and short covering. The key will be additional strength and follow through to establish a possible short-term uptrend.
- With favorable weather recently, weekly crop ratings are expected to rise by 1% nationally to 58% on the USDA Crop Progress Report on Monday afternoon.
Above: Since the end of July, the corn market has retreated and is showing signs of being oversold, which can be supportive if reversal action occurs. For now, the market continues to test support around 475 in the September contract. If support holds and prices turn higher, resistance above the market could be found near 495 – 513. If the 475 area fails and the market retreats, the next area of major support may be found near 415.
Money Corn Managed Money Funds net position as of Tuesday, Aug. 8. Net position in Green versus price in Red. Managers net sold 43,397 contracts between Aug. 1 – Aug. 8, bringing their total position to a net short 16,741 contracts.
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 along with both soybean meal and oil and ended slightly below the highs of the day following Friday’s friendly USDA report and a bullish weather forecast.
- While the past few weeks have provided good and necessary rains over most of the Midwest, the forecast has changed and now shows very dry and hot conditions that are expected to last through the month and possibly into September.
- Possibly the most supportive news today was the report of a sale of 416,000 mt of new crop soybeans to unknown destinations for 23/24. This comes following a string of recent sales to China and unknown destinations and is encouraging for demand.
- To recap Friday’s WASDE report, the USDA dropped soybean yields by 1.1 bpa to 50.9 bpa and dropped new crop ending stocks by 55 mb to 245 mb which is very tight. Export estimates were also dropped to account for the anticipation of the smaller crop.
Above: Since early August the market has been consolidating between 1326 and 1370, and has been showing signs of being oversold, which is supportive if prices reverse higher. If nearby soybeans can break out of the range to the upside, resistance can be found near 1400 and again around 1450. If not, initial support below the market may be found near 1326 with further support between 1318 – 1300.
Soybeans Managed Money Funds net position as of Tuesday, Aug. 8. Net position in Green versus price in Red. Money Managers net sold 30,412 contracts between Aug. 1 – Aug. 8, bringing their total position to a net long 64,081 contracts.
Wheat
Market Notes: Wheat
- Despite more tension in the Black Sea, wheat closed lower today. Over the weekend it was reported that there were Ukrainian drone attacks on Moscow, as well as a Russian oil tanker. Russia is said to have also fired warning shots at a boarded private vessel.
- Ukraine has reportedly started to register vessels that are willing to use their “humanitarian corridor”. This goes directly in the face of Russia’s statement that they would treat any civilian ships in the Black Sea as carrying military cargo, making any trip dangerous. In any case, it could mean that more grain shipments will make their way out of Ukraine.
- Weekly wheat export inspections were poor at 6.7 mb, roughly half of what is needed weekly to reach the USDA’s 700 mb estimate for 23/24 and bring total 23/24 inspections to 118 mb.
- Last week the USDA increased their estimate of Russian 23/24 wheat exports to 48 mmt. However, they also said that global inventories will decline to the lowest level since 15/16.
- The U.S. Dollar Index is continuing to trend higher and kept pressure on wheat today. The index did run into resistance at the 200-day moving average of 103.48, and though it has not been above that average since December of 2022, if it continues to move higher it will further hamper the export market.
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: The Chicago wheat market shows signs of additional shorts positions entering the market with open interest rising as prices decline. Additionally, the market is showing signs of being oversold, which could be supportive if bullish news enters the market and prices turn higher. Psychological support remains below the market around 600 with key support near 573. Resistance above the market lies between 658 – 684.
Chicago Wheat Managed Money Funds net position as of Tuesday, Aug. 8. Net position in Green versus price in Red. Money Managers net sold 4,967 contracts between Aug. 1 – Aug. 8, bringing their total position to a net short 55,395 contracts.
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.
K.C. Wheat Managed Money Funds net position as of Tuesday, Aug. 8. Net position in Green versus price in Red. Money Managers net sold 11,976 contracts between Aug. 1 – Aug. 8, bringing their total position to a net long 5,257 contracts.
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.
Minneapolis Wheat Managed Money Funds net position as of Tuesday, Aug. 8. Net position in Green versus price in Red. Money Managers net sold 3,095 contracts between Aug. 1 – Aug. 8, bringing their total position to a net long 4,497 contracts.
Other Charts / Weather
US 5-day precipitation forecast courtesy of NOAA, Weather Prediction Center.
