Grain Market Insider: August 15, 2023
All prices as of 1:45 pm Central Time
| Corn | ||
| SEP ’23 | 464 | -11.75 |
| DEC ’23 | 475.5 | -12.25 |
| DEC ’24 | 503.75 | -6.5 |
| Soybeans | ||
| NOV ’23 | 1326 | 18.5 |
| JAN ’24 | 1334.75 | 17.5 |
| NOV ’24 | 1256.25 | -9.5 |
| Chicago Wheat | ||
| SEP ’23 | 598.5 | -17.5 |
| DEC ’23 | 623.75 | -17.75 |
| JUL ’24 | 671.75 | -17.75 |
| K.C. Wheat | ||
| SEP ’23 | 737.5 | -13 |
| DEC ’23 | 745.5 | -13.75 |
| JUL ’24 | 736 | -16 |
| Mpls Wheat | ||
| SEP ’23 | 786.5 | -19 |
| DEC ’23 | 802 | -18 |
| SEP ’24 | 800.25 | -12 |
| S&P 500 | ||
| SEP ’23 | 4466.75 | -39.25 |
| Crude Oil | ||
| OCT ’23 | 80.61 | -1.31 |
| Gold | ||
| OCT ’23 | 1916.8 | -8.4 |
Grain Market Highlights
- Carryover weakness from wheat and soybeans, along with higher crop ratings, added pressure to the corn market today as December corn closed below the July low of 481-3/4.
- Improved crop ratings and concerns over weakness in China’s economy weighed heavily on the soybean and soybean meal markets. Soybean oil on the other hand found support from higher palm oil prices on talk of increased India demand.
- Even though tensions are rising in the Black Sea, all three wheat classes closed lower on continued technical selling from low demand due to low Russian export prices and increased Russian production.
- With the financial markets largely believing the Federal Reserve is near the end of its tightening cycle, the debate regarding interest rates is beginning to turn from how high will they go, to how long will they stay this high? Elevated rates supportive to the U.S. dollar and add resistance to commodity prices.
- To see the current U.S. 6 – 10-day and 8 – 14 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
- Strong selling pressure across the markets in general helped push Dec corn futures to new lows for the move, losing 12 ¼ cents on the day. Prices saw additional selling pressure as Dec crossed through support at the $4.80 price level, triggering long liquidation and technical selling. Price action remains weak in the corn market.
- The improved weather saw corn conditions rating jump to 59% good to Excellent, up 2% over last week, and now higher than last year’s levels. Analysts were expecting a 1% increase. Key states of Illinois, Indiana, Michigan, and Missouri saw improvements from recent rainfall totals.
- The improved crop conditions have some analysts in the corn market feeling the current USDA yield of 175.1 may be too low and will increase in future reports, increasing the supply side of the corn balance sheet.
- An upcoming heat ridge building into the end of the week will likely bring well above normal temperatures that could stress the developing crop. The market will be focused on the length of the heat wave and any potential stress.
- Wheat prices struggled and broke technical support, putting spillover pressure into the corn market. The Russian ruble has tumbled in value, making the already less expensive Russian wheat more attractive to the export market.
Above: The market has been in retreat since late July and has traded through the July low 474 in the September contract, it also continues to show signs of being oversold. If bullish influences enter the market and turn prices higher, resistance above the market could be found between 495 – 516. Below the market, the next area of major support may be found near 415.
2023/24 Corn condition percent good-excellent (red) versus the 5-year average (green) and last year (pink).
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 ended the day lower following yesterday’s Crop Progress report, which showed significant improvements in crop ratings for soybeans. Additional pressure has come from weak Chinese economic data. Soybean meal closed lower, while bean oil closed higher.
- Yesterday’s Crop Progress report showed the soybean crop’s good to excellent rating improving by 5% nationally to 59%. Illinois had one of the sharpest recoveries with an improvement of 12 points to 70% good to excellent. The upcoming dry and hot weather forecast could hurt yields, which would be supportive to prices.
- In China, economic data was released that showed weaker growth than the country had been previously touting. Industrial production came in at 3.7% versus the estimate of 4.4%, and retail sales were only 2.5% compared to the estimate of 4.5%.
- Yesterday’s large sale of 15.3 mb of soybeans to unknown destinations for the 23/24 marketing year was an addition to the recent string of sales, and demand in the U.S. remains strong as well, with profitable crush margins incentivizing processors.
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 prices break to the downside, support below the market may be found between 1318 – 1300.
2023/24 Soybeans condition percent good-excellent (red) versus the 5-year average (green) and last year (pink).
Wheat
Market Notes: Wheat
- Black Sea tensions are not offering much support to the wheat market, despite the fact that Russian missiles caused civilian deaths in western Ukraine. Additionally, the Russian ruble has tumbled in value, making already less expensive Russian wheat more attractive to the export market.
- IKAR increased their estimate of the Russian wheat crop to 89.5 mmt versus previous estimates of 88 mmt. They cite higher yields in some areas as the reason for the revision.
- Spring wheat condition improved 1% on yesterday afternoon’s Crop Progress report to 42% good to excellent. Additionally, spring wheat harvest is said to be 24% complete, while winter wheat is 92% harvested.
- By this weekend, temperatures are expected to be 90-100+ degrees as far North as South Dakota and could cause some late season stress for crops. While it will have less of a direct impact on wheat, the impact on corn and soybeans could affect grain prices as a whole.
- Wheat harvest has started in Parana (Brazil). So far, it looks like production will be behind last year. CONAB estimated Brazil’s wheat output at 10.41 mmt, which would be down 1.4% from last year. They may still have a domestic surplus, however, which could mean more exports and competition for the U.S.
- Funds are likely adding to short positions in Chicago wheat and are now estimated to be short about 70,000 contracts.
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 short 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. Key support remains below the market around 573, with resistance above the market between 658 – 684.
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 K.C. wheat has retreated following the key reversal on 7/25 and is testing the 735 – 745 support area, which coincides with this year’s lows. Additionally, the market is showing signs of being oversold, which is considered supportive if prices reverse higher. If prices do reverse to the upside, overhead resistance lies near 830, if not, the next area of major support is near the September ’21 low of 670.
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: Since 7/25/23, the market has been in a down trend and is oversold. Currently, key support below the market lies near the May low of 769, with the next support level near the June ’21 low of 730. Above the market, nearby resistance could be found near 835 – 850.
2023/24 Spring wheat condition percent good-excellent (red) versus the 5-year average (green) and last year (pink).
2023/24 Spring wheat percent harvested (red) versus the 5-year average (green) and last year (purple).
Other Charts / Weather
US 5-day precipitation forecast courtesy of NOAA, Weather Prediction Center.
