Grain Market Insider: August 16, 2023
All prices as of 1:45 pm Central Time
| Corn | ||
| SEP ’23 | 469.5 | 5.5 |
| DEC ’23 | 481.5 | 6 |
| DEC ’24 | 507.75 | 4 |
| Soybeans | ||
| NOV ’23 | 1323.5 | 18.25 |
| JAN ’24 | 1333.75 | 18.25 |
| NOV ’24 | 1270.75 | 14.5 |
| Chicago Wheat | ||
| SEP ’23 | 597.75 | -0.75 |
| DEC ’23 | 623 | -0.75 |
| JUL ’24 | 672 | 0.25 |
| K.C. Wheat | ||
| SEP ’23 | 743 | 5.5 |
| DEC ’23 | 752.5 | 7 |
| JUL ’24 | 741 | 5 |
| Mpls Wheat | ||
| SEP ’23 | 791 | 4.5 |
| DEC ’23 | 806.25 | 4.25 |
| SEP ’24 | 807.5 | 7.25 |
| S&P 500 | ||
| SEP ’23 | 4452.5 | -1.5 |
| Crude Oil | ||
| OCT ’23 | 79.05 | -1.45 |
| Gold | ||
| OCT ’23 | 1910 | -6.5 |
Grain Market Highlights
- A forecast for hot and dry conditions through the end of August led traders to add some weather premium back into the corn market and cover some short positions, with concern that the high temperatures may stress the corn crop during grain fill.
- Soaring temperatures for the next two weeks with little rain, and a strong soybean oil market gave support to soybeans that also spilled over into soybean meal, which also ended higher on the day.
- Soybean oil found continued support from yesterday’s NOPA crush report that showed a decline in bean oil stocks following a near record number of beans crushed for the period. The report suggests last month’s soybean oil usage was the second highest on record.
- Despite additional Russian attacks on Odesa grain facilities and Danube River terminals, the wheat complex ended the day mixed with most Chicago contracts settling fractionally lower, and only July ’24 fractionally higher, while both K.C. and Minneapolis contracts settled higher.
- To see the current U.S. 7 day precipitation forecast 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, 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 saw some corrective and consolidation action on the session, with Dec corn finishing 6 cents higher. The market was supported by some short covering in an oversold market and supportive price action in the soybean market.
- The corn market added some weather premium as the short-term forecasts are showing significantly warmer and drier conditions over the Corn Belt into early next week.
- Cash basis has trended softer as the market is getting more comfortable with corn supplies from harvest a couple months away. The recent push lower in prices has moved U.S. corn to a more comfortable position versus Brazil’s export prices for the fall months. The key being, we will need to see if demand picks up in this window.
- Weekly export sales will be released on Thursday morning. Expectations are for 0-250,000 MT in sales for old crop, and 500,000-1,000,000 MT of new crop sales last week.
- The U.S. Dollar Index continues its recent rally, challenging resistance at Monday’s highs and trading at its highest level in 6-weeks. The U.S. dollar has strengthened against the Russian ruble, Brazilian real and the Chinese yaun currencies, which will impact export demand and the competition from Russian wheat prices, limiting the corn markets short term rally potential.
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.
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 higher along with both soybean meal and oil, as the hot and dry two-week weather forecast adds support to prices and may lower crop ratings slightly. The recent rains came at a good time for pod fill, but the heat could ding yields.
- World vegetable oils have been strong over the past few days with Malaysian palm oil supporting soybean oi,l which has had three consecutively higher closes. Additionally, domestic demand for soybean oil for biofuels has been increasing.
- Yesterday’s NOPA crush report for July was supportive as it revealed a record large crush number of 173.3 million bushels. Crush margins have been profitable, which has incentivized processors, increasing soybean demand. Soybean oil stocks fell more than expected to a 10-month low of 1.527 billion pounds.
- 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%.
Above: Since the end of July, the trend in the soybean market has been down with choppy trade, 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.
Wheat
Market Notes: Wheat
- Renewed Russian attacks on Danube River terminals in Ukraine were not enough to interest traders today. Chicago wheat posted small losses, while Kansas City and Minneapolis futures had only modest gains.
- The US Dollar Index has been on both sides of neutral throughout today’s session, but did break through the 200 day moving average today and was in positive territory into the grain market’s close. This likely added pressure to wheat; the index has not been above this average since December 2022.
- From a technical perspective, all three US wheat futures classes are oversold and due for a correction. It is worth noting, however, that a commodity can become and remain oversold for quite some time during a strong downtrend.
- Weather could become a more important factor in the southern hemisphere with the evolving El Nino pattern. Argentina and Australia in particular, could see drought conditions with significant impact on crops.
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 in the rearview mirror, U.S. 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 660 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 U.S., but also Canada and Australia. As harvest begins, there typically isn’t a strong likelihood of higher prices until after harvest is complete, 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.
Other Charts / Weather
