Grain Market Insider: August 18, 2023
All prices as of 1:45 pm Central Time
| Corn | ||
| SEP ’23 | 479.5 | 6.5 |
| DEC ’23 | 493 | 7.25 |
| DEC ’24 | 510.75 | 2.5 |
| Soybeans | ||
| NOV ’23 | 1353.25 | 23.25 |
| JAN ’24 | 1363.75 | 23 |
| NOV ’24 | 1295.75 | 12 |
| Chicago Wheat | ||
| SEP ’23 | 613.25 | 23.75 |
| DEC ’23 | 639 | 23.75 |
| JUL ’24 | 683.25 | 19 |
| K.C. Wheat | ||
| SEP ’23 | 753.5 | 20.5 |
| DEC ’23 | 760.75 | 19.25 |
| JUL ’24 | 749.75 | 14.5 |
| Mpls Wheat | ||
| SEP ’23 | 802.75 | 15 |
| DEC ’23 | 817.75 | 14.25 |
| SEP ’24 | 819.25 | 11 |
| S&P 500 | ||
| SEP ’23 | 4383.25 | -1.25 |
| Crude Oil | ||
| OCT ’23 | 80.61 | 0.71 |
| Gold | ||
| OCT ’23 | 1899.2 | 2.5 |
Grain Market Highlights
- A daily export flash sale to Mexico and a dry outlook for the Corn Belt helped corn continue its late week push higher following Wednesday’s bullish reversal.
- A warm and dry outlook for at least the next 10 days in the heart of the U.S. rallied soybeans sharply to end the week. November soybean futures added 46-1/2 cents this week, closing above the 200-day moving average for just the second time in the month of August.
- Soybean oil futures continued their rally higher for a fifth consecutive trading session challenging recent highs posted in late July. Soybean meal futures also posted gains as buyers defended the $400 per ton level on the continuous chart.
- To see the current U.S. 6-10 Day Temperature Outlook, and the U.S. 7-day precipitation forecast courtesy of NOAA, Weather Prediction Center, 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
- Private exporters reported sales of 112,000 mt of corn for delivery to Mexico during the 23/24 marketing year.
- The nearby weather forecast looks hot and dry for much of the Midwest with triple-digit temperatures expected in many areas. While this should not impact corn as much as soybeans at this point in the year, late planted corn could be stressed.
- Next week the Pro Farmer tour will begin and will offer yield estimates. Historically during the week of this tour, corn futures lose an average of 10 cents (with soybeans losing 25). The yields found generally also come in below the final USDA yields.
- Worsening economic issues in China may have been the anchor on the grain markets this week, but the price trend appears to be turning higher. Both the RSI and stochastics show momentum starting to trend upward.
- According to the Buenos Aires Grain Exchange, Argentina’s 22/23 corn production estimate is unchanged at 34 million tons. Additionally, 90% of the crop is harvested.
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 forecasts project hot and dry conditions over at least the next seven days which may affect pod fill and yield. Most of the Midwest is expected to be in the 90’s with Des Moines forecast to hit 101 on Tuesday.
- With this string of hot and dry temperatures, the September WASDE report could show another reduction in yields. That is also the report where acres could be adjusted higher, which would affect the carryout.
- Technically, November soybeans appear to have put a bottom in and are hugging the 50-day moving average which is moving higher. There is a gap on the chart at 13.79 which may be a target.
- There were no reported export sales today following yesterday’s export sales report showing 51.7 mb of old crop sales for the previous week. Total new crop soybean sales are currently at 389 million bushels which is well behind last year’s 671 mb at this time, but last year the US didn’t have a massive 5.73 bb Brazilian crop to compete against.
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
- The first vessel that traveled through Ukraine’s humanitarian corridor, the “Joseph Schulte”, has safely reached Bulgarian waters. Bulgaria is a NATO nation, and this is an indication that more exports could be expected via this route.
- According to the National Weather Service, there is a 99% chance that the El Nino weather pattern will continue through fall and a 95% chance that it will last into next year. It is expected to strengthen as we approach winter in the northern Hemisphere.
- The Grain Industry Association of Western Australia said that grain yields will be 1 mmt lower in just the last few weeks, with more potential declines if there isn’t enough rain. Wheat production in particular is said to unlikely be over 10 mmt.
- India is reportedly in confidential talks with Russia regarding a purchase of 9 mmt of wheat. While this news has been circulating the past few weeks, until now it was just rumors. If the deal goes through it would be the largest grain deal on record between the two nations.
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
Active
Enter(Buy) JUL ’24 KC 660 Puts ~ 30c
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.
- Grain Market Insider recommends buying July ’24 660 K.C. wheat puts on a portion of your 2024 HRW wheat crop for approximately 30 cents plus commission and fees. While weather has been a dominant feature of the market this year with dry growing conditions and harvest delays, slow export demand and cheap Russian exports remain major headwinds to prices. The market has turned lower in recent weeks and July K.C. Wheat has traded through a major support area around 738. Trading below 738 support signals that the major trend may be turning down and poses the risk that prices could erode further in the weeks ahead, possibly to the next level of support, the September ’21 low of 678. If the 678 level were to fail, next support could be the 560 – 573 level. Buying July ’24 660 K.C. Wheat puts on a portion of your HRW wheat production should help protect future sales from further downside erosion, while still allowing for upside appreciation should the market turn higher.
- 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
Active
Enter(Buy) JUL ’24 KC 660 Puts ~ 30c
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.
- Grain Market Insider recommends buying July ‘24 660 K.C. wheat puts on a portion of your 2024 Spring wheat crop for approximately 30 cents plus commission and fees. While weather has been a dominant feature of the market this year with a wet spring, late planting, and growing conditions that have been less than ideal, slow export demand and cheap Russian exports remain major headwinds to prices. The market has turned lower in recent weeks and July K.C. Wheat has traded through a major support area around 738. Trading below 738 support signals that the major trend may be turning down and poses the risk that prices could erode further in the weeks ahead, possibly to the next level of support, the September ’21 low of 678. If the 678 level were to fail, next support could be the 560 – 573 level. The K.C. wheat market is highly correlated to the Minneapolis wheat market and much more liquid, which makes it a better choice when employing options strategies for Spring Wheat. Buying July ’24 660 K.C. Wheat puts on a portion of your spring wheat production should help protect future sales from further downside erosion, while still allowing for upside appreciation should the market turn higher.
- 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
