Grain Market Insider: August 23, 2023
All prices as of 1:45 pm Central Time
| Corn | ||
| SEP ’23 | 476.25 | 9.75 |
| DEC ’23 | 490.5 | 11 |
| DEC ’24 | 507.75 | 5.75 |
| Soybeans | ||
| NOV ’23 | 1360.5 | 14.5 |
| JAN ’24 | 1371 | 15 |
| NOV ’24 | 1295 | 11.25 |
| Chicago Wheat | ||
| SEP ’23 | 612.5 | 10.75 |
| DEC ’23 | 639.75 | 12.25 |
| JUL ’24 | 687.25 | 13.75 |
| K.C. Wheat | ||
| SEP ’23 | 755 | 15 |
| DEC ’23 | 763.75 | 16 |
| JUL ’24 | 752.5 | 12.75 |
| Mpls Wheat | ||
| SEP ’23 | 784.5 | 11 |
| DEC ’23 | 803.25 | 11.5 |
| SEP ’24 | 813.5 | 6 |
| S&P 500 | ||
| SEP ’23 | 4446 | 46.75 |
| Crude Oil | ||
| OCT ’23 | 79.01 | -0.63 |
| Gold | ||
| OCT ’23 | 1928.3 | 20.2 |
Grain Market Highlights
- The corn market gained steam as the day wore on from a steady to firm overnight trade on results from Day 2 of the Pro Farmer crop tour that saw corn yields above last year’s yields, but below the 3 year average in both Nebraska and Indiana, and below the USDA estimates for each state.
- Despite decent pod counts in both Nebraska and Indiana on Day 2 of Pro Farmer’s crop tour, soybeans will need to see additional rain to fill the pods and generate bushels, and this likely added to today’s bullish sentiment as it’s anticipated that the extreme heat over the next couple of days could stress the crop and negatively affect crop ratings and yield.
- A flash sale of 100k tons of meal and soybean cake to “unknown” destinations added to the positive bias in soybean meal, and soybean oil also showed decent gains to lend support to the soybean market.
- Although the markets didn’t react significantly in the overnight session, the fact that Russia made further attacks on Ukraine’s grain facilities in Odesa and along the Danube River likely led the market to add a level of war premium to wheat prices, which closed higher in all three classes.
- The U.S. dollar made new highs today, only to lose ground and trade lower on the day at the time of this writing, in a classic bearish key reversal. If the dollar follows through and continues lower, it could provide a level of underlying support to the grain markets and commodity sector.
- To see the current U.S. 5-day precipitation forecast, and the U.S. 6 – 10 Day Temperature and Precipitation Outlooks, courtesy of NOAA and the Weather Prediction Center, scroll down to the other Charts/Weather Section.
Note – For the best viewing experience, some Grain Market Insider content is best viewed with your phone held horizontally.
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 followed through on the firm close of Tuesday to post solid gains for Wednesday’s session. Options expiration of September options on Friday and the prospects of more variability in Iowa and Illinois corn yield on the Pro Farmer tour may have helped the buying strength.
- Pro Farmer crop tour is finding variable, but moderately good yields, which may be confirming the possible corn supply available this harvest. Yesterday, Pro Farmer forecasted corn yield in Indiana at 180.89 bu/acre and Nebraska at 167.22 bu/acre, both above last year’s levels. The tour moved into Iowa and Illinois today for sampling.
- September corn options expire on Friday, which could lead to an increase in volatility as prices have a tendency to move to large areas of open interest. Wednesday started with 17,500 open puts at the Sept 480 strike price.
- Demand will stay the focus of the market. The USDA will release weekly export sales numbers for last week on Thursday morning. Expectations are for this week’s totals to still be lackluster as the overall export pace remains sluggish for new crop sales. The current marketing year ends on Aug 30.
- Longer range weather forecasts are keeping temperatures above average for the majority of the Corn Belt with limited rainfall until next week. The warmer and dry conditions may limit any chances for the crop to finish out strong, limiting the top end of production.
Above: After trading mostly sideways since the end of July, December corn posted a bearish reversal on 8/21 after testing the 495 – 516 resistance level. The reversal is a bearish development, likely needing bullish input to turn prices back higher. Should that happen, resistance above the market remains between 495 – 516. If not and prices turn lower, support may be found near 460 and again 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 soy products as the Pro Farmer tour went through Illinois with yields coming in a bit lower than expected. Dry weather forecasts over the next 6 to 14 days also supported prices today.
- The crop tour completed its run through of Nebraska and Indiana yesterday, and found pod counts in a 3×3 plot with an average of 1,160.02 in Nebraska and 1,309.96 in Indiana, both ahead of last year.
- Exports have been mostly sluggish, but a slow stream of small sales to China and unknown destinations has been coming in and today, a sale of 100,000 metric tons of soybean cake were reported to unknown destinations for the 23/24 marketing year.
- The US Energy Department said today that supplies of ultra-low sulfur diesel were up slightly to 107.0 million barrels last week, which was up 6% from last year, but at the lower end of the 10-year range. The news could imply an uptick in soybean oil demand for biodiesel. Crush margins have also been profitable, which has incentivized processors.
Above: Since the end of July, the soybean market has turned lower, and attempts to rally have been met with resistance between 1381 and 1401. If the market breaks through to the upside, it may find further resistance near the 200-day moving average. If prices break to the downside, support below the market may be found between 1318 – 1300.
Wheat
Market Notes: Wheat
- Renewed Russian attacks overnight on Odesa and Danube River area grain facilities did not have much of an initial impact on the markets this morning. However, the fact that wheat finished higher in all three futures classes may indicate that some more war premium was factored in by the end of the session.
- According to their Agriculture Ministry, Ukraine has exported 3.83 mmt of grain so far in the 23/24 (July – June) season, which includes 1.6 mmt of wheat. They did not offer any comparison to this time frame last year.
- The EU’s export season began July 1st. Since that date, their soft wheat exports have reached 4.06 mmt as of August 20th, versus 5.12 mmt this time last year, a 21% decrease.
- Argentina’s wheat crop is rated only 20% good to excellent as of last week, due to serious drought conditions. With dryness persisting, it could mean additional downgrades to condition to come.
- Stats Canada will release their crop production estimates this coming Tuesday, August 29th. The average pre-report estimate of spring wheat production is pegged at 23.1 mmt, which compares to 25.68 mmt in 2022.
- Despite making a new near term high today, the US Dollar Index has since faded back, and this eased some pressure on commodities. Nevertheless, it remains near an eleven-week high and if the uptrend continues, it will also continue to keep pressure on prices.
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. War continues in the Black Sea region, the world stock to use ratio is the lowest in 8 years, 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 appears to be consolidating and is recovering from being oversold. Initial support below the market resides between 596 and 573. Above the market, resistance could be found between 664 and 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 more becomes known about this year’s crop with some reports of better than expected yields, questions remain about the world wheat supply. War continues in the Black Sea region, Ukraine’s export capabilities remain uncertain, and dryness continues in key production areas of the world. With a world stock to use ratio at its lowest level in 8 years, 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 sees an active opportunity to buy 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: The K.C. wheat market continues its sideways trend between 733 – 780, with the low end of the range acting as initial support, while the upper end of the range acts as initial resistance. If prices break out to the upside, psychological resistance sits around the 800 area. While below the market, 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. While there typically isn’t a strong likelihood of higher prices until after harvest is complete, 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 sees an active opportunity to buy 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, 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 820 – 837.
Other Charts / Weather
