Grain Market Insider: August 25, 2023
All prices as of 1:45 pm Central Time
| Corn | ||
| SEP ’23 | 470.75 | -1.5 |
| DEC ’23 | 488 | -0.25 |
| DEC ’24 | 509 | 0.25 |
| Soybeans | ||
| NOV ’23 | 1387.75 | 16 |
| JAN ’24 | 1399.25 | 15.75 |
| NOV ’24 | 1310.25 | 7.25 |
| Chicago Wheat | ||
| SEP ’23 | 593.25 | -10.75 |
| DEC ’23 | 621.75 | -10 |
| JUL ’24 | 672.75 | -8.5 |
| K.C. Wheat | ||
| SEP ’23 | 754 | 1 |
| DEC ’23 | 764.5 | 2 |
| JUL ’24 | 753.5 | 1.5 |
| Mpls Wheat | ||
| SEP ’23 | 775 | 0.25 |
| DEC ’23 | 800.25 | 1 |
| SEP ’24 | 825 | 9.75 |
| S&P 500 | ||
| SEP ’23 | 4422 | 36 |
| Crude Oil | ||
| OCT ’23 | 79.84 | 0.79 |
| Gold | ||
| OCT ’23 | 1923.5 | -5 |
Grain Market Highlights
- Despite the lack of rain in the forecast, a weaker wheat market and the potential for more Fed rate hikes weighed on the corn market, which traded on both sides of unchanged before closing mixed, with nearby contracts settling marginally lower and deferred contracts fractionally higher.
- Another flash sale of 121k mt to China and a warm and dry two week forecast kept support under the soybean market, which settled at its highest level in nearly a month.
- Soybean meal and oil also finished in the green with .7% and 1.9% gains respectively, as meal continued its trek higher supported by a firmer Brazilian export basis, and oil shrugged off yesterday’s losses, supported by higher heating oil (diesel) and palm oil prices.
- A strong U.S. dollar and estimates of record Russian wheat exports for the 23/24 season from Agritel weighed most heavily on the Chicago contracts, which closed the day in the red. K.C. and Minneapolis contracts fared better with both classes settling in the green.
- Fed Chairman Jerome Powell remarked in a speech from Jackson Hole, WY today that economy is growing faster than anticipated and the Federal Reserve may raise interest rates further to achieve its 2% inflation rate goal. Rates staying elevated for an extended length of time or rising further is supportive to the U.S. dollar and could add resistance to commodity prices.
- To see the current U.S. Seasonal Drought Outlook from NOAA, 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
- Quiet day in the corn market as prices were stuck between strong soybean prices and a pressured wheat market. Overall, corn prices finished steady to slightly lower on the session. For the week, Dec corn futures traded 5 cents lower.
- Pro Farmer completed its annual crop tour on Thursday and released yields for Minnesota and Iowa. Minnesota corn yield was disappointing at 181.34 bu/acre, down from last year’s levels, and Iowa corn yield was 182.8 bu/acre, just slightly below last year. Pro Farmer released its projected national yield for the year at 172.0 bu/acre, currently under the USDA and last year’s level.
- As the market tries to narrow in on potential yield estimates, demand will stay a focus. Current new crop corn sales are disappointing. China is down 91% in corn purchase for the new marketing year, compared to last year. Rallies in the corn market may stay limited if demand remains slow.
- Longer range weather forecasts are pushing the heat dome back to the South, but the Corn Belt will have limited rainfall until next week. The forecasted conditions may push maturity and limit any chances for the crop to finish out strong.
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 traded higher today, with the November contract ending the week 34-1/2 cents higher. December soybean meal ended the week with a large gain, and soybean oil posted a small weekly loss. Crush margins improved this week.
- The Pro Farmer crop tour released pod counts for most states that were slightly above the 3-year averages, but their final yield estimate was 49.7 bpa, which is below the USDA’s estimate of 50.9, but above last year’s number of 49.5. The USDA typically estimates yields higher than the crop tour.
- Soybeans are gaining support from the extreme heat and rain that has been absent for over 10 days in the Midwest during crucial pod filling time. The heat is expected to ease up going into this weekend, but rain is light in the forecast over the next 7-days.
- November soybeans on the Dalian exchange were up 1.5% today to make a new high for 2023 at $19.03 a bushel, which has resulted in increased export sales activity. Adding to the recent string of sales, another one was reported today to unknown destinations in the amount of 121,000 metric tons.
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
- After Fed chairman Powell’s comments this morning about potentially more interest rate increases, the U.S. Dollar Index hit the highest level in almost three months. If the dollar remains in an uptrend, it will continue to pressure wheat as it makes U.S. exports more expensive for importing countries.
- According to consultancy group, Agritel, Russia’s 23/24 wheat exports are expected to be record large at 49 mmt. Additionally, the production estimate from Sov Econ is up 5 mmt from last month.
- Odesa is introducing a grain export control mechanism, in which vessels will only be loaded after the legality of the grain’s origin is determined. Apparently, many grain sales are not transparent, which is reducing revenue needed for the military.
- Turkey is said to be encouraging Russia to re-open the Black Sea grain export deal and government officials will meet with Putin. Russia’s foreign minister, Sergei Lavrov, reportedly told the UN Secretary General that Russia would return to the deal only if the West fulfills obligations to Russia.
- Due to the dry conditions in Canda, there is thought that their production will fall below the USDA’s estimated 33 mmt. On Tuesday, Stats Canada is anticipated to reflect this in their crop production estimates.
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 800 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 between 650 and 596. If the market breaks out to the upside, the next level of resistance may be found near 665, if not, and the market drifts lower, the next level of support below the market may be found near 573.
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 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.
- No action is recommended for 2024 K.C. wheat. This year has been dominated by production concerns regarding the 2023 crop, and considering slow export demand and cheap Russian prices continue to be major headwinds for U.S. prices. Insider recently recommended buying July ’24 puts to protect unsold grain if prices continue to retreat further. While war persists in the Black Sea region, production concerns continue in the southern hemisphere due to El Nino, and the world stocks to use ratio remains at an 8-year low, there are still many uncertainties that could shock prices higher. Plenty of time remains to market the 2024 crop, and after recommending buying July ’24 660 puts, unsold bushels will be protected if prices make new lows, and if prices turn around and rally higher, Insider will be looking for opportunities to consider recommending additional sales north of 850.
- 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
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. 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.
- No action is currently recommended for 2024 Minneapolis wheat. This year has been dominated by production concerns regarding the 2023 crop, and considering slow export demand and cheap Russian prices continue to be major headwinds for prices. Insider recently recommended buying July ’24 puts to protect unsold grain if prices continue to retreat further. While war persists in the Black Sea region, production concerns continue in the southern hemisphere due to El Nino, and the world stocks to use ratio remains at an 8-year low, there are still many uncertainties that could shock prices higher. For now, plenty of time remains to market the 2024 crop and Insider is content to see how the market develops before suggesting making any additional sales. After recommending buying July ’24 K.C. wheat 660 puts for the liquidity and high correlation to Minneapolis wheat’s price movements, unsold bushels will be protected if prices make new lows, and if prices turn around and rally higher, Insider will be looking for opportunities to consider recommending additional sales.
- 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 the middle of August, the market has been consolidating between nearby support and resistance of 786 and 820. Should the market break out of the current range, 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, the next area of resistance could be found near 837.
Other Charts / Weather
