Grain Market Insider: August 31, 2023
The CME and Total Farm Marketing offices will be closed
Monday, September 4, in observance of Labor Day
All prices as of 1:45 pm Central Time
| Corn | ||
| SEP ’23 | 461 | -0.75 |
| DEC ’23 | 478.25 | -2.5 |
| DEC ’24 | 507.5 | -2.5 |
| Soybeans | ||
| NOV ’23 | 1368.75 | -18 |
| JAN ’24 | 1382 | -17.75 |
| NOV ’24 | 1292.75 | -17.75 |
| Chicago Wheat | ||
| SEP ’23 | 573 | -3.75 |
| DEC ’23 | 602 | -5 |
| JUL ’24 | 654.5 | -4.5 |
| K.C. Wheat | ||
| SEP ’23 | 726.5 | 7.25 |
| DEC ’23 | 727.25 | -4.5 |
| JUL ’24 | 723.75 | -8.25 |
| Mpls Wheat | ||
| SEP ’23 | 735 | -13.75 |
| DEC ’23 | 767.5 | -12 |
| SEP ’24 | 795 | -7.75 |
| S&P 500 | ||
| SEP ’23 | 4529.25 | 5 |
| Crude Oil | ||
| OCT ’23 | 83.53 | 1.9 |
| Gold | ||
| OCT ’23 | 1949.6 | -4.4 |
Grain Market Highlights
- Decent 23/24 export sales that were at the upper end of expectations, though still short of the USDA’s pace, were not enough to keep the corn market on the high side of unchanged as prices came under pressure from lower trading soybeans.
- Continued profit taking and technical selling weighed on the soybean complex as the markets sold off from overbought conditions despite solid export sales. While still closing lower on the day, soybean oil was the strong leg of the complex posting minor losses as it garnered support from higher crude and palm oil markets.
- Weak demand, a strong US dollar, and weakness from neighboring corn and soybeans may have contributed to today’s lower close in the wheat complex, as all three classes closed on the red side of unchanged with the exception of September KC wheat that closed higher.
- The US dollar rallied today, overtaking yesterday’s losses on ideas that the US economy is holding up comparatively well to those in Europe, with some thinking it may resume its upward trend. If so, the stronger dollar could provide headwinds to US commodity prices and export sales.
- To see the current US Drought Monitor and 1 week drought classification changes, 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
New Alert
Sell DEC ’24 Cash
2025
No Action
Puts
2023
New Alert
Exit All DEC ’23 580 Puts ~ 100c
2024
No Action
2025
No Action
Corn Action Plan Summary
- Grain Market Insider recommends selling the remaining, previously recommended, DEC ‘23 580 puts at approximately 100 cents in premium minus fees and commission to lock in gains. At the end of June, Insider recommended buying DEC ’23 580 puts for approximately 30 cents in premium plus fees and commission. At the time the US Drought Monitor was showing dryness across the Midwest and weather forecasts were calling for hot and dry conditions. Since then, conditions have improved and DEC ’23 corn has dropped over 100 cents with the recommended 580 puts gaining over 200% in value. With much of the growing season behind us, we are at the time of year when market lows are often made, and while the market may continue to recede into harvest, it is still subject to unforeseen weather like the 2020 derecho, or headlines from the Black Sea that could shock prices higher.
- Grain Market Insider recommends selling a portion of your 2024 corn crop today. The 2023 growing season has been marked by hot and dry conditions, changing weather forecasts, and geopolitical volatility that has moved prices dramatically in both directions for both the 2023 and 2024 crops. We recognize that $5 is not the $6 or $7 that we have seen in recent memory, but much like the runup in 2012, some of the best prices for the 2013 crop were made in the summer of 2012 before they retreated that fall and into the next calendar year. Now that the 2023 growing season is winding down, 2024 prices continue to be historically favorable to get another early sale on the books, and Grain Market Insider suggests selling another portion of your 2024 production on a DEC 24 HTA contract, or DEC 24 Futures contract, so basis can be set at a later more advantageous time.
- 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
- Extended selling pressure in the soybean market kept the corn market from holding session highs to finish slightly lower on the day. December corn lost 2-1/2 cents on the day and had a 9-3/4 cent trading range on the day. Price action stays weak overall.
- The Weekly Export Sales report released by the USDA showed old crop corn sales at 2.8 MB and 39.0 MB in new crop sales reported last week. These totals were within market expectations. Corn sales overall are still lackluster and limiting market gains.
- Grain markets are becoming concerned about the water levels on the Mississippi River for the fall harvest window. Barge restrictions have been put in place, limiting grain movement, and has the potential to impact cash basis levels going in the fall months.
- September corn futures moved into the delivery window against long contract positions. The CBOT reported “Zero” deliveries against the September contract, which is supportive of price.
- Weather forecasts are still showing limited rainfall and warmer-than-normal temperatures going into the middle of September. This should speed up maturity and limit any possible yield potential in most areas of the Corn Belt as the crop finishes out.
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. While the reversal is a bearish development, prices could turn higher if the market receives additional bullish input. 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 sharply lower, along with both soybean meal and oil, despite the hot and dry weather and decent export sales today. Earlier in the day, soybean oil traded higher with help from higher crude and palm oil, but the entire grain complex faded lower by the end of the day.
- Export sales were good overall despite net sales reductions for 22/23 of 50,700 mt, which was a marketing year low. For 23/24, sales were 1,123,800 mt and were primarily to unknown destinations and China. Exports of 319,700 mt were down 29% from the previous week.
- Some crop scouts are now estimating soybean yields below 50 bpa and in some cases as low as 49.5 bpa due to the hot and dry conditions. This compares to the USDA’s last estimate of 52.0 bpa. The USDA will update their estimates on September 12.
- The US has become much more competitive with Brazil for new crop soybean sales and as a result, there has been a sale reported nearly every day this week and significant amounts last week. This morning, a sale of 123,000 mt was reported to unknown destinations for 23/24.
Above: After filling in the chart gap that was left between 1390-1/2 and 1394-3/4, the market has drifted lower in conjunction with stochastic indicators crossing over in overbought conditions indicating a possible downward market reversal. For now, if prices continue to slide lower, the market may find support near 1330 and again around 1300. If prices regain upward momentum, initial resistance will be in the 1400 – 1410 area.
Wheat
Market Notes: Wheat
- After trading both sides of neutral today, wheat struggled to hold any gains. All three US futures classes posted losses in tandem with Paris milling wheat futures. Weakness may have stemmed from today’s rise in the US dollar, struggling corn and soybeans, and the fact that exports are still relatively poor.
- The USDA reported an increase of 12.1 mb of wheat export sales for 23/24 and an increase of 0.6 mb for 24/25. Export shipments are still behind the 13.9 mb pace needed per week to reach the USDA’s goal of 700 mb for 23/24. Last week’s shipments were only 13 mb.
- Despite US soft wheat is now competitive versus other world origins, the difference in freight costs may be the anchor on exports. Yesterday, Egypt purchased wheat from Romania and France, as their freight costs are cheaper than the US.
- Russia has reportedly said that they will discuss with Turkey an alternative to the Black Sea grain export deal. This week Sergei Lavrov, the Russian foreign minister, will meet with Hakan Fidan, the Turkish foreign minister. While the exact details are not set in stone yet, it appears that the plan would involve Russia sending grain to Turkey, where it would then be sent to countries in need.
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
Active
Enter(Buy) JUL ’24 590 Puts ~ 30c
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.
- Grain Market Insider sees an active opportunity to buy July ’24 590 Chicago Wheat Puts on a portion of your 2024 SRW Wheat crop. 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 Chicago wheat broke through a major support area around 657. Closing below 657 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 May low of 573. If the 573 level fails, the next support could be the 468 – 514 level. Buying July ’24 590 Chicago wheat puts on a portion of our SRW 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 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 December futures as a potential level to suggest the next round of 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: December KC wheat broke through the bottom end of its trading range and may be poised to test the September ’21 low of 670 unless bullish input enters the market to turn prices higher. If so, initial resistance above the market may rest near 772 – 780.
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. 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: The December contract resumed its downward slide and traded through the May low of 769, and is now showing signs of being oversold, which can be supportive if prices turn higher. If prices do turn higher, nearby resistance could be found near 785 – 795 and again around 810 – 820. Otherwise, the next support level below the market could come in near the June ’21 low of 730.
Other Charts / Weather
