Grain Market Insider: July 10, 2023
All prices as of 1:45 pm Central Time
| Corn | ||
| SEP ’23 | 492.25 | 5 |
| DEC ’23 | 499.5 | 5 |
| DEC ’24 | 503.25 | 5.5 |
| Soybeans | ||
| AUG ’23 | 1455.5 | 27.75 |
| NOV ’23 | 1345.5 | 27.75 |
| NOV ’24 | 1241 | 13.75 |
| Chicago Wheat | ||
| SEP ’23 | 646.25 | -3.25 |
| DEC ’23 | 663.5 | -3 |
| JUL ’24 | 690.5 | -3 |
| K.C. Wheat | ||
| SEP ’23 | 811.25 | -7 |
| DEC ’23 | 814.25 | -5.25 |
| JUL ’24 | 773 | -3.25 |
| Mpls Wheat | ||
| SEP ’23 | 850.25 | 2.5 |
| DEC ’23 | 856.75 | 2.25 |
| SEP ’24 | 792.75 | -5.75 |
| S&P 500 | ||
| SEP ’23 | 4439.75 | 5.75 |
| Crude Oil | ||
| SEP ’23 | 73 | -0.77 |
| Gold | ||
| OCT ’23 | 1950 | -1.6 |
Grain Market Highlights
- Consolidation ahead of Wednesday’s USDA WASDE report continues as traders square positions in the corn market, with prices not veering far from $5.00 in the December contract.
- Sharply higher soybean oil prices and anticipation of lower production and ending stocks numbers in Wednesday’s upcoming USDA report drove the soybean market higher.
- Higher Malaysian palm oil prices which were up 2.32% in the overnight added to the bullish sentiment in soybean oil, which closed up 248 points (4.75%). December soybean meal with $2.60 in gains and the strong bean oil market drove Board Crush in the December contracts to a 5-1/4 cent gain, adding support to soybeans.
- Despite better than expected wheat export inspections, overall exports lag last year’s and weighed on prices with Paris Milling Wheat futures adding pressure to the Winter Wheats, while Minneapolis was able to close on the positive side, possibly in anticipation of lower crop conditions in this afternoon’s report.
- The US dollar slid lower for the third day in a row and is trading near the June lows. If the dollar breaks further, it could add support to commodities.
- To see the current US 7 day precipitation forecast and NOAA US 8 – 14 day Temperature and Precipitation outlooks, scroll down to the Other Charts/Weather Section.
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Corn
Action Plan: Corn
Calls
2022
No Action
2023
No Action
2024
No Action
Cash
2022
No Action
2023
No Action
2024
Active
Sell DEC ’24 Cash
Puts
2022
No Action
2023
No Action
2024
No Action
Corn Action Plan Summary
- No new action is recommended for Old Crop. The market had a nearly 140-cent swing from the May low to the June high and back on weather. Use any remaining bounces in the market to price what Old Crop bushels you may have, if any. We won’t have any “New Alerts” for 2022 Corn (Cash, Calls, or Puts) as we have moved focus onto 2023 and 2024 Crop Year Opportunities.
- No action is recommended for New Crop 2023 corn. December corn rallied 139 cents from its May 18 low to its high on June 21 on weather and production concerns. The market is currently off that high on poor export sales figures and a forecast that shows increased chances of rain in the next couple of weeks. When Dec corn was trading over 620, Grain Market Insider recommended making a cash sale and buying Dec 580 puts to cover more downside. The Dec 580 puts, paired with the previously recommended Dec 610 calls, yields a combination of options commonly known as a Strangle, which benefits from dramatic market moves either up or down. Considering it is still early in the season, with drought and crop production uncertainty it is too soon to know if the market high is in or not. Either way, the Strangle position is prepared. If conditions improve from here and prices make new lows, unsold bushels will be protected with the 580 puts. If it doesn’t rain again and prices skyrocket to new highs, already sold bushels will be protected by the 610 calls.
- Grain Market Inside recommends selling New Crop 2024 Corn. While the market has seen some extreme volatility in recent weeks, we are entering a time of year when prices tend to have more headwinds than tailwinds to the upside. Also, with last week’s surprise acreage jump, continued rain in the forecast and slow demand, the size of the 2023 crop still has the potential to yield a carryout north of 2 billion bushels. A large 2023 carryout in the US, combined with the large corn crop in Brazil, could pose greater headwinds for 2024 prices. With it being the time of year to start getting early sales for next year on the books, and no recent bullish catalyst from the Stocks or Acreage reports, we are suggesting making a sale for the 2024 corn crop using either a DEC ’24 HTA contract or DEC ’24 futures, so the basis can be set at a later more advantageous date. While $5.00 futures is not the $6.00 or $7.00, we’ve become accustomed to the last few years, it’s still historically a good price to be getting some early sales on the books at.
Market Notes: Corn
- Corn prices continue to consolidate around the $5.00 price levels as futures were firmer to start the week. December corn traded around the $5.00 area for the sixth consecutive session as traders begin to square positions before Wednesday’s USDA report.
- The USDA will release the July Supply/Demand report on Wednesday at 11:00 CST. Expectations are for corn yield to drop to 176.3 bushels/acre, down 5.2 bushels/acres from the June report. Despite the yield drop, the additional acres and possible demand adjustment will likely keep new crop corn carryover near 2.250 billion bushels on the report.
- Demand remains a concern as weekly export inspections were 341,000 mt last week, below trade expectations. This total is down 50% from last week and year-over-year, export inspections lagged last year by 32%.
- Weather forecast will limit any near-term rally and rainfall chances and above normal temperatures should help additional crop recovery in some area and stabilize the crop into pollination.
- Improved weather across the Corn Belt has analysts looking for improvement in the corn crop. USDA crop ratings on Monday afternoon are expected to rise 2% to 53% good/excellent. Rainfall reduced the areas of corn acres in drought from 70% to 67% week over week.
Above: The USDA added a bearish 4 million acres to its planted acreage estimate on June 30. The September contract is now extremely oversold and consolidating in the 480 – 505 support level that has been in place since January 2021. The oversold condition of the market would be considered supportive to higher prices if reversal action occurs; if not, there may not be much support until 390 – 415. Overhead lies strong resistance between 595 and 625.
Corn Managed Money Funds net position as of Monday, July 3. Net position in Green versus price in Red. Money Managers net sold 52,845 contracts between June 27 – July 3, bringing their total position to a net short 18,209 contracts.
Soybeans
Action Plan: Soybeans
Calls
2022
No Action
2023
No Action
2024
No Action
Cash
2022
No Action
2023
No Action
2024
No Action
Puts
2022
No Action
2023
No Action
2024
No Action
Soybeans Action Plan Summary
- No new action is being recommended for Old Crop. Any remaining old crop bushels should be getting priced into this rally. We won’t have any “New Alerts” for 2022 Soybeans (Cash, Calls, or Puts) as we have moved focus onto 2023 and 2024 Crop Year Opportunities.
- No action is being recommended for New Crop 2023 soybeans. No action is being recommended for New Crop 2023 soybeans. While changing weather forecasts will continue to dominate price action, a potentially much lower than anticipated 2023 carryout looms over the market due to low crop condition ratings and a reduced planted acreage estimate. Grain Market Insider is still eyeing a rally to the 1400 – 1450 area before considering any additional 2023 cash sales. Yet given the time of year and how fast prices can change direction, we’re willing to change that plan at a moment’s notice. In view of the current crop conditions and carryout situation and that we recently recommended making a cash sale, we suggest holding tight on further cash sales for now.
- 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.
Market Notes: Soybeans
- Soybeans finished the day solidly on the positive side with additional support coming from both soybean meal and oil.
- Export inspections for the week ending July 6 came in at 8.754 mbu, about 900 mbu lower than last week, bringing the total for the year to 1.825 bil. bu, and 5% behind last year at this time. Although the number was within expectations, it remains well below the 22 mbu needed per week to meet the USDA’s goal.
- Friday’s COT report still show the funds long the soybean complex, although they did reduce their soybean holdings by an estimated 10,000 contracts to 89,000. For soybean meal and oil, the funds are reportedly long 53,000 meal and 43,000 oil.
- China has adopted new regulations to require imported soybeans to be quarantined in specific warehouses prior to entering the domestic market.
- The average trade guess for 2022 ending stocks is up 5 mil bu. at 235 mbu. versus the USDA’s June estimate of 230, largely due to reduced export demand. As for 2023, due to 4 million fewer planted acres, the average trade estimate is 206 mil. bu with a 51.4 bpa compared to 49.5 last year.
- The trade estimates Brazil’s soybean production to come in at 156.2 mmt in Wednesday’s USDA report, up slightly from the June estimate of 156 mmt. For Argentina’s production, the average trade guess is 23.6 mmt, 1.4 mmt lower than in June.
Above: The USDA’s Stocks and Acreage estimate came in well below expectations and gave the market a solid push to the upside. The market has now fallen back and is struggling to continue higher without additional bullish input. If the market can rebound, resistance above the market continues to rest between 1500 – 1550, while support below the market could be found between 1340 and 1300 with further support near 1270.
COT – Soybeans Managed Money Funds net position as of Monday, July 3. Net position in Green versus price in Red. Money Managers net sold 10,338 contracts between June 27 – July 3, bringing their total position to a net long 89,142 contracts.
Wheat
Market Notes: Wheat
- After starting higher this morning, wheat could not hold onto those gains and traded lower for the rest of the session. Some pressure may be coming from the European markets, where Paris milling wheat futures closed lower for the third session in a row.
- Wheat export inspections of 15.4 mb bring the 23/24 total inspections to 56 mb; this is down 21% from this time a year ago.
- Funds are said to remain net short Chicago wheat by about 56,000 contracts. If Wednesday’s WASDE report is friendly this could trigger some short covering.
- Next week the Black Sea Grain Initiative will expire – so far there has not been any new agreement reached. Turkey is reportedly trying to broker a deal to extend the corridor again, however Russia seems adamant that they have no reason to extend the deal.
- According to their Agriculture Ministry, Russia’s wheat export tax is set to increase to 2,990 Rubles per ton next week, up from 2,610 Rubles.
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 New Crop. In the month of June, the September Chicago wheat contract posted a 163-cent range and has largely been a follower of the corn market which has been mostly driven by weather. While demand remains weak, production concerns in parts of the country remain, as does uncertainty surrounding the Black Sea region and the potential for major exporting countries’ inventory to hit 16-year lows. While Grain Market Insider will continue to monitor the downside for any violation of major support, following the recent sales recommendation it may be after harvest or near the end of summer before we consider recommending any additional sales for the 2023 crop.
- No action is currently recommended for 2024 Chicago wheat. Price volatility has risen in the last couple of weeks due to the changing weather forecasts and current events in the Black Sea. While prices have fallen off their recent highs, plenty of time remains to market next year’s crop. War continues in the Black Sea region, major exporting countries’ stocks expected to fall to 16-year lows, and no one knows what the weather will bring, leaving the market vulnerable to many uncertainties. For now, after recently 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: September wheat rallied nearly 200 cents from the May low to its June high when it encountered heavy resistance and posted a bearish reversal. This technical formation on the price chart is considered bearish and momentum may be adding to the bearish tone. Support below the market may be found between 650 – 610, while resistance above the market rests between 770 – 810.
COT – Chicago Wheat Managed Money Funds net position as of Monday, July 3. Net position in Green versus price in Red. Money Managers net sold 1,838 contracts between June 27 – July 3, bringing their total position to a net short 54,006 contracts.
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. While Crop ratings have improved and the Black Sea export corridor remains open, questions remain about the size of the HRW crop, whether Russia will continue to agree to keep the Black Sea corridor open, and what production looks like in Europe and Australia. We continue to target 950 – 1000 in the July futures as a potential level to suggest the next round of New Crop sales.
- Patience is warranted for the 2024 crop. With continued issues in the Black Sea region and with major exporting countries’ stocks expected to fall to 16-year lows, we are willing to be patient with further sales of New Crop HRW wheat. We are targeting just below the 900 level on the upside while keeping an eye on recent lows for any violation of support.
- 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: Balancing both production and demand concerns, the September contract continues to trade within the 736 – 919 range established in May. The recent downturn in the market has established heavy resistance above the market between 890 – 920, with initial support coming in between 778 – 763 and key support near the May low of 736.
K.C. Wheat Managed Money Funds net position as of Monday, July 3. Net position in Green versus price in Red. Money Managers net bought 1,341 contracts between June 27 – July 3, bringing their total position to a net long 13,760 contracts.
Action Plan: Mpls Wheat
Calls
2022
No Action
2023
No Action
2024
No Action
Cash
2022
No Action
2023
No Action
2024
No Action
Puts
2022
No Action
2023
No Action
2024
No Action
Mpls Wheat Action Plan Summary
- No new action for 2022 Old Crop MINNEAPOLIS Wheat. The market had a nearly 116-cent swing from the May low to the June high and back on weather. While weather and geopolitical events can still affect Old Crop prices, the marketing year for Old Crop is quickly winding down, and any additional upside opportunities may be more difficult to come by before New Crop harvest. Use any remaining bounces in the market to price what Old Crop bushels you may have, if any. We won’t have any “New Alerts” for the 2022 crop (Cash, Calls, or Puts) as we have moved focus onto 2023 and 2024 Crop Year opportunities.
- No action is currently recommended for the 2023 New Crop. Weather dominates the market right now, and though much of the growing season remains, Grain Market Insider suggested making a sale as prices closed below 822 to protect from further downside erosion due to a potential trend change. Seasonally, there isn’t a strong likelihood of higher prices until after harvest, although both weather and geopolitical events can change suddenly to shock the market higher. Insider will consider making sales suggestions if prices improve through this growing season, while also continuing to watch the downside for any further violations of support.
- We continue to hold on pricing the 2024 crop. With the September ‘24 contract about 60 cents from its May 22 low, continued issues in the Black Sea region and major exporting countries’ stocks expected to fall to 16-year lows, we are entering the time frame where we would consider suggesting making sales recommendations while also keeping an eye on the recent lows for any violation of support.
Above: The September contract rallied out of its congestion area on the Front Month Continuous chart towards the 200-day moving average and into resistance between 889 and 940, the April and December highs respectively. With the market off those highs, it will need additional bullish news to be able to trade through them. Should the market continue to fall, support may be found between 770 and 730.
Minneapolis Wheat Managed Money Funds net position as of Monday, July 3. Net position in Green versus price in Red. Money Managers net sold 1,009 contracts between June 27 – July 3, bringing their total position to a net long 1992 contracts.
Other Charts / Weather
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