Grain Market Insider: July 24, 2023
All prices as of 1:45 pm Central Time
| Corn | ||
| SEP ’23 | 560.5 | 33.5 |
| DEC ’23 | 568.25 | 32 |
| DEC ’24 | 545 | 16.5 |
| Soybeans | ||
| AUG ’23 | 1523.25 | 22.25 |
| NOV ’23 | 1424.5 | 22.75 |
| NOV ’24 | 1314 | 19.75 |
| Chicago Wheat | ||
| SEP ’23 | 757.5 | 60 |
| DEC ’23 | 777.5 | 59.75 |
| JUL ’24 | 786.75 | 47.75 |
| K.C. Wheat | ||
| SEP ’23 | 918.5 | 58.25 |
| DEC ’23 | 925.25 | 58.5 |
| JUL ’24 | 865 | 46 |
| Mpls Wheat | ||
| SEP ’23 | 936 | 49 |
| DEC ’23 | 944.5 | 48 |
| SEP ’24 | 865.25 | 31.75 |
| S&P 500 | ||
| SEP ’23 | 4585.75 | 21 |
| Crude Oil | ||
| SEP ’23 | 78.81 | 1.74 |
| Gold | ||
| OCT ’23 | 1976.7 | -9.1 |
Grain Market Highlights
- Rising tensions in the Black Sea region and hot weather led to short covering and nearly 6% gains in the December corn futures.
- A hot and dry week ahead and Russian attacks on the Danube River lead traders to add weather and war premium to prices.
- Higher crude oil and sharply higher Malaysian palm oil helped lead soybean oil to gain more than 3% and gave additional support to soybeans and meal which were up 1.6% and 0.76% respectively in the November and December contracts.
- Reports of Russian attacks damaging grain infrastructure along the Danube River in Ukraine led to short covering in the Chicago contracts with a limit up close in the September contract, while K.C. and Minneapolis were not far behind in the rally.
- The US dollar continued its rally for the fifth day in a row as traders expect the Fed to raise short-term interest rates 0.25% at this week’s meeting. The dollar is also thought to be gaining support on thoughts that the EU recovery may be stymied by additional, potentially unnecessary rate hikes in that region. Nevertheless, the grain markets so far are overcoming any bearish influence a rising dollar may have.
- To see the current 7-day precipitation forecast and 6-10 Day Temperature and Precipitation Outlooks courtesy of the Climate 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
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
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. The future price potential for Dec 23 corn continues to be at the mercy of each new weather forecast. Dryness and dry weather forecasts pushed Dec corn from the May low to the June high with a gain of 137 cents, which was promptly erased and then some by mid-July, leaving the market 149 cents off that June high, with a surprise jump in acres and more favorable forecasts. Now, the threat of dry weather again has rallied Dec corn more than 80 cents off that July 13 low. During the runup in early June, we warned that any change in the forecast to wetter weather could erase all the gains as corn didn’t have much of a bullish fundamental story without a supply-side shock fueled by lower yields. Overall, our thought process has not changed from a month ago and with the tremendous uncertainty, and subsequent volatility still in front of us, we continue to recommend holding the Strangle options position, comprised of the previously bought Dec 610 calls and Dec 580 puts. A turn back to wetter weather and we wouldn’t be surprised to see sub-500 corn again, and if dry weather persists, we wouldn’t be surprised to see corn prices north of 700. Under either of these scenarios, the Strangle will benefit and doesn’t require trying to outguess the weather.
- 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 January 2, 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.
Market Notes: Corn
- The corn market added weather and war premium as wheat futures traded limit higher, fueling strong double-digit gains in the corn market.
- Russian attacks of Ukraine ports on the Danube River triggered a short covering rally in the corn and wheat markets, and the market added war premium on the potential of additional escalation in the Black Sea region.
- Demand remains a concern. Weekly export inspections for corn were within expectations at 300,000 MT. Overall export shipment pace is still disappointing and trending down 33% below last year’s levels with the marketing year ending on August 30.
- Above average temperature and limited rainfall supported the corn market, but the market may shift its focus to the early August weather forecast, which is looking toward overall cooler temperatures and average rainfall for the majority of the corn belt.
- USDA is expected to see weekly crop ratings improve to 58% good/excellent for corn on this week’s crop ratings, up 1% from last week’s estimates. This will make four consecutive weeks of improved corn crop ratings as July weather has been more favorable.
Above: In mid-July the corn market was oversold and posted a double bottom at 474. Since then, it has rallied significantly toward the 50-day moving average. While the market has upward momentum, it may run into resistance near the 50-day MA. If the market closes above the 50-day MA, it could signal a change in trend to higher, though heavy resistance remains up towards 595 – 625 and it would need further bullish news to break through. Below the market, key support lies near the recent 474 low.
Money Corn Managed Money Funds net position as of Tuesday, July 18. Net position in Green versus price in Red. Managers net bought 16,126 contracts between July 11 – 18, bringing their total position to a net short 46,926 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 recommended for 2023 soybeans. The USDA injected a lot of volatility into this market beginning with a much lower-than-expected planted acreage estimate, followed by a much larger-than-expected 300mb carryout estimate in its July WASDE. While demand has been weak, we have a bona fide weather market during a crucial period for soybeans and there is little wiggle room for lost yield in this year’s crop. While a drier forecast can still maintain upside potential, plenty of time remains for rain to come and push prices lower, much like in 2012, when July was dry. Then the pattern changed in August, and 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.
Market Notes: Soybeans
- The soybean complex traded higher today, led by a strong meal and sharply higher soybean oil, as the market priced in additional weather and war premium to prices.
- US export inspections released this morning for the week ending July 20 were on the high side of expectations at 283,000 mt, and 77% higher than last week, though still behind the pace needed to reach the USDA’s goal. This brings the annual total to 50,177 mt, which is down 5% from the same time last year.
- Adding further support to the market, the USDA reported a flash sale to China totaling 121,000 tonnes of soybeans for the 23/24 marketing year. The last reported sale of soybeans to China was June 30, nearly one month ago.
- There were reports of a Russian drone attack on Ukrainian Danube River ports. The attack reportedly lasted over 4 hours, destroying one grain storage facility, and injuring 4 workers. The Danube River remains a key artery for grain exports following the closure of the Black Sea corridor, and reports of the attack likely added bullish support to world veg oil prices and soybean oil, because Ukraine is a key sunflower meal and oil exporter.
- Weather is also a factor for soybeans, and this week warm dry temperatures will continue to stress the crop throughout much of the Midwest. There are better rain chances in the 6-10 day forecast, however.
- Seasonal maintenance for crush facilities has slowed crush pace somewhat, which has tightened soybean meal supplies and been supportive to meal basis values and prices.
Above: The soybean charts rolled from the August to the September contract on 7/17 with the 75-cent discount to the September represented by the 52-cent gap on the chart between 7/14 and 7/17. To fill the gap, the market will need additional bullish news to continue higher and trade through the heavy resistance area of 1490 – 1505. If not, and prices retreat, initial support below the market is near 1400 with further support being in the 1350 – 1390 area.
Soybeans Managed Money Funds net position as of Tuesday, July 18. Net position in Green versus price in Red. Money Managers net bought 13,066 contracts between July 11 – 18, bringing their total position to a net long 95,814 contracts.
Wheat
Market Notes: Wheat
- September Chicago wheat closed limit up (60 cents higher) today after headlines reported that Russia attacked the Danube River area in Ukraine. Destruction of grain and infrastructure was significant; after the closure of the Black Sea corridor, this was one of the key remaining methods for Ukraine to export grain. Reportedly, they planned for 2-3 mmt of grain exports per month via the Danube River, but that amount may now be severely limited if possible.
- Weekly wheat inspections of 13.2 mb bring the 23/24 total inspections to 79 mb, still down 17% from last year. So far, wheat inspections are behind the pace needed to meet the USDA’s 725 mb export goal.
- Paris milling wheat futures also settled sharply higher, with the front month September gaining 17.50 Euros per ton. This contract is approaching the 200-day moving average, around 267, which it has not traded above since November of 2022.
- Though it has taken a back seat to the war news, the US Dollar Index continues to claw back from the recent low. At this week’s FOMC meeting, the Fed is expected to issue a 25 basis point interest rate increase; this could affect the US Dollar, which may in turn affect wheat.
- The Taiwan Flour Miller’s Association is tendering for 108,000 mt of wheat to be sourced from the US.
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. The wheat market has seen a great amount of volatility in recent weeks and has primarily been a follower of corn which has been driven by weather. Although demand remains weak, the recent closure of the Black Sea corridor, and continued weather concerns in the northern Plains, Canada, Europe, and Russia, still leave many supply questions unanswered. 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. 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 are off their recent highs, plenty of time remains to market the 2024 crop. 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: In June, when September wheat posted a bearish reversal it left significant resistance near 730 – 770. Rising tensions in the Black Sea have triggered a rally which is testing this area, and the market will need additional bullish input to rally beyond and test the 800 level. If prices do retreat, support below the market may be found around 650 – 610, and again near 570, the May low.
Chicago Wheat Managed Money Funds net position as of Tuesday, July 18. Net position in Green versus price in Red. Money Managers net sold 2,290 contracts between July 11 – 18, bringing their total position to a net short 54,418 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 conditions have improved and there are reports of better-than-expected US yields, questions remain about the world wheat supply with the closure of the Black Sea corridor, dryness in Russia, the Canadian Prairies/Northern US Plains, and Europe. 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.
- Patience is warranted for the 2024 crop. With continued issues in the Black Sea region and with major exporting countries’ stocks at 11-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 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: KC wheat continues to be volatile and trade within the broad 736 – 919 range established back in May. Momentum favors higher prices, though heavy resistance remains between 890 – 920 and the market will need additional bullish input to push higher. Below the market, initial support remains near 778 – 763 with key support around the May low of 736.
K.C. Wheat Managed Money Funds net position as of Tuesday, July 18. Net position in Green versus price in Red. Money Managers net sold 1,934 contracts between July 11 – 18, bringing their total position to a net long 12,650 contracts.
Action Plan: Mpls Wheat
Calls
2022
No Action
2023
No Action
2024
No Action
Cash
2022
No Action
2023
No Action
2024
Active
Sell SEP ’24 Cash
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.
- Grain Market Insider sees an active opportunity to sell a portion of your 2024 spring wheat crop. So far this year we have seen some of the volatility from the 2023 crop, with its challenges from late planting and now dryness, be carried over to the 2024 crop. We are now at that time of year where there are typically more headwinds to prices than tailwinds, and to begin getting some early sales on the books. Now that the market has rallied to within 15 cents of the June high where there is significant overhead resistance, Insider recommends making a sale on a portion of your 2024 spring wheat production by using either SEPT ’24 Minneapolis Wheat futures contracts or a SEPT ’24 HTA contract, so basis can be set a later, more advantageous time. While $8 prices are not the $9 or $10+ that we have seen in recent years, and weather and geopolitical disruptions can still shock the market higher, they still represent historically good prices to begin making sales.
Above: The September contract has rallied nearly 100 cents from the July low and is showing signs of being overbought while pushing into the 889 – 940 resistance area. If the market cannot push higher, initial support may be found near 865 – 845 and again around 800.
Minneapolis Wheat Managed Money Funds net position as of Tuesday, July 18. Net position in Green versus price in Red. Money Managers net bought 2,304 contracts between July 11 – 18, bringing their total position to a net long 6,587 contracts.
Other Charts / Weather
