Grain Market Insider: July 27, 2023
All prices as of 1:45 pm Central Time
| Corn | ||
| SEP ’23 | 533.25 | -7 |
| DEC ’23 | 542.25 | -6 |
| DEC ’24 | 534.5 | 2.5 |
| Soybeans | ||
| AUG ’23 | 1532 | -14.25 |
| NOV ’23 | 1398 | -22 |
| NOV ’24 | 1294 | -12.75 |
| Chicago Wheat | ||
| SEP ’23 | 712.75 | -7.25 |
| DEC ’23 | 735.5 | -6.75 |
| JUL ’24 | 758.75 | -2 |
| K.C. Wheat | ||
| SEP ’23 | 866.5 | 1.25 |
| DEC ’23 | 878 | 0.75 |
| JUL ’24 | 838.25 | 0.5 |
| Mpls Wheat | ||
| SEP ’23 | 904.25 | 8.5 |
| DEC ’23 | 915 | 7.5 |
| SEP ’24 | 852.5 | 1.25 |
| S&P 500 | ||
| SEP ’23 | 4575.5 | -19.75 |
| Crude Oil | ||
| SEP ’23 | 79.99 | 1.21 |
| Gold | ||
| OCT ’23 | 1963.8 | -25.9 |
Grain Market Highlights
- Corn futures closed mixed with nearby months lower and deferred contracts higher, as rainfall chances increased for this coming weekend across the I-states compared to early week forecasts.
- Despite a daily flash sale of soybeans to unknown destinations this morning, soybeans, soybean meal and soybean oil all closed lower on the day.
- A Russian submarine attack on a Ukrainian port overnight was not enough to rally the entire wheat complex. Chicago wheat posted losses; Kansas City wheat closed mixed, while spring wheat closed higher across the board.
- A potential bullish reversal in the US Dollar Index today could have aided in the general weakness across the commodity complex.
- To see the current 1–7-day precipitation outlook courtesy of the Weather Prediction Center, 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
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 and heightened tensions in the Black Sea region has rallied Dec corn sharply 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
- Corn futures saw mixed to mostly lower trade on Thursday, as improved rainfall forecasts and ongoing concerns regarding demand had sellers in control in the market.
- Weather models are forecasting improved rain chances into the weekend across Iowa, Illinois, and into Indiana, as potential storm clusters could build overtop of the heat ridge.
- Weekly export sales were lackluster, as the USDA reported new sales of 12.4 mb of old crop and 13.2 mb of new crop sales last week. These totals were within market expectations. China remains inactive in the U.S. corn export market.
- An above normal temperature forecast is still of concern into next week in large areas on the Corn Belt. The overall lack of moisture and heat may potentially stress the crop as the majority of the crop has moved into the pollination and ear fill stages.
- The USDA reported that 59% of U.S. corn acres are experiencing drought. This was a 4% increase week over week. This will likely increase with the current forecast in next week’s report.
Above: In mid-July the corn market was oversold and posted a double bottom at 474. Since then, it has rallied and retraced about 62% of the prior down move toward the 50-day moving average. While the short-term trend remains up, the market is consolidating and becoming overbought. More bullish news will be needed for the market to forge through the recent highs toward the 595 – 625 resistance area. Below the market, nearby support may be found near 520, with key support near the recent 474 low.
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
- Soybeans began the day higher and were 13 cents away from the Nov contract high in the overnight, but ultimately closed lower along with lower soybean meal and oil despite a flash sale and decent export sales.
- A private sale of 256,000 metric tons of new crop soybeans was reported to unknown destinations, which makes the third flash sale in the past two days. All three sales were to unknown destinations and were for the 23/24 marketing year. It is possible that the purchaser is China.
- Today’s export sales report showed soybean exports at 27 mb, which was in line with expectations. Old crop commitments were at 1.939 bill, down 11% from last year’s pace, which is more than the USDA forecast of down 8%.
- Weather forecasts may have added some pressure to the soy complex today. While the next week is still slated to be hot and dry, forecasts for the second week and beyond are showing lower temperatures and better chances for rain into the crucial pod fill timeframe.
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. Since the roll the September contract has rallied to fill the gap and is poised to test the 1490 – 1505 resistance area of the recent highs. If prices retreat, initial support below the market is near 1400 with further support being in the 1350 – 1390 area.
Wheat
Market Notes: Wheat
- On today’s export sales report, the USDA reported wheat export sales of 8.6 mb for 23/24.
- After a two-sided trade, Chicago wheat closed the session with losses, KC was mixed, but MPLS posted gains. This could be due to the mounting concern about the spring wheat crop in Canda. While they might be getting some rain soon, that moisture may be too late to help the crop much.
- A Russian submarine fired missiles overnight, attacking the Odessa port in Ukraine. The wheat market did not seem to care much about this news though. It is worth noting that NATO said they will be increasing surveillance in the Black Sea with aircraft and drones.
- Argentina is still dry – it remains to be seen how that will impact their wheat planted acreage. Elsewhere, Agritel is estimating French soft wheat production up 1.1 mmt from last year at 34.8 mmt. This is a 1.3% increase from the five-year average.
- The spring wheat tour’s second day in North Dakota resulted in a yield estimate of 45.7 bpa. This is down 2 bpa from last year for the same area, and the USDA is projecting North Dakota yield at 47 bpa).
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 continue to be volatile, 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: Rising tensions in the Black Sea have fed the rally that tested the June high. Prices have become overbought and retreated. New bullish input will likely be needed to turn prices back higher and test the heavy resistance area of 777 – 807-1/2 between the recent high and the February high. If prices do retreat, initial support may be found near 690 – 700, and again around 610 – 650.
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: The September K.C. wheat contract posted a bearish reversal on 7/25 after testing heavy resistance near 920. Prices have become over bought and retreated. Support below the market is near 830 – 842, with further support near 763 – 778. Should prices reverse higher, heavy resistance remains in the 920 – 930 area.
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.
- No action is recommended for the 2024 crop. This year has been marked with volatility from adverse weather to geopolitical disruptions and has given us historically good prices to begin making early sales. While prices continue to be volatile, 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, Grain Market Insider will continue to consider making sales recommendations if prices improve while also keeping an eye on the downside should prices break support.
Above: September Minn. wheat’s rally of nearly 180 cents to test last winter’s highs culminated in a bearish reversal after the contract became mildly overbought. Prices have since retreated and may test the 865 – 845 initial support area, with further support near 800. If more bullish input is received, the market could turn higher again to retest the heavy resistance area near 950.
Other Charts / Weather
