Grain Market Insider: July 6, 2023
All prices as of 1:45 pm Central Time
| Corn | ||
| SEP ’23 | 499 | 13.75 |
| DEC ’23 | 506.5 | 13 |
| DEC ’24 | 505 | 6 |
| Soybeans | ||
| AUG ’23 | 1448.25 | -20.5 |
| NOV ’23 | 1339.5 | -15.5 |
| NOV ’24 | 1243.75 | -8 |
| Chicago Wheat | ||
| SEP ’23 | 658 | -16.25 |
| DEC ’23 | 676.5 | -13.75 |
| JUL ’24 | 704.75 | -10.25 |
| K.C. Wheat | ||
| SEP ’23 | 843.75 | -2.5 |
| DEC ’23 | 844.75 | 0.25 |
| JUL ’24 | 798 | 6 |
| Mpls Wheat | ||
| SEP ’23 | 858 | 0.5 |
| DEC ’23 | 864.75 | 1.25 |
| SEP ’24 | 805.5 | 5.5 |
| S&P 500 | ||
| SEP ’23 | 4445.75 | -38 |
| Crude Oil | ||
| SEP ’23 | 71.84 | -0.04 |
| Gold | ||
| OCT ’23 | 1935.7 | -10.5 |
Grain Market Highlights
- Driven by updated crop conditions and weather conditions, the corn market traded both sides of unchanged before settling on the positive side in sympathy with soybeans and wheat.
- Oversold conditions and the unwinding of short corn and long soybean spreads likely added to the short covering bounce in the corn market, as traders covered positions and took profits following the market’s fall from the June highs.
- A non-threatening forecast and weak demand took the soybean complex lower with December soybean oil leading the way with a 3.5% loss.
- After making new highs for the move in yesterday’s trade, soybean oil traded through yesterday’s lows as traders booked profits from the recent rally on overbought conditions.
- Better than expected yields in Illinois and continued low Russian export prices weighed on Chicago and K.C., wheat while Minneapolis was able to maintain small gains.
- To see the current US Drought Monitor and the NOAA US 7-day precipitation forecast map, 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. 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.
- Continue to hold current sales levels for the 2024 crop year. The Dec 24 contract is trading weather much like the rest of the market and posted nearly an eighty-cent range between 5/18 and 6/21 as dry conditions affect the ’23 crop and the potential carryout for the 2024 crop year. For now, continue to be patient as Grain Market Insider would like to see prices in the 570 – 600 level before considering making additional sales recommendations for the 2024 crop.
Market Notes: Corn
- Corn futures saw short covering in an oversold market to finish with double digit gains on Thursday. With both weakness in the soybean and wheat trade overall, corn futures were likely the backside of that trade.The market saw a risk off mentality overall, and that meant covering short corn positions.
- Chinese corn prices have been on the rise since April due to adverse weather, and rumors of China purchasing Brazilian corn for November delivery has helped support global corn prices, aiding the short covering rally.
- Weather will stay as a focus. The short-term weather forecast is showing some concerns about the northwestern Corn Belt staying on the dry side, bringing concerns regarding overall crop yield.
- A potential forecast for cooler temperatures next week should only help those areas that did receive recent rainfall, as corn looks to enter the pollination stage in the central Corn Belt.
- The USDA will release weekly corn export sales numbers on Friday morning. Expectations are for old crop and new crop sales to range from 0-500,000 MT each respectively, as export demand is still lacking overall.
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 has pierced the 490 – 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.
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 ended the day lower, along with both soybean meal and oil after futures became overbought during the past week, and weather forecasts turn wetter in the South over the next week.
- Brazil’s export group, ANEC, reported that June soy exports rose to 9.44 mmt, which compares with 7 mmt in June of last year. With Brazil taking so much control of the soy export market, US export remain very sluggish.
- The 10-day forecast is showing rain for Iowa, northern Illinois, the northern Plains, and Great Lakes regions. The northern areas are the hardest pressed for moisture right now and these rains could provide some needed relief.
- Soy conditions are currently the worst rated for this time of year since 2012 at only 50% good to excellent, falling 1% from the previous week. The decline in ratings came after a week of beneficial rain, so it is unknown what ratings will look like after this week’s rain amounts which are forecasted to be decent but better in the South.
Above: The USDA’s Stocks and Acreage report gave the market a bullish shot in the arm with a much-reduced acreage estimate. If the market can continue to rally beyond the 1450 area, 1500 – 1550 could be its next target. If not, support could be found between 1340 and 1300 with further support near 1270.
Wheat
Market Notes: Wheat
- Despite the uncertainty in the Black Sea, US wheat futures closed mostly lower today. Not only are there worries about sabotage of Ukrainian nuclear power plant, but overnight Russian missile strikes hit the city of Lviv. Russia is also said to be taking back parts of eastern Ukraine.
- Better than expected yields of SRW wheat in Illinois may have put pressure on the Chicago market today. Higher yields of French wheat also offered resistance. Reportedly, that crop yield is 5% above the 10 year average.
- Cheap Russian wheat exports continue to act as the anchor for US futures. Russian FOB values are said to be as low as $232 per metric ton. Additionally, one estimate of Russia’s wheat crop (Agritel) was increased by 2.5 mmt to 85.7 mmt. For reference the USDA is using a figure of 85 mmt.
- Tunisia is reported to have purchased 100,000 mt of wheat from Russia. The US was not totally left on the sidelines, however. Taiwan flour millers purchased 56,000 mt of US wheat.
- A Canadian port strike in British Columbia could eventually slow grain movement there, although it is not a major concern so far.
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.
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.
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.
Other Charts / Weather
