Grain Market Insider: July 7, 2023
All prices as of 1:45 pm Central Time
| Corn | ||
| SEP ’23 | 487.25 | -11.75 |
| DEC ’23 | 494.5 | -12 |
| DEC ’24 | 497.75 | -7.25 |
| Soybeans | ||
| AUG ’23 | 1427.75 | -20.5 |
| NOV ’23 | 1317.75 | -21.75 |
| NOV ’24 | 1227.25 | -16.5 |
| Chicago Wheat | ||
| SEP ’23 | 649.5 | -8.5 |
| DEC ’23 | 666.5 | -10 |
| JUL ’24 | 693.5 | -11.25 |
| K.C. Wheat | ||
| SEP ’23 | 818.25 | -25.5 |
| DEC ’23 | 819.5 | -25.25 |
| JUL ’24 | 776.25 | -21.75 |
| Mpls Wheat | ||
| SEP ’23 | 847.75 | -10.25 |
| DEC ’23 | 854.5 | -10.25 |
| SEP ’24 | 798.5 | -7 |
| S&P 500 | ||
| SEP ’23 | 4463.75 | 16.75 |
| Crude Oil | ||
| SEP ’23 | 73.77 | 1.98 |
| Gold | ||
| OCT ’23 | 1950.5 | 15.9 |
Grain Market Highlights
- Disappointing weekly export sales and a more favorable weather forecast for the Corn Belt continue to add pressure to corn prices.
- A friendly forecast for rain in the central Midwest, including much of Iowa and Illinois, helped to pressure the soybean complex lower across the board.
- Percentage losses in soybean meal nearly equaled those of soybeans. Higher energy markets were unable to rescue soybean oil from its losses today, as it followed suit along with lower palm oil prices.
- Despite a huge break in the US dollar, better than expected yields in France and a meeting between Turkish and Ukrainian leaders to discuss the Black Sea Export deal helped press all three wheat classes lower.
- Today’s jobs numbers showed fewer than expected US jobs created in June, while also revising the number of jobs created in May down by 33,000. The news may have weighed negatively on commodities with the perception of a slowing economy, even though the US dollar traded sharply lower.
- To see the current NOAA US 6 – 10 day and 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
New Alert
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
- Selling pressure returned to the corn market to end the week, influenced by weakness across the grain markets and weather models forecasting better rain potential through the weekend. Dec corn finished ¼ cent lower on the week as prices consolidated this week around the $5.00 level.
- The USDA weekly export sales are still disappointing overall. The USDA announced new sales of 251,700 MT of old crop and 418,000 MT of new crop sales last week. Weekly exports were 707,500 MT, down 17% from last week and 24% from the four-week average.
- The USDA announced a flash sale of corn to Mexico this morning. Mexico bought 180,000 MT of corn, which 135,000 MT was for new crop and 45,000 MT for old crop.
- Brazil shipped just over 1 MMT of corn in the month of June, but U.S. prices continue to struggle on talk of Chinese buying of Brazilian corn as the window for Brazil corn exports is about to rally to its peak over the next few months.
- Long range forecasts limit corn market rallies as 6-10 day and 8-14 day outlook forecasts from the NOAA are staying cooler and wetter than average.
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.
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
- An outlook for rain and cool temperatures for much of the northern and central Midwest in the 6 – 10 day forecast led the soybean complex lower, with the hope of reduced crop stress and some much needed moisture.
- The area of the US soybean crop that is in drought areas dropped 3% to 60%. While this is still a significant area, given the recent rain throughout the Corn Belt, it is expected to drop further.
- Weekly Export sales came in within expectations, but toward the low end, with net sales of 6.9 mb for 22/23, down 17% from last week’s report and 45% below the 4-week average. On the other hand, 23/24 sales came in above expectations at a friendly 21.8 mb.
- According to Brazil’s grain exporters association, Anec, Brazil is expected to export 9.4 mil metric tons of soybeans in July, which is down from June’s 13.9 mt total. For the year, its expected that the country may export a total of 96.3 mil mt, an increase of 17- 18 mmt over last year’s total.
- According to OilWorld, an analytical agency based in Germany, world biodiesel production is estimated to grow 8% this year. That is largely due to increases in the US with soybean oil being the primary feedstock, and Indonesia where palm oil is primarily used. The increased use of both feedstocks is supportive to bean oil and soybeans to maintain current world supplies.
- China’s Shanghai Securities News stated that the country’s sow herd shrank by 1.68% in June. This being the largest decline in months, suggests that farmers are culling more and more of their sows to cut losses, further reducing their feed demand.
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.
Wheat
Market Notes: Wheat
- Despite a sharp drop in the US dollar today, all three classes of US wheat futures posted losses, and despite the lowest US wheat stocks in 16 years, which should also offer support, the wheat market looks weak.
- The USDA reported an increase of 14.9 mb of wheat export sales for 23/24 and a decrease of 0.1 mb for 24/25.
- Better than expected yields of French wheat are weighing on both US and Paris futures. So far, the French crop is reported to be about 10% harvested.
- A meeting between leaders of Ukraine and Turkey to discuss an extension of the Black Sea grain deal took place Friday. They reportedly also discussed a prisoner swap and efforts to end the war. This comes despite Russia insisting they will not extend the agreement that ends on July 17th.
- From a technical perspective, Chicago wheat futures are at or near oversold levels on daily stochastics. This could mean that a technical correction to the upside is due.
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
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