Grain Market Insider: June 1, 2023
All prices as of 1:45 pm Central Time
| Corn | ||
| JUL ’23 | 592.5 | -1.5 |
| DEC ’23 | 530 | 8.25 |
| DEC ’24 | 510.5 | 5.75 |
| Soybeans | ||
| JUL ’23 | 1329.5 | 29.75 |
| NOV ’23 | 1169 | 22.5 |
| NOV ’24 | 1135 | 12.5 |
| Chicago Wheat | ||
| JUL ’23 | 610.75 | 16.5 |
| SEP ’23 | 624.25 | 16.25 |
| JUL ’24 | 672.75 | 16.75 |
| K.C. Wheat | ||
| JUL ’23 | 802.5 | 12 |
| SEP ’23 | 797.5 | 12.25 |
| JUL ’24 | 771 | 19.25 |
| Mpls Wheat | ||
| JUL ’23 | 789 | 9 |
| SEP ’23 | 790.75 | 8.25 |
| SEP ’24 | 767.25 | 6 |
| S&P 500 | ||
| SEP ’23 | 4271.25 | 39 |
| Crude Oil | ||
| AUG ’23 | 70.2 | 1.96 |
| Gold | ||
| AUG ’23 | 1995.1 | 13 |
Grain Market Highlights
- Corn ended the day mixed as July futures gave up early morning gains to close slightly lower, while New Crop contracts rallied on continued hot and dry weather worries.
- The soybean complex piggybacked on yesterday’s strong reversals, July soybeans and soybean oil led the gains with moves higher of 2.29% and 3.59% respectively.
- Wheat finished higher across the entire complex on follow-through buying from yesterday’s reversal in the two winter wheats. A weaker US dollar also likely helped spur some buying.
- A sharp daily break in the US dollar lent a helping hand to commodities. An almost certain resolution to US debt ceiling concerns, as well as Federal Reserve comments hinting at potential a pause to rate hikes, are likely pressuring the US dollar.
- To see updated US Drought Monitor and US 6-10 day Temperature and Precipitation Outlooks from the Climate 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 action is recommended at this time for Old Crop.
- No action is recommended at this time for Old Crop. July corn has had nearly a 60-cent rally in the last couple of weeks. The selloff from the recent high of 606-3/4 shows there is still a lot of volatility in the market, and that a changing weather forecast can push the market significantly in either direction. If you still have Old Crop to sell, consider using this rally to begin pricing some of those bushels. Don’t forget, there is about a 75-cent inverse between the July and September futures contracts, which could be lost when bids get rolled from one contract to the next in the next few weeks.
- No action is currently recommended for the 2023 new crop. The recent rally off the May low of 490-3/4 shows how volatile December corn can be on the turn of a weather forecast with little risk premium built into prices and a full growing season ahead of us. With dryness building in the Midwest, and an estimated fund short position in excess of 95k contracts, we continue to target the 590 – 630 range in the December futures to suggest adding cash sales. If you don’t happen to have any New Crop sold, you should consider targeting the 550 – 560 area to begin pricing bushels.
- Continue to hold current sales levels for the 2024 crop year. We will look for opportunities to make further sales as we move through the 2023 growing season as weather volatility builds.
Market Notes: Corn
- A break in the U.S Dollar Index, likely a resolution to the debt ceiling concerns, and strong outside markets supported corn futures for most of the session. July corn saw prices erode as demand concerns stay in the forefront of the market, and the competition for cheaper newly harvested Brazil corn is starting to come to the export market.
- New crop corn futures added some premium as precipitation chances for the heart of the Corn Belt were pushed further back into next week, but weather models are still looking for a significant pattern change into mid-June.
- Most recent drought monitor maps reflected the current dry conditions across the Corn Belt as areas of abnormally dry and Level 1 drought conditions developed across the key corn producing states of Iowa, Illinois, and Indiana.
- Private analysts continue to raise their Brazil 2nd crop corn production estimates higher, as StoneX raised their estimates to 102.9 MMT from their estimate of 100.8 MMT in April.
- The USDA will release weekly export sales on Friday morning, expectations are for old crop corn sales to range from –100,000 MT to 400,000 MT as U.S. corn continues to struggle against export competition.
Above: The July contract is beginning to show signs of exhaustion, but Wednesday’s bullish reversal is a positive sign that there is support near 575. If current prices can hold and close above the 50-day moving average near 610, the market would be poised to test April’s high of 647-1/2. Support below the market rests between 550 and 530, and again near the 2021 September low of 497-1/2.
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
- May was a rough month for soybeans with a 175 cent range, but the market is consolidating, and found support just above 1270. July soybeans continue to be oversold with a tight Old Crop balance sheet, and with dryness concerns building and a seasonal window that is conducive for upside volatility and opportunity, continue to hold on progressing any Old Crop sales for now.
- We recommend not adding to current sales levels for the new 2023 crop at this time. A quick planting pace with favorable conditions and South American competition have pressed US prices down nearly 17% from the beginning of the year. The potential remains for a tighter New Crop balance sheet, as the US Drought Monitor map remains concerning. We would consider recommending the next sales in the 1300 to 1350 area.
- Continue to hold off on pricing the 2024 crop. We look to make sales further into the 2023 growing season when selling opportunities tend to improve seasonally.
Market Notes: Soybeans
- Soybeans ended the day significantly higher and were led by gains in soybean oil and crude oil. Malaysian palm oil and other world veg oils have moved higher supporting soybeans. Soybean meal closed higher as well.
- The forecast for most of the Corn Belt is dry until the middle of this month with some scattered showers in the interim, but many producers need rain and higher futures are reflecting that. The market will likely trade weather in the absence of other news.
- The debt ceiling issue seems to be resolved with the agreement passing through the House and now on to the Senate where it will most likely be successful. Traders and markets have reacted positively to the resolution with the stock market working higher today too.
- One other concern for soybeans is China’s economy and the sluggish economic data that was released yesterday. Soybeans on the Dalian exchange have fallen to their lowest levels in two years at the equivalent of $14.47 a bushel. Sagging prices of Chinese stocks, copper, and crude oil have also pointed to a slowing economy.
Above: The market continues to show signs of being oversold and Wednesday’s bullish reversal indicates there is support near 1270 and follow through buying could lead to a market bounce. The next area of support could be found between 1237 – 1214 with nearby resistance near 1350 and 1420.
Wheat
Market Notes: Wheat
- The US dollar is sharply lower today, which may have given wheat some room to run higher.
- All three classes of US wheat futures are still at, or near, oversold levels on daily stochastics. After yesterday’s reversal and today’s follow through, a near term bottom may be in place.
- With the exception of dry Russian spring wheat areas, and drought in Spain, most of Europe and the Black Sea have seen favorable wheat crop conditions.
- China has recently received heavy rains in their wheat growing regions. This could cause quality issues, which may result in more of their wheat being used for feed.
- Today’s Drought Monitor map shows an increase in dry conditions throughout the eastern and central parts of the Midwest. The SRW crop should still be in good shape with plenty of soil moisture, but if the pattern persists it could be cause for concern.
- According to the UN, only 6 grain vessels have left Ukraine since the last deal extension. Russia is believed to still be restricting or delaying movement of ships.
Action Plan: Chicago 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
Chicago Wheat Action Plan Summary
- No new action is recommended for the 2022 crop. The market is down more than 300 cents from its October high and has become extremely oversold. The July contract may also post its 8th consecutive down month in a row at prices not seen since early 2021, even though wheat inventories of major exporting countries are anticipated to fall to 16 year lows. With the market being this oversold and a fund net position short nearly 113k contracts, we continue to eye the 640 – 670 range to clean up and market any remaining Old Crop inventory.
- We recommend not taking any action on the 2023 crop at this time. While the window of opportunity is quickly closing for Old Crop, it is still wide open for better opportunities ahead for New Crop. We are currently targeting a more aggressive window of 720 – 800 to suggest advancing sales and move more New Crop inventory.
- No action is currently recommended for the 2024 crop. Although the market is down nearly 17% from the beginning of the year, the July ’24 contract is finding support near 2021 lows. With major exporting countries’ stocks expected to fall to 16 year lows, and the great amount of economic and geopolitical uncertainty in the world, it wouldn’t take much to trigger a 23% retracement of the 2022 highs, toward the 700-750 level, which we are targeting to suggest adding coverage on next year’s crop.
Above: The market is currently oversold and testing support between 593 and 565, with the next area of possible support below the market near the September ’20 low of 533-1/4. Resistance above the market could be found between 670 and 724.
Action Plan: KC 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
KC Wheat Action Plan Summary
- No new action is recommended for the 2022 crop. Though most, if not all, of your Old Crop 2022 wheat may be sold, consider storing any remaining Old Crop, if possible, in anticipation of a short new crop this year, and marketing it along with the new crop.
- We continue to look for better prices before making any 2023 sales. Crop ratings overall are at historically low levels, and production concerns persist. Additionally, any unforeseen geopolitical changes in the Black Sea region could cause the market to bounce and retrace 25% towards the 2022 high.
- Patience is warranted for the 2024 crop. The 2024 market has limited liquidity, and it may be until mid-summer before recommendations are posted.
Above: Wednesday’s bullish reversal indicates that there is support near 760, and any follow through buying could be supportive with the market showing signs of being oversold. Resistance may be found above the market between 833 and 850, with further support resting below the market near 736-1/4.
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 action is currently recommended for the 2022 crop. With planting concerns and a seasonal tendency for old crop prices to increase over the next 4-5 weeks, we are continuing to wait for better prices to develop. The calendar is becoming a constraint though, and we’ll be looking to part with any remaining old crop bushels by mid-June or so.
- No action is recommended on the 2023 crop at this time. The September ’23 contract had a 120-cent range in the month of May where it found support just above 770. While the planting pace has largely caught up to the 5 year average, dryness in some areas is increasing. With the market still largely oversold and a full growing season ahead of us, we are not looking to make any sales right now.
- We continue to be patient to market any of the 2024 crop. The market for the 2024 crop continues to be illiquid, and it may be early summer before we post any recommendations, continue to be patient.
Above: The July contract continues to be weak and showing signs of being oversold. Additionally, open interest is falling, indicating liquidation. The market is showing signs of being oversold, which could be supportive if buying returns. Resistance currently sits between 820 and 855 and then the recent high of 888-1/2. Support below the market may be found between 770 and 760.
Other Charts / Weather
