Grain Market Insider: June 12, 2023
All prices as of 1:45 pm Central Time
| Corn | ||
| JUL ’23 | 617.25 | 13 |
| DEC ’23 | 549.25 | 18.75 |
| DEC ’24 | 514.75 | 10.25 |
| Soybeans | ||
| JUL ’23 | 1372.75 | -13.75 |
| NOV ’23 | 1209 | 4.75 |
| NOV ’24 | 1171 | 8 |
| Chicago Wheat | ||
| JUL ’23 | 633.75 | 3.5 |
| SEP ’23 | 646 | 4.25 |
| JUL ’24 | 690 | 3.75 |
| K.C. Wheat | ||
| JUL ’23 | 796.5 | -1.25 |
| SEP ’23 | 793.75 | 0 |
| JUL ’24 | 766.25 | 3.25 |
| Mpls Wheat | ||
| JUL ’23 | 814.25 | 2.5 |
| SEP ’23 | 814.75 | 2.25 |
| SEP ’24 | 788.5 | 2 |
| S&P 500 | ||
| SEP ’23 | 4368.5 | 19.75 |
| Crude Oil | ||
| AUG ’23 | 67.22 | -3.11 |
| Gold | ||
| AUG ’23 | 1970.6 | -6.6 |
Grain Market Highlights
- Increasing dryness and a forecast for limited moisture rallied July corn to test the 100-day moving average for the first time in two months.
- Weak export inspections and Fund spreading weighed heavily on Old Crop contracts, while New Crop was able to close on the positive side of unchanged as weather premium is added to the market.
- Carryover strength from corn helped to boost Chicago and Minneapolis contracts, while K.C. contracts saw continued pressure from better than expected crop numbers in Friday’s USDA report.
- Limited rainfall this past weekend brought the buyers out for the New Crop contracts as the market turned its attention to the weather, and with some rain chances expected in the next week a keen eye will be on Iowa, Illinois, and Missouri.
- To see the updated NOAA 8-14 Day Temperature and Precipitation Outlooks and 7-day NOAA Precipitation Outlook 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 action is recommended at this time for Old Crop. July corn has had nearly a 60-cent rally in the last couple of weeks. Expect volatility to remain in the market, 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 an 80-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 recommended at this time for New Crop. With dryness building in the Midwest and an estimated fund short position in excess of 40k 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
- Corn futures finished higher on the session as recent rainfall lacked the coverage and intensity that was anticipated, causing additional short covering as prices pushed higher through some levels of resistance.
- Weekly crop ratings will be released on Monday afternoon, and expectations are for an additional drop in corn ratings to 62% good/excellent, down 2% from 64% last week.
- The weather will stay as the market’s focus as weather models are variable over the next 10 days as overall rainfall still looks limited, pressuring the stressed crop.
- Demand remains a concern as the weekly export inspection report was released on Monday morning. Last week, U.S. exporters shipped 1.169 MMT of corn, near the top end of expectations, but still behind the pace needed to reach the USDA corn export goal. Corn shipments are still down 31% year–over-year.
- Brazil corn harvest of their second crop corn is starting to begin. Private analyst, AgRural, forecasted that Brazilian farmers have harvested 2.2% of the area planted for corn. This is down from 6.6% last year.
Above: The breakout above the recent congestion area has the market knocking on the door of the next resistance area between the 100-day moving average near 630 and the April high of 647-1/2, and while a test of the April high is within reach, the market is showing some signs of being overbought. Initial support below the market rests between 595 and 575, with additional support near 550.
Corn Managed Money Funds net position as of Tuesday, June 6. Net position in Green versus price in Red. Money Managers net bought 6,573 contracts between May 31 – June 6, bringing their total position to a net short 44,492 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
- The trend in the soybean market since early April has been down. Since the bullish reversal on 5/31, the market has found some support near 1270 and has formed a possible head-and-shoulders bottom. The Old Crop balance sheet remains on the tight side, and as dryness continues to build, we remain in a seasonal window that is conducive to upside opportunity and volatility. 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 greatly pressured soybeans in April and May. 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 mixed with the July contract posting losses and deferred contracts gaining as first notice approaches and funds likely rolled out of some of their Jul contracts and into Sep and Nov. Soybean meal closed slightly higher, while soybean oil fell alongside crude.
- Export inspections for soybeans were low at 5.2 mb and put total inspections for 22/23 at 1.794 bb which is down 3% from last year. The USDA is estimating soybean exports at 2.000 bb for 22/23 which is down 7% from last year.
- Weather has been a key factor for the moves in corn and this past weekend’s rains were spotty and underwhelming, but soybeans have more time before rains become crucial and so did not keep up with the gains in corn today.
- Crop progress will be released later today, and estimates are that the good to excellent rating in soybeans will drop to 60% from 62% last week, and that 96% of the crop will be planted which would be up from 91% last week.
Above: After a strong close last week, July soybeans will look for follow-through momentum to turn around a down-trend that has been in place since April. This week’s strong close above the 20-day moving average is a great sign of a short-term trend change higher. If prices were to set back, support should be found near 1340 with nearby resistance near the 1420 area.
Soybeans Managed Money Funds net position as of Tuesday, June 6. Net position in Green versus price in Red. Money Managers net bought 13,452 contracts between May 31 – June 6, bringing their total position to a net long 13,981 contracts.
Wheat
Market Notes: Wheat
- After a two-sided trade, the wheat complex closed mostly higher. Wheat acted as a follower today and was likely pulled higher by the corn market into the end of the session.
- Weekly wheat export inspections were pegged at 9.1 mb., bringing total 23/24 inspections to 12 mb. The USDA is estimating 23/24 wheat exports at 725 mb versus 775 for 22/23.
- Some support may have come from higher Paris milling wheat futures. Dry conditions in Spain and northern France may be the reason for Matif wheat’s uptrend since the May 31 lows, and because of this dry weather, one analyst group is estimating a decline in European wheat production of 2.1 mmt.
- Managed funds are estimated to still be net short 122,280 contracts of Chicago wheat. With uncertain weather, in addition to global political and economic uncertainties, this could prime the wheat market for a short covering rally.
- On Friday’s USDA report, US HRW wheat production was increased by 11 mb, and this is being attributed to recent rains in Texas and Oklahoma that helped the crop. Kansas production was left unchanged in the report.
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. With good price action to start June, the market may be positioned for a short covering rally as new crop harvest quickly approaches. 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 new action is recommended for the 2024 crop at this time. Prices have rallied nicely off of lows to start the month of June. With continued Black Sea tensions July of 2024 futures prices should be able to build off of the recent lows. We are currently targeting the 750-775 area to advance further on sales.
Above: The market appears to have put in short-term lows to end the month of May near the 575 level. A close above the 660 area would be a supportive sign of a trend change to higher. The next area of possible support, if the late May lows do not hold, would be below the market near the September ’20 low of 533-1/4. Resistance above the market could be found between 670 and 724.
Chicago Wheat Managed Money Funds net position as of Tuesday, June 6. Net position in Green versus price in Red. Money Managers net bought 7,524 contracts between May 31 – June 6, bringing their total position to a net short 119,474 contracts.
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. 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.
Above: Last week Wednesday’s bullish reversal indicates that there is support near 760. US harvest selling pressure should keep upside limited to any near-term rallies. Resistance may be found above the market between 833 and 850, with further support resting below the market near 736-1/4.
K.C. Wheat Managed Money Funds net position as of Tuesday, June 6. Net position in Green versus price in Red. Money Managers net sold 2522 contracts between May 31 – June 6, bringing their total position to a net long 7,106 contracts.
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 after breaking back below the 800 level this week. With winter wheat harvest on the horizon, spill over selling pressure could plague the spring wheat market in the weeks to come. 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.
Minneapolis Wheat Managed Money Funds net position as of Tuesday, June 6. Net position in Green versus price in Red. Money Managers net sold 1,271 contracts between May 31 – June 6, bringing their total position to a net short 8,974 contracts.
