Grain Market Insider: June 29, 2023
All prices as of 1:45 pm Central Time
| Corn | ||
| JUL ’23 | 581 | -9 |
| DEC ’23 | 528.5 | -8.25 |
| DEC ’24 | 507 | -7 |
| Soybeans | ||
| JUL ’23 | 1483 | 32 |
| NOV ’23 | 1265.75 | 0.75 |
| NOV ’24 | 1206 | -1.5 |
| Chicago Wheat | ||
| JUL ’23 | 653 | -2.75 |
| SEP ’23 | 667.5 | -2.25 |
| JUL ’24 | 708.5 | -4.25 |
| K.C. Wheat | ||
| JUL ’23 | 794.25 | -6.5 |
| SEP ’23 | 800 | -5.75 |
| JUL ’24 | 773.75 | -10 |
| Mpls Wheat | ||
| JUL ’23 | 807.5 | 3.75 |
| SEP ’23 | 825.5 | 7.25 |
| SEP ’24 | 794 | 0.75 |
| S&P 500 | ||
| SEP ’23 | 4426.75 | 9.25 |
| Crude Oil | ||
| AUG ’23 | 69.89 | 0.33 |
| Gold | ||
| AUG ’23 | 1916.6 | -5.6 |
Grain Market Highlights
- Continued long liquidation and technical selling, paired with less than stellar export sales, pressured the corn market ahead of tomorrow’s USDA Stocks and Acreage report.
- First Notice Day is tomorrow, and with reduced position limits for the July contract, it appears short July position holders were in a race to cover positions with July closing sharply higher and the July/August spread gaining 26 cents.
- New Crop soybean contracts closed nearly unchanged, balanced by higher soybean meal and lower soybean oil. With traders squaring meal positions ahead of tomorrow’s report while bean oil saw more technical follow through selling after yesterday’s bearish reversal.
- Weak export sales and a higher US Dollar added resistance to the wheat markets with Chicago and K.C. following corn lower, while Minneapolis closed higher.
- The US Dollar broke out of its recent range to the upside and traded to a high of 103.44, on hawkish comments from Jerome Powell and a better-than-expected GDP report. The move higher may add a layer of resistance to the grain markets if it continues.
- To see the current US Drought Monitor and US 7-day Precipitation forecast, 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
- Further technical selling and long liquidation pushed the corn market moderately lower. December corn failed to find support at the June 8 price gap at $6.33 ½. Confirmation of rainfall in recent forecasts and longer-term weather models holding a wetter and cooler bias pressure the market.
- The selling in December corn futures has been aggressive as prices have lost nearly 16% over the past six trading sessions and has been measured as one of the steepest six-session drops in corn prices during the month of June over the past three decades.
- Export demand remains a concern as the weekly USDA Export Sales report showed new sales of 140,400 MT of old crop and 123,500 MT of new crop. The total sales were at the lower end of analysts’ expectations.
- Weather models remain bearish for prices, as the 8-14 day forecast is looking at trending overall cooler temperature and above average precipitation over the majority of the corn belt. Rainfall looks to be targeted over Iowa, Illinois and into Indiana, areas that shifted drier on the latest drought monitor maps.
- Drought monitor maps are reflecting the dry conditions, as the estimate is up to 70% of corn acres in the U.S. are experiencing some form of drought, up 10% from last week.
- The market may be poised for some short covering before Friday’s 11:00 am USDA Planted Acreage and Grain Stocks report, as traders could look to square positions. Expectations are for corn acres to be at 91.8 million acres, down slightly from the March planting estimates. Grain stocks for the quarter are expected to be near 4.25 billion bushels, down 2.3% from last year.
Above: The weather has been a dominant feature of the current market and since May 18, September corn has had a 127-cent swing and back, testing 625 resistance and falling through 540 support. Without more bullish news, prices could slide further, where support may be found around the psychological level of 500, between 490 – 505, with key resistance above the market near 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. Changes in weather forecasts and crop conditions will continue to dominate the market. With having just recommended making a cash sale, and with one of the most volatile USDA report days of the year coming this Friday, we would need to see the market rally to 1400 – 1450 area before we would consider recommending any additional sales for the 2023 crop. Otherwise, in light of current crop conditions, we will suggest holding tight on further cash sales for now.
- 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 significantly higher in the July contract as First Notice Day approaches tomorrow, but deferred contracts only ended slightly higher. Soybean meal closed higher while only July and August soybean oil ended higher.
- The USDA’s Planted Acreage and Stocks report will be released tomorrow, and analysts are expecting soybean acres to increase slightly, while stocks are estimated to decline.
- Significant rains are currently moving through central Illinois, but they are accompanied by strong winds in some areas with reports of up to 70 and 80 mph. More rain is in the forecast for Iowa, Illinois, and Indiana over the next 5 days.
- Weekly export sales were disappointing again with an increase of 8.4 mb for 22/23 and an increase of 0.6 mb for 23/24. Sales were down 28% from the prior 4-year average. Last week’s export shipments of 7.0 mb were below the 11.4 mb needed each week to achieve the USDA’s export estimates.
Above: The market continues to keep its eye on the weather. The August contract rallied in June and tested the 1450 resistance area near the 100 and 200-day moving averages before it slid back. If the market receives additional bullish news and can 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 holding in positive territory for much of the day, Chicago wheat posted small losses at the close. The silver lining may be that the market is probing for a bottom at these lower support levels.
- The USDA reported an increase of 5.7 mb of wheat export sales for 23/24. The USDA is estimating 725 mb of wheat exports for 23/24 and last week’s shipments of 5.8 mb are behind the 14.1 mb pace needed to meet that goal.
- The US Dollar Index is trending higher today and above the 103 level. Along with poor export data, these factors are likely limiting the upside for wheat futures.
- Also offering resistance to US wheat is the fact that Canada revised higher their spring wheat seeding to the largest acreage since 2001. Recent rains in the northern US are likely to improve spring wheat conditions as well. Interestingly, Minneapolis wheat was the only US class to post gains today in the face of these negative factors.
- The US Ag Attaché in Australia is projecting their wheat crop at 29 mmt, down about 10 mmt from last year. The reduction is a result of anticipated drought conditions caused by the El Nino weather pattern.
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. Grain Market Insider is done with the 2022 crop, and there will be no New Alerts posted for the 2022 crop going forward.
- 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.
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
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. 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.
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
Active
Sell SEP ’23 Cash
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.
- There continues to be an opportunity to sell 2023 New Crop MINNEAPOLIS Wheat. Weather dominates the market right now, and friendlier forecasts have pushed prices below the 822 support level. Closing below that 822 support signals that the recent uptrend off the May lows may have ended, which poses the risk that the change in trend could erode the price further in the weeks ahead. The first risk being, price drops to the May low of 771, which is where first support comes in. If that level doesn’t hold, then the next risk could be in the 680-710 window. Although making a sale in a down market may be uncomfortable, it’s important at times to have a Plan B with the objective of trying to avoid having to sell bushels at even lower prices in the future if a downtrend takes hold.
- 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 trading lower, it will need additional bullish news to turn it back around. Should the market continue to fall, support may be found between 770 and 730.
Other Charts / Weather
US 7 day precipitation forecast courtesy of NOAA, Weather Prediction Center.