Grain Market Insider: June 7, 2023
All prices as of 1:45 pm Central Time
| Corn | ||
| JUL ’23 | 604.25 | -3.75 |
| DEC ’23 | 530.75 | -10.25 |
| DEC ’24 | 504 | -7.25 |
| Soybeans | ||
| JUL ’23 | 1360.75 | 7.5 |
| NOV ’23 | 1178.5 | -6.25 |
| NOV ’24 | 1134.5 | -10.75 |
| Chicago Wheat | ||
| JUL ’23 | 616.75 | -11 |
| SEP ’23 | 627.75 | -12.25 |
| JUL ’24 | 674 | -14.25 |
| K.C. Wheat | ||
| JUL ’23 | 788 | -32.25 |
| SEP ’23 | 786 | -28.5 |
| JUL ’24 | 752.25 | -21.25 |
| Mpls Wheat | ||
| JUL ’23 | 794 | -22.5 |
| SEP ’23 | 796.5 | -23 |
| SEP ’24 | 770 | -15 |
| S&P 500 | ||
| SEP ’23 | 4317.5 | -15.5 |
| Crude Oil | ||
| AUG ’23 | 72.62 | 0.77 |
| Gold | ||
| AUG ’23 | 1956.3 | -25.2 |
Grain Market Highlights
- Corn closed sharply lower as weather forecasts continue to point towards cooler and wetter conditions for much of the Corn Belt late next week.
- Soybeans ended mixed with Old Crop contracts higher on still tight domestic supplies, while New Crop contracts fell lower on a more favorable US weather outlook into the back half of June.
- Soybean meal traded in line with soybeans as nearby contracts were higher, while deferred contracts slumped lower and soybean oil futures were lower across the board.
- Wheat finished sharply lower with double-digit losses across all three wheats despite this week’s news of the Ukrainian dam collapse.
- To see updated 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. 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 a 70-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 prices traded lower on the session as strong selling pressure in the wheat market, and the weather forecast staying on the wetter side for the Corn Belt going into next week limited buying interest.
- On Friday, the USDA will release the June WASDE report, and after the recent rally prices may have been squaring up and profit taking going into that report at the end of the week. The June WASDE is expected to show a weaker demand tone and overall increasing corn supplies.
- The USDA will release the weekly Exports Sale report on Thursday morning. U.S. corn export sales are expected to remain weak as US exporters struggle for business against cheaper global competition.
- Overnight and afternoon weather models are still looking for a change in the current weather patterns, moving to a cooler and wetter overall pattern next week. If realized, the weather premium in the market will likely be pulled out on the fear of improved production with the beneficial rain.
Above: The July contract is beginning to show signs of exhaustion, but Friday’s bullish surge higher 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 were mixed today with front month July ending higher, but the deferred contracts closing lower as forecasts turn wetter. Soybean meal was bull spread and soybean oil closed lower despite higher crude oil.
- Traders have been fixated on weather and lately, it has turned to a more favorable cooler and wetter forecast over the next 7 days. Old crop supplies remain tight supporting the July contract.
- Friday’s WASDE report will likely show a revision to Argentinian production to be lower as the USDA has lagged behind other analysts to reflect the damage the drought has done to the soy crop. Trade will also look for an old crop carryout of 223 mb and 345 mb of new crop.
- US soy exports have been slow due to Brazil’s significantly cheaper offerings, and analysts are now expecting June exports to be 13.1 mmt vs 9.9 mmt a year ago with China as the major buyer.
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. Support should be found near the recent lows of 1300 with nearby resistance near the 1420 area.
Wheat
Market Notes: Wheat
- Russia’s FOB offers are now said to be as low as $229 per metric ton. This is pressuring the US export market, as well as futures prices. Additionally, Egypt purchased 55,000 mt of wheat from Russia at some of these low levels.
- Despite the recent news that a Ukrainian dam was destroyed by Russia, wheat traded sharply lower today. The damage is said to have caused flooding in agricultural areas, but the trade does not appear concerned.
- Russian spring wheat areas could be facing drought with temperatures as high as 90-100 degrees. And due to the El Nino weather pattern, Australian wheat production could also be reduced below what the USDA is estimating to just 26.2 mmt.
- Scattered showers across the Corn Belt today likely took away some weather premium in corn and soybeans with some of this weakness spilling over into the wheat market as winter wheat harvest looms on the horizon.
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 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.
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. Prices mostly failed to react to the heightened tensions in the Black Sea region to start this week. US harvest selling pressure should keep an upside 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.
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.
Other Charts / Weather
