Grain Market Insider: May 12, 2023
All prices as of 1:45 pm Central Time
| Corn | ||
| JUL ’23 | 586.25 | 4 |
| DEC ’23 | 508.75 | -5 |
| DEC ’24 | 504 | -2.75 |
| Soybeans | ||
| JUL ’23 | 1390 | -15.5 |
| NOV ’23 | 1223.75 | -24.25 |
| NOV ’24 | 1203.5 | -18.5 |
| Chicago Wheat | ||
| JUL ’23 | 635 | 7.75 |
| SEP ’23 | 647.5 | 8.5 |
| JUL ’24 | 682.5 | 6.25 |
| K.C. Wheat | ||
| JUL ’23 | 877 | 35.5 |
| SEP ’23 | 861 | 33 |
| JUL ’24 | 792 | 7.75 |
| Mpls Wheat | ||
| JUL ’23 | 846 | 9.25 |
| SEP ’23 | 848.25 | 8.25 |
| SEP ’24 | 771.75 | 3.75 |
| S&P 500 | ||
| JUN ’23 | 4117 | -26.75 |
| Crude Oil | ||
| JUL ’23 | 70.01 | -0.87 |
| Gold | ||
| AUG ’23 | 2039.3 | -0.6 |
Grain Market Highlights
- Corn ended mixed as traders absorbed larger than expected carry-outs for both 22/23 and 23/24 US corn while finding carryover strength from wheat.
- The USDA left Argentina’s soybean crop size unchanged from last month, this brought world soybean ending stocks in well above pre-report estimates for both the 22/23 and 23/24 crop years, weighing on soybeans.
- All three wheat classes rallied to end the week as the USDA estimated US wheat inventories will come in at a 16-year low.
- The US Dollar Index rallied sharply to end the week on fears of the US debt ceiling expiry and banking fallouts.
- To see the updated U.S. Drought Monitor 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
Updated as of 5/10/2023
- No action is recommended at this time for Old Crop. At this point in the crop marketing year most, if not all, of your Old Crop 2022 corn should be sold out. With the substantial inverse between old and new crop contract months, large rallies for Old Crop corn may be difficult to come by as we move forward. Consider using 40 to 50-cent rallies to sell any remaining inventory.
- No action is currently recommended for the 2023 new crop. While the crop is going in the ground fast, the most volatile part of the growing season remains ahead. We’re going to maintain an opportunistic posture for now, targeting 590 – 630 versus December corn to suggest any further cash sales.
- 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
- Despite overall bearish WASDE report numbers, strength in the wheat market supported front month corn futures to end the week. Bull spreading was noted, buying old crop and selling new, helping limit selling pressure in the corn market overall.
- USDA estimated Old Crop corn carryout at 1.417 billion bushels, using a 75 mb cut in export demand to increase the supply picture. This total was 51 mb above trade expectations.
- The most negative side of the USDA WASDE report was 23/24 carryout projections of 2.222. The USDA used a baseline yield of 181.5 bushels/acre and 92 million planted acres of corn to estimate production at 15.265 billion bushels, up 1.54 billion bushels from last year.
- With the USDA report passed, the market will shift its focus back to the weather, which appears mostly favorable for planting pace while still providing adequate moisture to allow this year’s crop to have a strong start.
- USDA raised projected Brazilian corn crop to 130 MMT, up 5MMT from last month as acreage has increased, and the crop has been supported by favorable weather overall. The record Brazilian production will be direct competition to U.S. export business well into the summer.
Above: The market is recovering from being oversold and continues to be under the influence of the bullish reversal from 5/03. Nearby resistance sits near 612 and again near the 50-day moving average, while support for the July contract rests between the recent low of 569 and the July ’22 low near 562.
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
Updated as of 05/09/2023
- We recommend holding current sales levels for Old Crop. We are beginning to push into the May-June seasonal window of opportunity, where prices could bounce as processors begin to push to keep tight on-hand supplies flowing, and seasonal weather concerns can get priced into the market.
- We recommend not adding to current sales levels for the new 2023 crop at this time. As we work through planting season, our research indicates there is a 66% likelihood of better prices moving into early June. Additionally, weather conditions will begin to dominate the market as we begin to move into the growing season, and we may consider recommending sales in the 1400 to 1450 area if any significant concerns arise.
- 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 closed sharply lower with new crop leading the way down after a bearish WASDE report. Soybean meal closed slightly higher while soybean oil moved lower with crude oil.
- Brazilian soybean production estimates were raised to 155 mmt which was above trade guesses and above April’s WASDE by 1 mmt. Surprisingly, Argentinian production was left unchanged at 37 mmt despite many private analysts estimating it much lower near 35 mmt or below.
- The USDA estimated the 23/24 soybean ending stocks at 335 mb which was higher than expected, and production was pegged at a record high 4.51 bb. Ending stocks for 22/23 were 215 mb, above the last estimate of 210 mb.
- Argentina has imported a record 539,000 mt of Brazilian soybean meal to offset its own lost supplies, but analysts have reported that Argentina’s capacity to import meal is limited to just 8 mmt per year. This has been supportive for US soybean meal prices as the US may be able to export more.
Above: July soybeans posted a bearish reversal on 5/08 and experienced continued downside follow-through. Support lies near the recent low of 1385 with further support near 1350. With support holding buyers may enter the market, resistance may be found between 1450 and 1460, and again near 1500.
Wheat
Market Notes: Wheat
- The USDA projected 23/24 US all wheat production at 1.659 bb (vs the average trade guess of 1.782 bb)
- The USDA pegged US wheat 22/23 ending stocks at 598 mb, compared with an expectation of 603 mb. For 23/24 carryout is estimated at 556 mb vs the average trade guess of 602 mb.
- The Black Sea grain deal negotiations are said to have not gone well, with the talks ending yesterday with no resolution.
- July KC wheat rallied sharply to end the week after the USDA estimated HRW production at 514 mb vs an expectation of 591 mb (and 531 mb last year).
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
Updated as of 05/09/2023
- No new action is recommended for the 2022 crop. At this point in the crop marketing year most, if not all, of your Old Crop 2022 wheat should be sold out. With large rallies difficult to come by at this time of year, consider using 40 to 50-cent rallies to sell any remaining inventory.
- We recommend not taking any action on the 2023 crop at this time. Managed Money funds currently hold their largest net short position since 2018, with a near record of about 40% of the total open interest in the Chicago contracts. Such a large position could be very supportive should the funds buy back their positions if market dynamics change due to HRW concerns or supply concerns in corn.
- No action is currently recommended for the 2024 crop. While we are looking for stronger markets to present themselves in this currently weak environment, there are factors that could be supportive, should they occur. Such as any escalation of the Ukraine war or disruption of grain movement in the Black Sea, or a significant devaluation of the US Dollar back to 2021 levels, as that market is showing characteristics of a potential drop.
Above: The market experienced a bearish reversal on 5/08 with follow through selling. Currently, the slow stochastics indicator may be crossing over to the downside, indicating upward momentum has slowed for the time being. Nearby resistance can be found between the recent high of 669 and 718, while key support may be found near 592.
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
Updated as of 05/09/2023
- 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: The July contract continues to show upward momentum, though open interest has fallen off somewhat, indicating some profit taking. If the market can break through nearby resistance, it could further test the 886 to 902 resistance area. Otherwise, initial support may be found near 769, with key support near 740.
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
Updated as of 05/10/2023
- 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. Wet conditions have delayed some planting and raised some prevent planting concerns which could continue to influence the market and generate better selling opportunities in the coming months. We are in no hurry to sell right now with everything going on.
- We continue to be patient to market any of the 2024 crop. Due to the lack of liquidity for the 2024 crop, there may not be any recommendations until late spring or early summer. This is the time for patience, not action.
Above: The market continues to show upward momentum, though open interest has fallen off somewhat, indicating some profit taking. Resistance still resides above the market near 870 and 895, while support may be found between 770 and 760.
Other Charts / Weather
