Grain Market Insider: May 15, 2023
All prices as of 1:45 pm Central Time
| Corn | ||
| JUL ’23 | 592.5 | 6.25 |
| DEC ’23 | 515 | 6.25 |
| DEC ’24 | 506.75 | 2.75 |
| Soybeans | ||
| JUL ’23 | 1400.75 | 10.75 |
| NOV ’23 | 1231.25 | 7.5 |
| NOV ’24 | 1204.75 | 1.25 |
| Chicago Wheat | ||
| JUL ’23 | 660.75 | 25.75 |
| SEP ’23 | 672 | 24.5 |
| JUL ’24 | 703.5 | 21 |
| K.C. Wheat | ||
| JUL ’23 | 898.25 | 21.25 |
| SEP ’23 | 885.5 | 24.5 |
| JUL ’24 | 808.5 | 16.5 |
| Mpls Wheat | ||
| JUL ’23 | 873.25 | 27.25 |
| SEP ’23 | 875 | 26.75 |
| SEP ’24 | 788.75 | 17 |
| S&P 500 | ||
| JUN ’23 | 4144 | 6 |
| Crude Oil | ||
| JUL ’23 | 71.08 | 1.06 |
| Gold | ||
| AUG ’23 | 2040.5 | 1.4 |
Grain Market Highlights
- Carryover strength from the wheat market and better weekly export inspections numbers helped corn to close on the positive side of unchanged, with Old Crop gaining on New Crop.
- Despite neutral to bearish demand news in last week’s USDA report and weak export inspections numbers today, soybeans found carryover strength from neighboring corn and wheat.
- July soybean meal and oil closed mixed, with meal showing a bearish reversal on profit taking from its recent rally, while soybean oil posted gains, trading in sympathy with crude oil.
- The buying continued in all three wheat classes on low US crop prospects and the possible ending of the Black Sea Grain Initiative.
- While the US Dollar was moderately lower on the day, there are thoughts that the recent rally may be short lived due to the possibility of steady to lower interest rates ahead.
- To see the updated U.S. 6-10 day temperature and precipitation outlooks from the National Weather Service, 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 05/10/2023
- 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
- Corn prices saw some price recovery off overnight lows as a strong wheat market helped trigger some light short covering in the corn market.
- The USDA weekly corn export inspections were improved over last week with 1.174 MMT (46.2 mb) being inspected for shipment last week. Even with the lowered USDA projection, this total is still behind the recommended USDA pace and 33% behind last year. Demand remains a concern and limiting factor.
- The Mississippi River lock and dam system is back in operation after being closed the past couple weeks for flooding concerns. Improved river movement could help front-end demand and support a firm cash market.
- The USDA weekly crop progress numbers are expected to see corn planting at 68% complete, up from 49% last week and still ahead of the 5-year average.
- The National Corn Index, which reflects cash markets across the Corn Belt, is trading at $6.21 (+0.034) and a premium to July futures, reflecting a still relatively tight domestic supply of corn and firm cash market tone.
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 higher today along with soybean oil, supported in part by carryover strength from the corn market and a higher crude oil market.
- In soybean meal, the deferred contracts closed higher, while the Jul and Aug contracts posted bearish reversals, which could lead to additional profit taking on any further weakness.
- The USDA reported a private export sale of 100,000 tonnes of US soybean meal for delivery to Poland for the 22/23 marketing year.
- April NOPA soybean crush was pegged at 173.232 million bushels, which was down from 185.81 mb in March, but still a record for April. Trade was expecting 174.173 mb.
- Weekly soybean inspections for the week ending Thursday, May 11, were poor at 5.4 mb which puts total inspections for 22/23 at 1,764 mb which is down 1% from the previous year.
- In Brazil, harvest has wrapped up, but producers are unwilling to sell at current spot prices. Instead of making cash sales, some producers are opting to barter their soybeans in exchange for inputs and fertilizer.
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
- Despite negotiations, there currently has been no resolution to the extension of the Black Sea Grain Initiative, which is set to expire in a few days on May 18th.
- The USDA is projecting Kansas winter wheat production at 191.4 mb, the lowest number in 50 years.
- Paris milling wheat traded higher today, adding further support to all three classes of US wheat futures.
- Wheat inspections of 5.4 mb bring total 22/23 wheat inspections to 688 mb. The USDA is still estimating 775mb of wheat exports.
- The strengthening El Nino weather pattern could mean global weather changes, including drought conditions for Australia’s wheat crop.
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: July wheat has found some support just below the market near 626. If it can break through nearby resistance around 669 and the 50-day moving average, it may be in position to test the April high of 718. 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 the 912, it may make a run towards 966. Initial support may be found near 833, 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 with the market nearing the 100-day moving average, which may provide some additional resistance. The market may still encounter resistance above the market near 870 and 895, while initial support may be found near 831 and then between 770 and 760.
Other Charts / Weather
