Grain Market Insider: May 16, 2023
All prices as of 1:45 pm Central Time
| Corn | ||
| JUL ’23 | 581.25 | -11.25 |
| DEC ’23 | 505.25 | -9.75 |
| DEC ’24 | 499 | -7.75 |
| Soybeans | ||
| JUL ’23 | 1364 | -36.75 |
| NOV ’23 | 1207 | -24.25 |
| NOV ’24 | 1184.75 | -20 |
| Chicago Wheat | ||
| JUL ’23 | 647.5 | -13.25 |
| SEP ’23 | 660.25 | -11.75 |
| JUL ’24 | 694.25 | -9.25 |
| K.C. Wheat | ||
| JUL ’23 | 895.25 | -3 |
| SEP ’23 | 884.5 | -1 |
| JUL ’24 | 805.75 | -2.75 |
| Mpls Wheat | ||
| JUL ’23 | 878.75 | 5.5 |
| SEP ’23 | 880.5 | 5.5 |
| SEP ’24 | 789.5 | 0.75 |
| S&P 500 | ||
| JUN ’23 | 4132.5 | -17.5 |
| Crude Oil | ||
| JUL ’23 | 70.69 | -0.4 |
| Gold | ||
| AUG ’23 | 2013.1 | -29 |
Grain Market Highlights
- Weighed down by a quick planting pace and favorable weather, corn finished in the bottom two-thirds of its recent range.
- With planting well ahead of average and rising South American production estimates, the soybean market posted its largest down day this year, as speculators continue to liquidate long positions.
- Also adding pressure to soybeans was a weak world veg oil market that led soybean oil to near 5% losses.
- A slower-than-average spring wheat planting pace lent support to Minneapolis contracts, while profit taking on the recent rally led the Chicago and nearby K.C. contracts lower.
- To see the updated U.S. 7- day Total Precipitation outlook 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 markets saw technical selling follow through from the softer price action from Monday’s close. Historically, high corn planting pace and strong selling pressure in the soybean market added to the selling pressure.
- US corn planting moved to 65% planted, which was slightly below expectations, but still 6% above the 5-year average. Key corn-producing states of Iowa and Illinois were over 80% complete, while northern states are still lagging the multi-year averages.
- Crop emergence was also above 5-year averages as 30% of the crop has germinated. This was up from 12% last year at this time and a 5-year average of 25%.
- The overall weather forecast stays supportive for the majority of the Corn Belt with above-average temperatures and rainfall average to below, which should keep the planting window over the next couple weeks very favorable.
- July corn could find support on the lack of producer selling and a friendly cash basis as producers are looking to complete crop planting. Selling pressure seemed to slow near the 580 price level, which held into the close. Dec corn charts look more technically challenged, placing a new near-term low on Tuesday, pressured by a potentially growing corn supply picture.
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 led by a big selloff in soybean oil, and though soybean meal was the strongest leg in the complex, it closed lower as well.
- Further pressure came from yesterday afternoon’s planting progress which showed soybean planting 49% complete and 13% above the 5-year average. Iowa and Illinois led the way at 69% and 77% respectively, but North Dakota lags at just 2%.
- While crude oil was slightly lower, the recent decline in palm oil has been a large bearish factor for soybean oil as demand from India decreases.
- South American crop watcher, Dr. Michael Cordonnier, raised his production estimate for Brazil’s crop to 155 mmt, matching the USDA’s estimate, but left his estimate for Argentina’s crop unchanged at 23 mmt, versus the USDA’s 27 mmt.
- Outside markets may have been a factor in today’s selloff as fund managers are weary of the future of the economy, though there are upcoming meetings to raise the debt ceiling.
- With Argentina’s soybean production so small, they will have trouble meeting export expectations for soybean meal, and the US will likely pick up some of that business which would be friendly. Yesterday there was a reported sale of soybean meal to Poland from the US.
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 heavy selling pressure in the grains, wheat had an overall mixed close. Chicago was red across the board, but both Kansas City and Minneapolis contracts ended the session with some green.
- The winter wheat crop was rated 29% good to excellent, which is unchanged from last week. However, the Kansas wheat tour will likely find dismal conditions, with 68% of their crop rated poor to very poor.
- According to the USDA, 40% of the spring wheat crop has been planted, compared to 57% average.
- There has still not been an agreement on the Black Sea Grain Initiative. The deal is set to expire on May 18th and Ukraine will reportedly host online talks. However, Russia does not appear to want to allow an extension.
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
