Grain Market Insider: May 17, 2023
All prices as of 1:45 pm Central Time
| Corn | ||
| JUL ’23 | 561.5 | -19.75 |
| DEC ’23 | 499 | -6.25 |
| DEC ’24 | 492 | -7 |
| Soybeans | ||
| JUL ’23 | 1337 | -27 |
| NOV ’23 | 1187.5 | -19.5 |
| NOV ’24 | 1165 | -19.75 |
| Chicago Wheat | ||
| JUL ’23 | 625.5 | -22 |
| SEP ’23 | 637.75 | -22.5 |
| JUL ’24 | 676.5 | -17.75 |
| K.C. Wheat | ||
| JUL ’23 | 885.5 | -9.75 |
| SEP ’23 | 873.25 | -11.25 |
| JUL ’24 | 785.75 | -20 |
| Mpls Wheat | ||
| JUL ’23 | 859.75 | -19 |
| SEP ’23 | 859.75 | -20.75 |
| SEP ’24 | 773 | -16.5 |
| S&P 500 | ||
| JUN ’23 | 4167.5 | 44.5 |
| Crude Oil | ||
| JUL ’23 | 72.88 | 2.04 |
| Gold | ||
| AUG ’23 | 2006.5 | -5.7 |
Grain Market Highlights
- Cancellations reported by the USDA totaling 272k mt in export sales to China weighed heavily on the July corn futures contract, with carryover weakness also spreading to the deferred contracts.
- Continued technical selling on weakening demand and favorable weather drove prices lower in the soybean complex as funds liquidated more long positions.
- Russia has agreed to extend the Black Sea Grain Initiative for another 60 days, adding further selling pressure to both corn and wheat markets.
- Poor conditions and low estimated yields from the K.C. wheat crop tour lent support to K.C. contracts. While Chicago and Minneapolis contracts took the brunt of the selling, pressured by weak demand and better crop outlooks.
- Hawkish Fed commentary gave legs to the US Dollar which continued its climb higher, adding some weakness to commodities.
- 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
- The corn market saw additional technical selling as prices pushed through levels of support, triggering long liquidation and momentum selling, boosted by strong selling pressure across the grain complex. July futures traded to their lowest close since December 2021, and December corn closed under the key psychological $5.00 level.
- A cancellation of 272,000 MT (10.7 mb) old crop corn by China only added to the selling pressure and fueled additional demand concerns. The corn market is anticipating further old crop demand adjustments, adding to a growing carry out picture.
- Brazilian second crop corn is still developing without any major overall issues. The forecasted record corn production allows for cheaper export offerings which will make it difficult for the US exporters to compete on the global market.
- The overall weather forecast stays supportive for the majority of the Corn Belt with above average temperatures and with rainfall average to below, which should keep the planting window over the next couple weeks very favorable.
- The USDA will release weekly export sales totals for last week on Thursday morning, and expectations are for -500,000 MT to 300,000 MT of old crop sales. If even at the top end of expectations, the US corn export program is struggling to reach USDA export projections for the marketing year.
Above: Stochastic indicators have crossed over to the downside indicating there may be more weakness ahead, though the market is showing signs of being oversold. With July corn searching for support, it may find some between 550 and 530, and again near the 2021 September low of 497-1/2, while nearby resistance sits near 600 and again near the 50-day moving average.
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 traded sharply lower again today with front month July leading the way lower as both soybean oil and meal fell. The move lower in soybean oil came despite a jump in crude oil. Palm oil was down for the third straight day on rising production and weaker demand.
- November soybeans are at the lowest level since December of 2021, but closed a chart gap left in July of last year which could be a technical level of support.
- The selloff comes as the USDA forecasts a record crop for the US and Brazil, while larger outside influences having to do with the economy and recession, pressure commodities.
- With Brazil’s soybean harvest complete and the bulk of soybeans that could not be stored sold, producers are holding on to their soybeans as an inflation hedge which is driving up premiums in Brazil. This could have a positive effect on US prices.
Above: While July soybeans posted a bearish reversal on 5/08 and have continued to follow-through to the downside, the market is showing signs of being oversold, which could be supportive if reversal action occurs. The next area of support may be found near 1288 and 1181, the July 2022 and November 2021 lows respectively. Nearby resistance may be found between 1420 and 1450, and again near 1500.
Wheat
Market Notes: Wheat
- Wheat plunged to double-digit losses in all three US classes after Turkey announced that a deal had been reached to extend the Black Sea grain corridor for another 60 days.
- The day 1 yield estimate of 29.8 bpa on the HRW wheat crop tour is the worst finding since the tour began in 2003. Normally the yield is closer to 45 bpa. This could explain why KC futures were not down as hard as Chicago and Minneapolis.
- Paris milling wheat futures were also sharply lower due to the extension of the Black Sea agreement. The front month September contract lost 9.00 euros per metric ton.
- Not offering any support to US wheat futures is the US Dollar as it trends higher, breaking the 103 level today.
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 pierced the low end of the recent trading range but remains in the broader range from earlier this month. If buying returns and the market 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 posted a new recent high and reversed lower, a negative development, and 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 posted a bearish reversal and open interest has fallen off somewhat, indicating some profit taking, and the potential for weakness ahead. Initial resistance above the market sits between 888 and 895, while initial support may be found near 831 and then between 770 and 760.
Other Charts / Weather
