Grain Market Insider: May 18, 2023
All prices as of 1:45 pm Central Time
| Corn | ||
| JUL ’23 | 555.25 | -6.25 |
| DEC ’23 | 500.75 | 1.75 |
| DEC ’24 | 493 | 1 |
| Soybeans | ||
| JUL ’23 | 1333.25 | -3.75 |
| NOV ’23 | 1187 | -0.5 |
| NOV ’24 | 1162 | -3 |
| Chicago Wheat | ||
| JUL ’23 | 611.75 | -13.75 |
| SEP ’23 | 624.5 | -13.25 |
| JUL ’24 | 665.25 | -11.25 |
| K.C. Wheat | ||
| JUL ’23 | 857 | -28.5 |
| SEP ’23 | 845.5 | -27.75 |
| JUL ’24 | 763 | -22.75 |
| Mpls Wheat | ||
| JUL ’23 | 828.5 | -31.25 |
| SEP ’23 | 830.75 | -29 |
| SEP ’24 | 769.25 | -3.75 |
| S&P 500 | ||
| JUN ’23 | 4186.5 | 15 |
| Crude Oil | ||
| JUL ’23 | 71.89 | -1 |
| Gold | ||
| AUG ’23 | 1978.7 | -25 |
Grain Market Highlights
- Corn export sales for the week ending May 11th came in at a net negative 13.3 million bushels for the 22/23 marketing year, which weighed on the corn market.
- Soybeans and soybean meal continued their recent liquidation trend while soybean oil managed to rally despite lower crude oil prices.
- Net cancellations in weekly export sales for the 22/23 marketing year pressured the market, K.C. wheat contracts were hit hardest by sellers as all three wheats worked lower.
- The US Dollar continued its winning streak adding outside pressure once again to commodities.
- To see the updated U.S. Drought Monitor and June Temperature Outlook 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
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 finished mixed on Thursday as weak export demand and competition from cheaper South American corn limited gains on the front end of the market.
- The USDA released weekly export data this morning and corn sales continue to disappoint. For the week of May 11, the 22/23 crop year saw net cancellations of 13.3 mb, a market year low, and new crop sales were light at 2.9 mb. These totals are well below sales needed to reach USDA targets.
- The large second crop Brazil corn is making good progress with limited concerns as harvest is getting closer. The expected record crops have Brazil offering corn for export at a discount to US prices.
- Overall, US weather looks to stay favorable as corn planting is hitting the home stretch. The market will be keeping a close eye on the northern Plains and the slow progress in that region with prevent plant dates starting as early as May 25.
- A strong US Dollar and aggressive selling in the wheat market limited the upside potential in the corn market as US wheat prices are still expensive compared to the global wheat market.
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 either side of unchanged today but ultimately closed lower, led down by soybean meal. Soybean oil traded higher despite a drop in crude oil.
- Export sales were poor last week with the USDA reporting an increase of just 0.6 mb of soybeans for 22/23, far below the average trade guess. Export sales for 23/24 were 24.4 mb, while export shipments were 6.9 mb and below the 12.6 mb needed each week to meet the USDA’s expectations.
- With Brazil’s harvest complete and estimated at 5.7 billion bushels, premiums there are rallying on an FOB basis, from close to 200 under Chicago futures to 57 under yesterday.
- Planting pace has accelerated everywhere but North Dakota and Minnesota. And, while showers are forecast across the central and southern Plains, the forecasts into June look mostly dry.
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
- Net cancellations of 1.5 mb of 22/23 wheat export sales did not offer any support to the market today. However, an increase of 12.4 mb for 23/24, while not stellar, does look better.
- Day 2 of the HRW crop tour found a yield of 27.5 bpa. Last year at this time it was 37 bpa.
- Kansas City contracts finished almost 30 cents lower, despite the friendly Kansas wheat tour yield projection coming in 13 million bushels below current USDA projections. Good rains have recently fallen in Kansas, many feel these rains were too little too late to help the maturing wheat crop.
- The US Dollar Index again made a new near term high today, offering weakness to wheat futures.
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
