Grain Market Insider: May 22, 2023
All prices as of 1:45 pm Central Time
| Corn | ||
| JUL ’23 | 571 | 16.5 |
| DEC ’23 | 509 | 9.25 |
| DEC ’24 | 500.5 | 7.75 |
| Soybeans | ||
| JUL ’23 | 1341.25 | 34 |
| NOV ’23 | 1197 | 21.5 |
| NOV ’24 | 1170.75 | 14.75 |
| Chicago Wheat | ||
| JUL ’23 | 606.25 | 1.25 |
| SEP ’23 | 618.75 | 1.75 |
| JUL ’24 | 661.5 | 0.25 |
| K.C. Wheat | ||
| JUL ’23 | 825.75 | 1.5 |
| SEP ’23 | 817.75 | 2.25 |
| JUL ’24 | 752.25 | 1 |
| Mpls Wheat | ||
| JUL ’23 | 809.5 | 5.5 |
| SEP ’23 | 812.5 | 5.5 |
| SEP ’24 | 763 | 10.75 |
| S&P 500 | ||
| JUN ’23 | 4215.25 | 10.5 |
| Crude Oil | ||
| JUL ’23 | 72.1 | 0.41 |
| Gold | ||
| AUG ’23 | 1993.1 | -7.2 |
Grain Market Highlights
- Export inspections of 52 mb helped spark a short cover rally in July corn and recover somewhat from being oversold.
- Short covering from extremely oversold conditions with carryover strength from soybean oil and a flash sale of 225k MT of meal gave support to the soybean market.
- Rumors of delayed vessels inbound for Ukraine and support from the neighboring corn market helped all three wheat markets close on the positive side of unchanged.
To see the updated US 8-14 day Temperature and Precipitation Outlooks from the Climate Prediction Center, scroll down to the Other Charts/Weather Section.
Note – For the best viewing experience, some Grain Market Insider content is best viewed with your phone held horizontally.
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
- No action is recommended at this time for Old Crop. July corn touched the lower end of the target range of 575 – 600 with a high of 575-1/2 which put it 30 cents off last week’s low. If you still have Old Crop bushels to sell, consider using this rally to begin pricing some of those remaining bushels and adding incremental sales up to 600. Another thing to consider is that there is about a 65-cent inversion from the July contract to the September contract, which may be lost when bids roll from one to the other in the next month or so.
- 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 lacking overall bullish news, the corn market rallied on short covering. With the corn market being oversold, technical buying pushed prices back higher.
- Weekly export inspections were within expectations on Monday at 52.1 mb of corn inspected for export last week. China took shipments on 12.4 mb of that total. Even with this week’s totals, the current inspection pace is approximately 100 mb behind the pace needed to reach the USDA export target.
- Corn market bulls are watching weather forecasts, which show above average temperatures and below average moisture across the corn belt going into early June. While the conditions should allow crop progress to continue, the dry pattern building across the heart of the corn belt may trigger some additional short covering and add potential weather premium in an oversold market.
- Weekly crop progress numbers will be released on Monday afternoon. The market is anticipating corn planting to be 82% complete as of May 21, up from 65% last week. Close attention will be on the northern Plain’s progress with the first prevent planting date around the corner on May 25 for areas of the northern states.
- The overall tone for cash basis remains soft, as producers have been moving more supplies, and exporters are concerned about demand for those supplies, which is limiting basis potential.
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
- July soybeans found support last week just above the 1300 level. While the month of May has been a rough one for the soy complex, the market remains in a seasonal window conducive for upside volatility and opportunity. Given the oversold nature of the market, combined with a still tight Old Crop domestic balance, continue to hold on progressing any Old Crop sales for now.
- We recommend not adding to current sales levels for the new 2023 crop at this time. As we continue through planting season, favorable weather conditions and South American competition have pressed US prices down nearly 17% from the beginning of the year. The potential remains for a tighter New Crop balance sheet, as the US Drought Monitor map remains concerning. We would consider recommending the next sales in the 1350 to 1400 area.
- 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 higher and took back the losses from Friday and then some. A move higher in soybean oil brought the soy complex higher despite a decline in palm oil today.
- Bullish news came from a sale to the Philippines of 225,000 metric tons of soy cake and meal, but export inspections for last week were poor as expected.
- Soybean inspections totaled 5.7 mb for the week ending Thursday, May 18, and total inspections are now at 1,771 mb for 22/23, down 2% vs the previous year.
- Planting progress is expected to move along swiftly as weather forecasts improve, and the weekly crop progress report is expected to show planting and emergence well ahead of the 5-year average.
- Overall, there hasn’t been much positive fundamental news to explain today’s rally, so it was likely technical due to being oversold. Support for the July contract is near the 13-dollar mark.
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
- The USDA reported wheat export inspections of 15 mb, bringing the total 22/23 inspections to 703 mb, they also estimated 775 mb of US wheat exports.
- There have been reports that Ukraine claims Russian inspections are delaying vessels bound for the port of Pivdennyi, despite the extension of the Black Sea export corridor deal.
- Spread traders were active in the Minneapolis contracts selling the front month contracts and buying the deferred, possibly indicating supply concerns later on.
- Sov Econ estimated Russian wheat production at 88 mmt, 1.2 mmt higher than their previous estimate.
- There may be some concerns with Russian spring wheat areas drying out with forecasts of higher temperatures on the way.
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
- No new action is recommended for the 2022 crop. As the 2022 crop marketing year begins to wind down, most if not all, your Old Crop bushels should be sold out, and with large rallies difficult to come by at this time of year. Consider selling rallies in the 640 to 670 range to market 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 wheat market is searching for support, and open interest has been increasing on the recent selloff, which implies sellers may be adding to their positions. If buying returns and the market can break through nearby resistance between 655 and 669, it may be in position to test the April high of 718. Support below the market may be found between 593 -565.
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
- 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 bearish reversal lower on 5/17, a negative development, with some profit taking as indicated by a drop in open interest. If the market can reverse and break through the 885 to 917 resistance area it could make a move towards 966. With the market looking for support, some may be found between 736 and 716.
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
- 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. The market for the 2024 crop continues to be illiquid, and it may be early summer before we post any recommendations, continue to be patient.
Above: The market posted a bearish reversal on 5/17 and stochastic indicators have crossed to the downside, indicating momentum has shifted downward for now. Initial resistance may be found between 830 and 855, with support between 770 and 760.
Other Charts / Weather
