Grain Market Insider: May 3, 2023
All prices as of 1:45 pm Central Time
| Corn | ||
| JUL ’23 | 588.5 | 8.5 |
| DEC ’23 | 530.5 | 10.75 |
| DEC ’24 | 520.5 | 5.25 |
| Soybeans | ||
| JUL ’23 | 1417.5 | 6.75 |
| NOV ’23 | 1272.25 | 5 |
| NOV ’24 | 1238.75 | 7.75 |
| Chicago Wheat | ||
| JUL ’23 | 639.75 | 30.5 |
| SEP ’23 | 650.75 | 30.25 |
| JUL ’24 | 684.5 | 25.25 |
| K.C. Wheat | ||
| JUL ’23 | 785 | 44.75 |
| SEP ’23 | 778 | 42.25 |
| JUL ’24 | 762.75 | 36 |
| Mpls Wheat | ||
| JUL ’23 | 803.5 | 30 |
| SEP ’23 | 807 | 30.5 |
| SEP ’24 | 762.5 | 2.5 |
| S&P 500 | ||
| JUN ’23 | 4148 | 11.25 |
| Crude Oil | ||
| JUL ’23 | 68.37 | -3.18 |
| Gold | ||
| AUG ’23 | 2046 | 3.5 |
Grain Market Highlights
- Corn ended higher on the day on carryover strength from the wheat markets as historically low crop numbers were noted in the Oklahoma crop tour.
- Soybeans closed higher on strength in soybean oil, and neighboring corn and wheat markets.
- Soybean meal and oil continued in their reactions to yesterday’s record March crush numbers, as meal struggled from large supplies and weakening demand. Soybean oil gained strength from higher inferred biofuel demand on lower-than-expected supplies.
- All three wheat markets were sharply higher following KC contracts, as Oklahoma was noted as potentially having its smallest crop since 1955.
- The grain markets appeared to add a level of “war premium” on reports of a foiled drone attack on the Kremlin by Ukraine. Ukraine denies the attacks, but the result is more concern over the world’s grain supply.
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Corn
Action Plan: Corn
Calls
2022
No Action
2023
Continued Opportunity
Enter(Buy) DEC ’23 Calls:
560 @ ~ 22c & 610 @ ~ 12c
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. 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.
- There is continued opportunity to buy December ’23 560 and 610 calls. The December corn contract is extremely oversold and shows signs of support with a hook reversal after making a new low for the move. Additionally, with the market approximately 50 cents off the recent high and 115 cents off the fall high, it has eroded enough risk premium ahead of the long growing season that call valuations look attractive here.
- 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 futures reversed off early session lows, and the results of the Oklahoma Winter Wheat crop tour revealed one of the worst crops since 1955, triggering a strong short covering reaction in the wheat market, spilling over and supporting the corn market.
- The planting pace of this year’s crop is expected to be more complete across the corn belt this week as forecasts are calling for warmer and drier weather into the second week of May.
- The weekly Ethanol Production report saw mixed numbers, as weekly production was improved over last week, and ethanol stockpiles were lower than expected. The overall pace of corn usage for ethanol is trending below USDA projections at this point of the marketing year.
- Demand concerns will still be a focus with the release of weekly export sales totals on Thursday morning. Expectations are for corn sales to be from -450,000 mt to 800,000 mt for the next two marketing years. Export sales totals will be influenced by the cancellations of Chinese purchases last week.
- The strong closing price action posted a bullish reversal on the corn charts after retesting previous lows. With a market holding an oversold status, this could allow for additional price strength on technical buying and covering of short positions.
Above: The market is severely oversold and has exhibited a second reversal after making a new low for the move, indicating short-term selling may be exhausted, which could be seen as supportive. 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
- 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 supplies flowing.
- We recommend not adding to current sales levels for the new 2023 crop at this time. Our research indicates there is about a 74% likelihood of improved prices moving into the June time frame. Also, weather conditions will begin to dominate the market as we begin to move through planting and 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 lower for most of the day but ultimately ended higher along with soybean oil following the Federal Reserve announcement that cast a bearish shadow over the markets.
- The Federal Reserve raised rates by 25 basis points but hinted that they may be done with hikes for the year. The US Dollar reacted well to the news, but crude oil stayed suppressed, down 3 dollars a barrel.
- Brazil’s basis levels had fallen sharply in the past two months but recently have improved by 75 cents as harvest wraps up and farmers slow selling. This has added some support to the soy complex.
- In the US, soy planting is ahead of schedule at 20% complete with northern states showing the most sluggish pace. Temperatures in the North are forecast to warm over the next two weeks, which should speed up planting.
Above: July soybeans traded lower to post a new low for the move and reversed to settle near unchanged. The market will need further confirmation to continue in either direction following two consecutive reversals. Support lies near the recent low of 1392 with further support near 1350. Should support hold and buyers enter the market, resistance may be found between 1450 and 1460, and again near 1500.
Wheat
Market Notes: Wheat
- The wheat market saw significant reversals today in all three US wheat futures classes with gains of 30 or more cents.
- News outlets are reporting an attempted drone attack on the Kremlin in Russia. This may have been the catalyst behind today’s rally, as war premium was added back into the market.
- Offering support to wheat price is the Oklahoma wheat tour’s projection of their crop at 54.3 mb. This would be the lowest production since 1955.
- The American weather model predicts up to seven inches of rain next week in parts of Nebraska and Kansas. The European model is somewhat in conflict, though, with a drier forecast.
- Egypt fulfilled their tender from Romania and Russia. US SRW wheat was cheaper but was also at a freight cost disadvantage. Additionally, the Russian wheat was purchased at $260 per ton, whereas Russia previously encouraged a $275 export price floor.
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. 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. Corn and K.C. wheat are near historic premiums to Chicago wheat, which could lend support to the Chicago contracts if HRW production concerns persist, or if any production concerns develop for 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: While the market is considered extremely oversold, it did post an outside-day up pattern, where the range is larger than that of the previous day/s and closed higher than it opened. This market set-up could be considered bullish and be supportive. Initial resistance could be found near 668 and again between 718 and 724, while 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
- 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 despite recent the recent rain. 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 is oversold, and posted an outside day up, which is a type of reversal pattern where the current price action overtook the previous day’s and closed near the day’s highs. This pattern could be supportive should buyers enter the market on new positions or to cover existing short positions. Support may be found near 742 with further chart support near 690. Initial resistance lies between 835 and 850 and then near 886.
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. We look for better pricing opportunities for the 2022 crop with potential planting concerns and a seasonal tendency for better prices as we move through springtime.
- No action is recommended on the 2023 crop at this time. The snowy and cold winter has given rise to wet conditions and planting concerns which may present good selling opportunities in the coming weeks.
- 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: While the market is considered extremely oversold, it did post an outside-day up pattern, where the range is larger than that of the previous day/s and closed higher than it opened. This market set up could be considered bullish and can be supportive should buying return to the market. Nearby support may be found between 770 and 760, while resistance may be found near 870 and 895.
Other Charts / Weather
