Grain Market Insider: May 30, 2023
All prices as of 1:45 pm Central Time
| Corn | ||
| JUL ’23 | 594 | -10 |
| DEC ’23 | 525.25 | -9.25 |
| DEC ’24 | 506.5 | -6.75 |
| Soybeans | ||
| JUL ’23 | 1296.5 | -40.75 |
| NOV ’23 | 1153.25 | -36.25 |
| NOV ’24 | 1136.5 | -24.25 |
| Chicago Wheat | ||
| JUL ’23 | 591 | -25 |
| SEP ’23 | 605.5 | -24 |
| JUL ’24 | 654 | -19 |
| K.C. Wheat | ||
| JUL ’23 | 783.75 | -35.5 |
| SEP ’23 | 780.5 | -33.75 |
| JUL ’24 | 753.75 | -12.75 |
| Mpls Wheat | ||
| JUL ’23 | 793 | -25 |
| SEP ’23 | 794.5 | -24.75 |
| SEP ’24 | 757.5 | -26 |
| S&P 500 | ||
| JUN ’23 | 4216.25 | 3 |
| Crude Oil | ||
| JUL ’23 | 69.53 | -3.14 |
| Gold | ||
| AUG ’23 | 1976.3 | 13.2 |
Grain Market Highlights
- Decent export inspections were not enough to support the corn market as it fell on a more favorable weather forecast.
- Poor export inspections added fuel to the selloff in soybeans, which was triggered by a less threatening weather outlook.
- Soybean meal and oil also felt the pressure in the complex. Soybean oil led the way down losing 2.62 cents/lb, a 5.37% loss in the July, and crude oil added pressure with a 4.3% loss.
- With K.C. contracts leading the way, all three wheat classes succumbed to the seller’s wrath with help coming from neighboring corn and soybeans and lower global demand concerns.
- To see updated US 8-10 day Temperature and Precipitation Outlooks 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
- 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 contract to the other in the next month or so.
- No action is currently recommended for the 2023 new crop. Planting is nearly complete and the volatile weather months still ahead. December corn has dropped nearly 120 cents from its January high, and with that drop, much of the weather risk premium has eroded away. With drought still looming in the WCB and the funds carrying a 92k contract short position, we continue to target the 590 – 630 range in the December futures to suggest adding cash sales. If you happen to not have any New Crop sold, you should consider targeting the 550 – 560 area to begin pricing bushels.
- 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
- Extended weather forecasts are signaling a potential pattern change as the current ridge over the Corn Belt will be replaced by a more active weather pattern. This triggered profit taking and technical selling after last week’s rally, as corn futures traded lower to start the week.
- Corn demand remains a concern as weekly export inspections were marked at 52 mb, at the top of expectations, but still down 32% from last year and behind the pace needed to reach the USDA export target.
- The Brazilian corn harvest is starting to begin, and AgRural raised their projection for the Brazil second crop corn to 127.4 MMT up from 125.1 MMT for their April projection.
- For the first time since 2013, Chicago wheat prices are trading below corn futures prices on the front month as July Chicago Wheat (SRW) closed at $5.91 versus July corn at $5.94. Cheaper wheat may lead to additional demand concerns with the substitution of wheat into feed rations versus corn.
- The USDA is scheduled to release the first corn crop ratings on Tuesday afternoon. Expectations are for the crop to be 71% Good/Excellent, in line with the 5-year average. Last year’s first initial crop rating was 73% Good/Excellent. Corn planting is expected to be 92% complete, up from 81% last week.
Above: The July contract traded through the May 8th high of 600 and continues to show positive momentum. If current prices can hold and close above the 50-day moving average near 613, the market would be poised to test April’s high of 647-1/2. Support below the market rests between 550 and 530, and again near the 2021 September low of 497-1/2.
Corn Managed Money Funds net position as of Tuesday, May 23. Net position in Green versus price in Red.
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 lower, led down by a decline in soybean oil by over 5% and declines in soybean meal and crude oil as well. A change in the weather forecast for June put pressure on the markets today.
- Last week, the 10-day forecast was calling for warm and dry weather as planting wraps up, but over the weekend forecasts were updated to show cooler weather with more precipitation beginning in the middle of June. For now, it appears as though the market will be trading weather.
- Export inspections for soybeans came in at 9 mb which was in line with expectations, but still below the 17mb needed each week to reach the USDA’s estimate.
- Soybeans in both Brazil and China declined today, partially because of Brazil’s crop size and partially due to slowing demand in China. On the Dalian exchange, soybeans lost 1.8% and are trading at the equivalent of $14.80 per bushel.
- Soybean planting progress will likely show a large jump from last week’s 66% completion, and typically soybeans can handle early dry conditions better than corn can. So, the recent dryness is of less concern since it may not affect yields.
Above: The market traded through the July ‘22 low of 1304 in search of support, and the stochastic indicators continue to be oversold, which could be supportive if reversal action occurs. The next area of support could be found between 1237 – 1214, with nearby resistance near 1350 and 1420.
Soybeans Managed Money Funds net position as of Tuesday, May 23. Net position in Green versus price in Red.
Wheat
Market Notes: Wheat
- Wheat’s lower trade today is likely the result of a risk off session caused by improving chances for rain throughout the Midwest, spillover pressure from corn and beans, as well as concern about lower global demand for wheat due to financial and economic issues.
- Wheat inspections were decent at 14.0 mb, bringing the total 22/23 inspections to 719 mb.
- Despite Russian attacks over the weekend in the port of Odessa, one of the ports supposedly protected in the Black Sea grain deal, and reports of Ukrainian drones hitting Moscow, US wheat futures posted sharp losses in today’s session.
- Australia is starting to get some rain, although the El Nino weather pattern is growing, which generally means less rain for that region of the world. This may have contributed to today’s weakness as some drought concerns were reduced.
- Higher temperatures last week in North Dakota are likely to be reflected in an increase in spring wheat planting on this afternoon’s Crop Progress report.
- Friday’s Commitments of Traders report showed, as of May 23rd, funds holding 121,053 short contracts of Chicago wheat, which is equivalent to 605 million bushels.
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. The market is down more than 300 cents from its October high and has become extremely oversold. The July contract may also post its 8th consecutive down month in a row at prices not seen since early 2021, even though wheat inventories of major exporting countries are anticipated to fall to 16 year lows. With the market being this oversold and a fund net position short nearly 113k contracts, we continue to eye the 640 – 670 range to clean up and market any remaining Old Crop inventory.
- We recommend not taking any action on the 2023 crop at this time. While the window of opportunity is quickly closing for Old Crop, it is still wide open for better opportunities ahead for New Crop. We are currently targeting a more aggressive window of 720 – 800 to suggest advancing sales and move more New Crop inventory.
- 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 market is currently oversold and testing support between 593 and 565, with the next area of possible support below the market near the September ’20 low of 533-1/4. Resistance above the market could be found between 670 and 724.
Chicago Wheat Managed Money Funds net position as of Tuesday, May 23. Net position in Green versus price in Red.
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: With support failing near 807, and the July contract showing a head and shoulders formation, there is a potential downside objective near 740 with support near the May 2nd low of 736-1/4. The market is also showing signs of being oversold, which can be supportive if a reversal occurs. Resistance may be found above the market between 833 and 850.
K.C. Wheat Managed Money Funds net position as of Tuesday, May 23. Net position in Green versus price in Red.
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 is testing support near the 5/22 low of 793 and is showing signs of being oversold, which could be supportive if buying returns. Resistance currently sits between 830 and 855 and then the recent high of 888-1/2. If the current support area fails, support below the market may be found between 770 and 760.
Minneapolis Wheat Managed Money Funds net position as of Tuesday, May 23. Net position in Green versus price in Red.
Other Charts / Weather
