Grain Market Insider: May 4, 2023
All prices as of 1:45 pm Central Time
| Corn | ||
| JUL ’23 | 589 | 0.5 |
| DEC ’23 | 528.5 | -2 |
| DEC ’24 | 517.75 | -2.75 |
| Soybeans | ||
| JUL ’23 | 1417.75 | 0.25 |
| NOV ’23 | 1268.5 | -3.75 |
| NOV ’24 | 1232.25 | -6.5 |
| Chicago Wheat | ||
| JUL ’23 | 645 | 5.25 |
| SEP ’23 | 656.75 | 6 |
| JUL ’24 | 689.5 | 5 |
| K.C. Wheat | ||
| JUL ’23 | 798.25 | 13.25 |
| SEP ’23 | 791.5 | 13.5 |
| JUL ’24 | 775.25 | 12.5 |
| Mpls Wheat | ||
| JUL ’23 | 812 | 8.5 |
| SEP ’23 | 815.5 | 8.5 |
| SEP ’24 | 762.75 | 0.25 |
| S&P 500 | ||
| JUN ’23 | 4076 | -31.5 |
| Crude Oil | ||
| JUL ’23 | 68.44 | -0.11 |
| Gold | ||
| AUG ’23 | 2075.1 | 18.9 |
Grain Market Highlights
- Corn ended mixed as traders absorbed net negative weekly corn export sales reflecting Chinese corn cancellations from last week.
- Soybeans closed slightly lower matching similar quiet price changes from other commodities such as corn and crude.
- Soybean meal and oil prices closed fractionally lower; US Census data showed record high soybean meal exports in the month of March which lent support.
- All three wheat markets continued higher following yesterday’s bullish key reversals as tensions continue to rise in the Black Sea region.
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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
- The USDA reported net cancellations of 12.4 mb of corn export sales for 22/23 as expected following Chinese cancellations last week. Export sales for next year came in at 4.8 mb.
- Although the Fed raised interest rates again yesterday, the comments by Fed Chairman Powell that there may be a pause on further rate hikes was viewed as supportive to financial and commodity markets.
- Much of the Midwest is forecast to see favorable weather conditions ahead; this should lead to a continued uptick in planting progress.
- The Brazilian safrinha corn crop is looking good. Harvest typically begins in early July, and a lack of domestic storage capacity could lead to a flood of Brazilian corn into the world export market.
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
- July soybeans ended the day slightly higher after trading lower for the better part of the day. The higher close came despite losses in both soybean meal and oil, with crude oil a bit lower as well.
- US soybean meal exports in March were a record high for the month and up 22% from March of 2022 according to US Census Bureau data released this week.
- Export sales for soybeans were low but were at the higher end of the trade guesses. The USDA reported an increase of 10.6 mb of soybean export sales in 22/23 and an increase of 2.5 mb for 23/24. Last week’s export shipments of 20.6 mb were above the 13.1 mb needed each week.
- Crude oil has fallen by over 7 dollars a barrel since Monday as traders nurse concerns about recession and the new bank failures. Demand for crude oil is expected to fall, which has pressured the soy complex.
- Weather in most of the country is forecast to warm up, and rains are expected to fall near normal levels. Soybean plantings remain ahead of pace for this time of year, and the improved weather will give northern states a chance to catch up.
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
- Wheat may have found a near term bottom after the strong reversal yesterday and a higher close across the board today.
- The USDA reported an increase of 7.8 mb of wheat export sales for 22/23 and an increase of 10.3 mb for 23/24.
- The increase in tensions between Russian and Ukraine after yesterday’s news suggests that the Black Sea export deal may not be renewed on May 18.
- The May 15-18 Kanas winter wheat crop tour is likely to show poor conditions, which could be supportive to prices.
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
