Grain Market Insider: May 9, 2023
All prices as of 1:45 pm Central Time
| Corn | ||
| JUL ’23 | 584.75 | -11.75 |
| DEC ’23 | 518.25 | -11.5 |
| DEC ’24 | 511.5 | -3.75 |
| Soybeans | ||
| JUL ’23 | 1414.25 | -19.5 |
| NOV ’23 | 1254.5 | -18 |
| NOV ’24 | 1222.75 | -10.75 |
| Chicago Wheat | ||
| JUL ’23 | 643.5 | -10.5 |
| SEP ’23 | 655.25 | -10.75 |
| JUL ’24 | 691.5 | -6.5 |
| K.C. Wheat | ||
| JUL ’23 | 856.25 | 12 |
| SEP ’23 | 841.75 | 7.5 |
| JUL ’24 | 800 | -1.25 |
| Mpls Wheat | ||
| JUL ’23 | 847.75 | 4 |
| SEP ’23 | 850 | 3.25 |
| SEP ’24 | 782 | 3 |
| S&P 500 | ||
| JUN ’23 | 4141.5 | -11.25 |
| Crude Oil | ||
| JUL ’23 | 73.58 | 0.51 |
| Gold | ||
| AUG ’23 | 2063.4 | 10.6 |
Grain Market Highlights
- Chinese cancellations and a planting pace that is ahead of schedule had traders turn sellers following yesterday’s bearish reversal.
- Monday’s bearish reversal and a planting pace that is well ahead of average weighed on the soybean complex.
- Increases in the poor to very poor Hard Red Winter wheat ratings and the slowest Spring Wheat planting pace in ten years sparked K.C. and Minneapolis to rally, while Chicago drifted lower on continued selling from Monday’s bearish reversal.
- While the US Dollar settled higher today and may have offered some resistance to commodities, it largely continues to trade in a sideways fashion with not a lot of influence on the grain markets at this time.
- To see the updated National Weather Service 7-day precipitation forecast, scroll down to the Other Charts / Weather section.
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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
Updated as of 5/05/2023
- 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.
- There is continued opportunity to buy December ’23 560 and 610 calls. The December corn contract shows signs of support with a hook reversal after making a new low for the move, and 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 corn market saw follow through on Monday’s weak afternoon price action. Tuesday’s selling pressure was fueled by strong planting pace and demand concerns.
- Export demand remains a concern as USDA announced that China cancelled 272,000 mt (10.7 mb) of old crop sales this morning, adding to the bearish tone in the corn market. This makes the third cancellation of old crop purchases by China since April 24, totaling nearly 32.7 mb.
- As anticipated, planting progress was strong last week as producers planted 23% of the crop to reach 49% complete. This is 7% above the 5-year average. Keys stats of Iowa and Illinois have completed over 70% of his year’s plant projections.
- Weather forecasts look favorable overall for continued planting progress. Warm temperatures and moisture should only aid in germination, as the market is anticipating getting the crop off to a good start.
- The corn market and grain markets in general will be looking towards Friday’s USDA WASDE report for near-term direction and the market’s first look at 2023-24 marketing year supply/demand numbers. Expectations are for a slight increase in old crop carryout, and new crop projected carryout to push 2.0 billion bushels for this fall. The report will be released on Friday, May 12 at 2:00 CST.
Above: The market is recovering from being oversold and continues to be under the influence of the bullish reversal from 5/03. 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
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 finished the day significantly lower along with soybean meal and oil. Yesterday afternoon’s Planting Progress report showed soybeans ahead of pace, which pressured prices.
- Yesterday’s Planting Progress report shows total plantings at 36% complete which was above trade expectations and above the average of 21% for this time of year. 9% of the crop has emerged, which compares with 4% on average.
- Chinese soybean import pace was slower than expected last month, down 10% from the previous month. The Chinese economy may not be recovering as well as has been reported, which may slow their demand.
- Tomorrow morning the CPI data will be released, and traders will look for signs of inflation. The Federal Reserve has made comments that they will most likely not raise interest rates more this year, but will also not lower them this year even if there are signs of easing inflation.
Above: July soybeans have recovered from being severely oversold and posted a bearish reversal on 5/08 which indicates recent buying could be exhausted and the market may turn lower. 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 USDA rated the winter wheat crop at 29% good to excellent, which is up 1% from last week. Additionally, the poor to very poor rose 2% from last week to 44%, versus 39% last year.
- Only 24% of the US spring wheat crop is planted, which is behind the average pace of 38% and the lowest in 10 years.
- Matif wheat gapped lower in today’s trade and likely weighed on US futures.
- Negotiations on the Black Sea export corridor will take place between Russia, Turkey, Ukraine, and the UN over the next couple days. This could mean the deadline will be extended beyond May 18.
- Forecasts indicate that 3-5 inches of rain will likely fall in Texas and eastern Oklahoma, and could be perceived as negative 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
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: The market experienced a bearish reversal on 5/08 with follow-through selling. Currently, the slow stochastics indicator may be crossing over to the downside, which indicates upward momentum has slowed for the time being. Nearby resistance can be found between the recent high of 669 and 718, 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
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 is recovering from being oversold and has gained momentum on the rally with open interest on the rise, which indicates new buyers could be getting long the market. If the market can break through the 835 to 850 resistance area, it could further test the 886 to 902 resistance area. Otherwise, initial support may be found near 769, 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 04/24/2023
- 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: The market continues to recover from being oversold, and with open interest on the rise, it appears that new buyers may be entering, and getting long the July contract. Resistance still resides above the market near 870 and 895, while support may be found between 770 and 760.
Other Charts / Weather
