Grain Market Insider: October 12, 2023
All prices as of 2:00 pm Central Time
| Corn | ||
| DEC ’23 | 496 | 8 |
| MAR ’24 | 511.5 | 7.75 |
| DEC ’24 | 522.75 | 5.5 |
| Soybeans | ||
| NOV ’23 | 1290 | 37.5 |
| JAN ’24 | 1308.75 | 36.5 |
| NOV ’24 | 1259.75 | 20.25 |
| Chicago Wheat | ||
| DEC ’23 | 571.5 | 15.5 |
| MAR ’24 | 601.5 | 14.25 |
| JUL ’24 | 636.25 | 11 |
| K.C. Wheat | ||
| DEC ’23 | 675 | 7.75 |
| MAR ’24 | 684 | 7.75 |
| JUL ’24 | 693.5 | 7.5 |
| Mpls Wheat | ||
| DEC ’23 | 723.5 | 5.25 |
| MAR ’24 | 747.25 | 5 |
| SEP ’24 | 781.75 | 4.25 |
| S&P 500 | ||
| DEC ’23 | 4376.5 | -33.25 |
| Crude Oil | ||
| DEC ’23 | 82.14 | 0.07 |
| Gold | ||
| DEC ’23 | 1881.8 | -5.5 |
Grain Market Highlights
- Friendly supply and demand numbers from today’s USDA WASDE report, a reported sale of almost 125,000 mt of corn to Guatemala, and carryover strength from soybeans lifted corn to within 1 ¼ cents of 500, before it closed 8 cents higher on the day.
- A surprise move, from the USDA that kept U.S. soybean ending stocks unchanged from last month, where a 13 mb increase was expected, and an additional sale of 295,000 mt to unknown destinations fueled the fire for a 37-cent rally in November soybeans.
- Both soybean meal and oil were strong performers today, lending additional support to soybeans. The USDA left meal ending stocks unchanged from last month, but increased exports by 200,000 tons, while bean oil ending stocks were reduced by 85 mil lbs.
- Spillover strength from sharply higher soybeans, and higher corn, supported all three wheat classes to close near the top of their respective ranges despite a neutral to bearish U.S. supply and demand update from the USDA.
- To see the current U.S. 5-day precipitation forecast and 6 – 10 day Temperature and Precipitation Outlooks from the NWS and NOAA, scroll down to other Charts/Weather Section.
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Corn
Action Plan: Corn
Calls
2023
No Action
2024
No Action
2025
No Action
Cash
2023
No Action
2024
No Action
2025
No Action
Puts
2023
No Action
2024
No Action
2025
No Action
Corn Action Plan Summary
- No new action is recommended for 2023 corn. The last couple weeks Dec ’23 corn has seen a bump from a low of 467.75 to a high last week of 499.00. Since mid-August, the psychological 500.00 level has served as market resistance on the front month. Without any bullish catalyst from the coming USDA Supply and Demand report this Thursday, the market remains at risk of sideways to lower price action. In years without bullish fundamental tailwinds at this time of year, the worst case scenarios have seen prices trend slowly lower into anywhere from late November to early January. If you’re new to Insider and were not a subscriber during this summer’s rally, Insider did recommend making sales into that summer rally when Dec ’23 was around 624.00, so for now the thought process is to hold tight on any further sales recommendations until later this fall or early winter, with the objective of seeking out better pricing opportunities. If the market has not turned around by early winter, then Insider may sit tight on the next sales recommendations until next spring. If you end up harvesting more bushels than you can store this fall and must move them, consider re-owning those bushels with either July or September ’24 call options.
- No new action is recommended for 2024 corn. The Dec ’24 contract has held up better than Dec ’23 as bear spreading over the last several months has brought increased buying interest into Dec ’24 and other further out contract months. Back in late July, the Dec ’23 contract traded up to a 25-cent premium over Dec ’24. Now Dec ’24 holds a 28-cent premium over Dec ’23. This bear spreading has the Dec ’24 price up about 28 cents from its year-to-date low. The risk for 2024 prices is the same as 2023 prices, which is a continuation of a lower trend without a bullish catalyst on this Thursday’s Supply and Demand report. Insider is watching for signs of a change in the current trend to look at recommending buying Dec ’24 call options. This past spring, Insider recommended buying 560 and 610 Dec ’23 call options ahead of the summer rally, and having those in place helped provide confidence to pull the trigger on recommending 2023 sales into that sharp rally, knowing that if corn kept rallying and went to 700.00 or 800.00 that the call options would protect those sold bushels.
- No Action is currently recommended for 2025 corn. Insider isn’t considering any recommendations at this time for the 2025 crop that will be planted two springs from now. It will probably be late winter or early spring of 2024 before Insider starts considering the first sales targets.
Grain Market Insider has issued the following number of corn recommendations:
• 2023: 1 Cash/2 Call/2 Put
• 2024: 2 Cash/0 Call/0 Put
• 2025: 0 Cash/0 Call/0 Put
Market Notes: Corn
- Corn futures used a friendly USDA report and a strong soybean market to post moderate gains on the session. December corn gained 8 cents to $4.96 but failed to push through overhead resistance at $4.98 ¾ from last week.
- The USDA lowered expected corn yield to 173.0 bushels/acre, down 0.8 bushels from last month and below market expectations. Yield losses from last year were noted in many corn producing states, but Missouri (-12.4%), Minnesota (-8.2%) and Illinois (-6.5%) were key states impacted by this season’s overall hot and dry weather.
- The reduced yield lowered overall production by 70 mb versus last month. The combination of lower production and lower than expected grain stocks on September 29th, lowered corn carryout to 2.111 bb. This was down 210 mb from last month and 27 mb below expectations. In order to reach the final carryout total, the USDA lowered feed usage and export demand by 25 MB for each category.
- Corn harvest pace moved to 34% complete on the weekly crop progress numbers. The weather forecasts have kept the harvest pace strong for the first half of the week, but projected moisture in the 2nd half of the week, and into the weekend, may likely slow harvest progress going into next week for north and central areas of the Corn Belt
- The USDA will release weekly export sales on Friday morning. Corn export sales for the last week are expected to range from 600,000 – 900,000 mt for new crop and up to 150,000 mt for the 24/25 marketing year. Weekly ethanol demand saw good production as corn used for ethanol grind is trending 5.1% above last year’s levels.
Above: The corn market has largely been rangebound since the beginning of August, with some minor short covering lifting prices in recent days. Resistance remains above the market between 490 – 516, and support below the market may be found near 460 and again near 415.
Soybeans
Action Plan: Soybeans
Calls
2023
No Action
2024
No Action
2025
No Action
Cash
2023
No Action
2024
No Action
2025
No Action
Puts
2023
No Action
2024
No Action
2025
No Action
Soybeans Action Plan Summary
- No new action is recommended for 2023 soybeans. The Nov ’23 contract has been finding buying interest around the June 2023 low of 1256.75 on the front month. Over the last seven trading days, Nov ’23 has traded largely between 1260.00 and 1280.00. If there were to be a bullish catalyst from this Thursday’s USDA Supply and Demand report and Nov ’23 subsequently closed over 1287.25, that could signal the possibility that a harvest/fall low is in. Bigger picture, since May 2023, the front month contract has traded in a range from 1256.75 on the downside to 1435.00 on the topside. If you are a newer subscriber to Insider and were not with us back in the summer, Insider did make two sales recommendations in the 1310-1360 price window versus Nov ’23. Given those sales recommendations were already made and given that now is not the time of year to be making many if any sales, Insider is content to hold tight on next sales recommendations until later this fall or early winter. The focus for strategy right now is to be on the lookout for any call option buying opportunities. If you end up harvesting more bushels than you can store this fall, consider buying those sold bushels back with July or August ’24 call options.
- No action is recommended for the 2024 crop. Nov ’24 continues to trade at a discount to Nov ’23. That discount was over 90 cents in late summer yet has stabilized lately around the 10-20 cent range. Since July, the Nov ’24 contract has largely traded between 1250 and 1320, so this contract is currently testing the bottom end of that range. To date, Insider has not recommended any sales for next year’s soybean crop. First sales targets will probably be early winter at the soonest. Currently, Insider’s focus is also on watching for any opportunities to recommend buying call options.
- No Action is currently recommended for 2025 Soybeans. Insider isn’t considering any recommendations at this time for the 2025 crop that will be planted two springs from now, and it may be some time before conditions are conducive to consider making any recommendations. Be patient as we monitor the markets for signs of improvement.
Grain Market Insider has issued the following number of soybean recommendations:
• 2023: 2 Cash/0 Call/0 Put
• 2024: 0 Cash/0 Call/0 Put
• 2025: 0 Cash/0 Call/0 Put
Market Notes: Soybeans
- Soybeans posted a significantly higher close today, fueled by a bullish WASDE report and big gains in soybean meal. Soybean oil was higher too, but larger gains may have been held back by lower crude oil and continued weakness in world veg oil prices. November soybeans had a sharp reversal and closed at the 20-day moving average.
- Today’s WASDE report featured several bullish surprises for soybeans. Yield was pegged at 49.6 bpa, below trade expectations and far below the most recent guess of 50.1 bpa. Production was lowered, and soybean ending stocks were held steady from September at a very tight 220 mb, below trade expectations. World ending stocks were also lowered to 115.62 mmt from last month’s guess of 119.25 mmt.
- With U.S. soybean ending stocks so tight at 220 mb, further increases in demand could add more bullish fuel to the market. China has already been a more active buyer of soybeans out of the PNW as Brazilian supplies dwindle.
- In South America, Argentina remains very dry from last season and this trend is not expected to improve. Northern Brazil is also too dry, while the southern regions are too wet, and this comes as planting is underway. It may be too early to focus on South American weather, but it will come into focus in the coming months and could drive prices higher if the weather pattern doesn’t improve.
Above: Since the end of August, the soybean market has been in a downtrend, and though it has been consolidating, it remains oversold, which can be supportive if prices turn higher. Initial support to the downside lies near the recent low of 1254, with further support between 1238 – 1214, while resistance above the market lies between 1285 – 1323.
Wheat
Market Notes: Wheat
- Today’s USDA report elicited a bullish reaction after some of the numbers came in below expectations. Wheat was more of a mixed bag but still was able to partake in the upswing. U.S. 23/24 wheat carryout came in at 669 mb, above expectations of 646 mb and 615 mb in September. World 23/24 ending stocks were reduced slightly from 258.6 mmt in September to 258.1 mmt. However, the USDA did lower global wheat production by almost 4 mmt to 783.43 mmt.
- With today’s data out of the way the question is, can this rally be sustained? Often the market has a kneejerk reaction on report day but may set back once the dust settles. One thing that could continue to weigh on the market is continued high inflation. Today’s CPI data came in at 3.7%, a little more than expected. In turn, the U.S. Dollar Index jumped higher today and if it continues the trend higher, it will add more pressure to wheat.
- Rumors that China is asking for U.S. SRW wheat pricing out of the Gulf is an encouraging sign that the recent low prices may have stimulated some buying interest. It remains to be seen if this rumor will be confirmed or not, but the export side of the market could use a boost. The USDA left their wheat export estimate unchanged in the report at 700 mb.
- The developing war in the Middle East, and the uncertainty between Russia and Ukraine, are both factors that could continue to affect commodity markets, especially wheat. Russia continues to overshadow other exporters, with reports that private offers are as low as $235 per metric ton, despite their government’s preferred $270 floor.
Action Plan: Chicago Wheat
Calls
2023
No Action
2024
No Action
2025
No Action
Cash
2023
No Action
2024
No Action
2025
No Action
Puts
2023
No Action
2024
No Action
2025
No Action
Chicago Wheat Action Plan Summary
- No new action is currently recommended for 2023 Chicago wheat. The Dec ’23 contract has been in a downtrend since making highs in late July but has found support near 541 following the September 29 production report and has since been rangebound between 541 and 581 ½. With weak U.S. export demand driven by cheap Russian exports being the dominant headwind, it appears that prices may be finding value in the current trading range. If a bullish catalyst were to enter the market and push prices over 616, it may signal that a fall low is in place, which would line up with the historical tendency for prices to appreciate into the winter months. If you are a newer subscriber, Insider made sales recommendations in the late June rally around 720 and again earlier this fall near 604. With those two sales, Insider’s strategy is to look for price appreciation going into this winter as weather becomes a more prominent market mover, with an eye on considering additional sales in the 600 – 650 range. If at that point the market remains strong and continues to rally, Insider will consider potential re-ownership strategies to protect current sales and add confidence to make additional sales at higher prices.
- No new action is recommended for 2024 Chicago wheat. Currently, July ’24 is trading at a 68-cent premium to the Dec ’23 contract as bear spreading due to fund positioning and weak fundamentals have driven the Dec ’23 contract closer to 550, while the July ’24 contract remains near 625. The risk for the July ’24 contract remains the same as for Dec ’23. The market needs bullish input to move prices higher, and without it, prices may continue to erode. At the end of August, Insider recommended purchasing July 590 puts to prepare for this possibility, and back in June, Insider recommended two separate sales that averaged about 720 to take advantage of the brief upswing. If the market receives the needed stimulus to move prices back toward June’s highs, Insider is prepared to recommend adding to current sales levels. Otherwise, the current recommended put position will add a layer of protection if prices erode further, and Insider will be prepared to recommend covering some of those puts to offset some of the original cost and move toward a net neutral cost for the remaining position.
- No action is currently recommended for 2025 Chicago Wheat. Insider isn’t considering any recommendations at this time for the 2025 crop that will be planted a year from now. It will probably be mid-winter before Insider starts considering the first sales targets.
Grain Market Insider has issued the following number of Chicago wheat recommendations:
• 2023: 1 Cash/0 Call/0 Put
• 2024: 2 Cash/0 Call/1 Put
• 2025: 0 Cash/0 Call/0 Put
Above: December wheat has been consolidating since the break on September 29. The market’s previous range of 570 – 618 is an area of resistance which will need more bullish input to rally through. If the market breaks further, support below the market resides between 533 – 524.
Action Plan: KC Wheat
Calls
2023
No Action
2024
No Action
2025
No Action
Cash
2023
No Action
2024
No Action
2025
No Action
Puts
2023
No Action
2024
No Action
2025
No Action
KC Wheat Action Plan Summary
- No new action is recommended for 2023 K.C. wheat crop. The Dec ’23 contract has been in a down trend since making highs in late July and continues to search for support while trading about 40 cents off the contract lows from July ’21. With weak U.S. export demand driven by cheap Russian exports being the dominant headwind, the market is in need of bullish input to stabilize and rally prices back higher. If a bullish catalyst were to enter the market and push prices towards 750, it may signal that a fall low is in place which would line up with the historical tendency for prices to appreciate into winter and early spring. Earlier this year, Insider made a sales recommendation in the late May rally around 1170. With that sale, Insider’s strategy is to look for price appreciation going into this winter as weather becomes a more prominent market mover, with an eye on considering additional sales north of 700, and again around 750 – 800. If at that point the market remains strong and continues to rally, Insider will consider potential re-ownership strategies to protect current sales and add confidence to make additional sales at higher prices.
- No new action is recommended for 2024 K.C. wheat. Currently, July ’24 is trading at an 18-cent premium to the Dec ’23 contract, up from a 60-cent discount last July, as bear spreading due to weak fundamentals has driven the Dec ’23 contract closer to its contract lows, while the July ’24 contract remains more elevated as it tests Feb ’22 lows. The risk for the July ’24 contract is much like that for Dec ’23. The market needs bullish input to move prices higher, and without it, prices may continue to erode, and in mid-August Insider recommended purchasing July 660 puts to prepare for this possibility. Also, back in July Insider recommended a sale near 800 to take advantage of elevated prices before they eroded further. If the market receives the needed stimulus to move prices back toward 800, Insider is prepared to recommend adding to current sales levels. Otherwise, the current recommended put position will add a layer of protection if prices erode further and Insider will be prepared to recommend covering some of those puts to offset some of the original cost and move toward a net neutral cost for the remaining position.
- No action is currently recommended for 2025 K.C. Wheat. Insider isn’t considering any recommendations at this time for the 2025 crop that will be planted a year from now. It will probably be mid-winter before Insider starts considering the first sales targets.
Grain Market Insider has issued the following number of K.C. wheat recommendations:
• 2023: 0 Cash/0 Call/0 Put
• 2024: 1 Cash/0 Call/1 Put
• 2025: 0 Cash/0 Call/0 Put
Above: Since the end of September, K.C. wheat has been consolidating after finding initial support just below the market near 660. If the market resumes its downtrend, the next levels of support below 660 come in around 630 and then 575, while resistance to the upside may be found between 710 – 722.
Action Plan: Mpls Wheat
Calls
2023
No Action
2024
No Action
2025
No Action
Cash
2023
No Action
2024
No Action
2025
No Action
Puts
2023
No Action
2024
No Action
2025
No Action
Mpls Wheat Action Plan Summary
- No new action is currently recommended for the 2023 New Crop. The Dec ’23 contract has been in a down trend since making highs in late July and continues to search for support while showing signs of being oversold. With weak U.S. export demand driven by cheap Russian exports being the dominant headwind, the market is in need of bullish input to stabilize and rally prices back higher. If a bullish catalyst were to enter the market and push prices towards 800, it may signal that a fall low is in place, which would line up with the historical tendency for prices to appreciate into winter. Earlier this year, Insider made a sales recommendation near 820 in the July rally. With that sale, Insider’s strategy is to look for price appreciation going into this winter with an eye on considering additional sales around 750 – 800, and again north of 825. If at that point the market remains strong and continues to rally, Insider will consider potential re-ownership strategies to protect current sales and add confidence to make additional sales at higher prices.
- No new action is currently recommended for 2024 Minneapolis wheat. In the last three months the Sep ’24 contract has gone from a 60 – 80 discount to Dec ’23, to nearly a 60-cent premium. Weak fundamentals led bear spreading to drive Dec ’23 in search of new contract lows, while Sep ’24 remains nearly 30 cents off its low from last June. The risk for the Sep ’24 contract is much like that of Dec ’23. The market needs bullish input to move prices higher, and without it, prices may continue to erode. In mid-August, Insider recommended purchasing July K.C. 660 puts (for their greater liquidity and correlation to Minneapolis pricing) to prepare for this possibility, and back in July, Insider recommended a sale near 815 to take advantage of elevated prices. If the market receives the needed stimulus to move prices back toward 800, Insider is prepared to recommend adding to current sales levels. Otherwise, the current recommended put position will add a layer of protection if prices erode further. Insider will then be prepared to recommend covering some of those puts to offset some of the original cost and move toward a net neutral cost for the remaining position.
- No action is currently recommended for the 2025 Minneapolis wheat crop. Insider isn’t considering any recommendations at this time for the 2025 crop that will be planted a year from now. It will probably be mid-winter before Insider starts considering the first sales targets.
Grain Market Insider has issued the following number of Minneapolis wheat recommendations:
• 2023: 1 Cash/0 Call/0 Put
• 2024: 1 Cash/0 Call/1 Put
• 2025: 0 Cash/0 Call/0 Put
Above: Since early September, Dec Minneapolis wheat has been largely rangebound, and the recent breakout to the downside on September 29 has the market poised to test support near the May ’21 low of 665. If prices turn higher, initial resistance may be found between 745 – 760.
Other Charts / Weather
