Grain Market Insider: October 17, 2023
All prices as of 2:00 pm Central Time
| Corn | ||
| DEC ’23 | 489 | -1 |
| MAR ’24 | 503.75 | -1.25 |
| DEC ’24 | 516.5 | -1.25 |
| Soybeans | ||
| NOV ’23 | 1296.75 | 10.5 |
| JAN ’24 | 1316.25 | 10.5 |
| NOV ’24 | 1260.5 | 5.5 |
| Chicago Wheat | ||
| DEC ’23 | 570.5 | -6.75 |
| MAR ’24 | 598.75 | -5.75 |
| JUL ’24 | 631.25 | -3.5 |
| K.C. Wheat | ||
| DEC ’23 | 666.75 | -2 |
| MAR ’24 | 675.75 | -2.25 |
| JUL ’24 | 684.5 | -3 |
| Mpls Wheat | ||
| DEC ’23 | 727.75 | -1 |
| MAR ’24 | 749.75 | -1.5 |
| SEP ’24 | 780 | -1.75 |
| S&P 500 | ||
| DEC ’23 | 4395.25 | -5.75 |
| Crude Oil | ||
| DEC ’23 | 85.41 | 0.15 |
| Gold | ||
| DEC ’23 | 1932.9 | -1.4 |
Grain Market Highlights
- Harvest pressure and resistance just above the market continue to weigh on the corn market with the December contract seeing choppy trade before settling just 1 ¼ cents off the low of the day.
- Following through on Monday’s strength and with support from soybean meal, November soybeans punched through the 1300 level for the first time this month before falling back but still settling near the upper third of the range.
- Soybean meal gained on oil today as spread traders likely took profits from long oil/short meal positions. December meal traded over 400 for the first time in a month before settling back below, as basis remains firm from strong export demand.
- After trading on both sides of unchanged, the wheat complex settled near their respective lows of the day on continued demand concerns. SovEcon lowered its estimate of the Russian wheat crop by 0.2 mmt but still kept it well above the USDA’s current estimate. EU soft wheat exports remain behind year ago levels.
- To see the current U.S. 7-day precipitation forecast, the 8 – 14 day Temperature and Precipitation Outlooks, and the average temperatures for South America 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 supportive USDA Supply and Demand report from October 12 had Dec ’23 corn testing that 500 psychological price level, yet so far Dec ’23 has been unable to close above it. That 500 level remains an important resistance area for the trend, and without a close over it, the market remains at risk of continuing to trend sideways to lower, and worst-case scenarios could entail sideways-to-lower trends into the late November to early January window. If Dec ’23 can close above 500, it may aim to test the next resistance near 547. Otherwise, the first support on the downside is the August low of 461. During last summer’s June rally, Grain Market Insider recommended making sales when Dec ’23 was around 624. 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 Grain Market Insider may sit tight on the next sales recommendations until spring. If you end up harvesting more bushels than you can store this fall and must move them, consider protecting those sold 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 for 2023 prices, which is a continuation of a lower trend without further bullish input. Grain Market Insider is watching for signs of a change in the current trend to look at recommending buying Dec ’24 call options. This past spring, Grain Market 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 or 800 that the call options would protect those sold bushels.
- No Action is currently recommended for 2025 corn. Grain Market 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 Grain Market Insider starts considering the first sales targets.
To date, Grain Market Insider has issued the following corn recommendations:
Market Notes: Corn
- Harvest pressure limited the corn market on the session, despite positive money flow into the soybean market, and the lack of fresh news kept corn buyers on the sidelines. December corn lost 1 cent on the session.
- As of Sunday, the USDA saw corn harvest move to 45% complete, slightly below expectations, and limited by rainfall the second half of last week. With over half of the harvest to go, the market stayed pressured expecting additional fresh supplies.
- Soybean futures tried to provide some support with double-digit gains and an increase in weather premium due to difficult conditions for some South American soybeans that helped lift the market but only could provide minimal support for the corn market.
- Corn futures are trading in a range, bound between $4.90 and $4.80 in the short term. The market is looking for some news in either direction to trigger some price movement.
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 between 490 – 516, with initial support between 475 – 480 and then near 460.
Corn percent harvested (red) versus the 5-year average (green) and last year (purple).
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. Front month soybeans have been finding buying interest around the June 2023 low of 1256 ¾, and since the beginning of October, they have also traded largely between 1260 and 1280. The close over 1287 ¼ on October 12 could be a signal that a harvest/fall low is in. In the big picture since May 2023, Nov ’23 has traded in a range from 1256 ¾ on the downside to 1435 on the topside. Last summer, Grain Market Insider did make two sales recommendations in the 1310 – 1360 price window versus Nov ’23. Given that those sales recommendations were made and given that now is not the time of year to be making many sales, if any, Grain Market Insider is content to hold tight on any further 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 protecting any sold bushels with July or Aug ’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 to 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, Grain Market Insider has not recommended any sales for next year’s soybean crop. First sales targets will probably be early winter at the soonest. Currently, Grain Market Insider’s focus is also on watching for any opportunities to recommend buying call options.
- No Action is currently recommended for 2025 Soybeans. Grain Market 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.
To date, Grain Market Insider has issued the following soybean recommendations:
Market Notes: Soybeans
- Soybeans ended the day higher and briefly broke above the 13-dollar mark. Support came from strong gains in soybean meal, while soybean oil was slightly lower. The trend has been higher since last week’s bullish WASDE report, with dry South American weather adding to the support.
- Yesterday’s Crop Progress report showed the soybean harvest reaching 62% completion which is 10 points above the average pace as many producers get soybeans wrapped up ahead of corn. Iowa is 74% complete and Illinois 61% done. Crop ratings also improved by 1 point to 53%.
- Yesterday’s NOPA crush report also bled into the bullishness of today after it was reported that 165.456 mb of soybeans were crushed in September, creating a new record high. Soybean oil stocks are also at their lowest levels since 2014 at a time when demand is increasing for use in biodiesels.
- Attention is beginning to shift to South American weather and planting. Slight showers are forecast for the dry areas of Argentina and Brazil later in the week, but so far planting has not gotten off to a good start with conditions either too dry or too wet.
Above: October 12 soybeans were shocked higher and traded into the resistance area of 1285 – 1323. If the market can maintain upward momentum, it would be poised to make a run to test mid-September prices around 1370. Otherwise, initial support below the market remains near 1250, with key support coming in between 1180 – 1200.
Soybeans percent harvested (red) versus the 5-year average (green) and last year (purple).
Wheat
Market Notes: Wheat
- Wheat closed mostly lower. Bear spreading was a noted feature in the Chicago contracts, as traders sold the nearby months and bought the deferred. This may be a reflection of the supply concerns down the road in South America and Australia caused by drought. It is noted, however, that there are better prospects for rain in Argentina this weekend which should bring some relief, though more will be needed.
- Yesterday afternoon’s Crop Progress report indicated that US winter wheat planting was 68% complete, in line with the average pace, and 39% was emerged versus 43% on average. Elsewhere, Ukraine’s agriculture ministry is reporting that 65.2% of their 3.3 million hectares of winter grains are planted. Of that total, 3.02 million is reported to be winter wheat, with the rest made up of mostly barley and rapeseed.
- In Russia, Sov Econ slightly lowered their wheat crop estimate, but it is still higher than what the USDA is using. And the fact that Russia continues to offer cheap wheat to the world will keep US exports and futures prices under pressure for some time to come.
- South American weather is becoming more of a concern for corn and soybeans, as well as wheat. Central and northern Brazil are seeing continued dryness with certain areas along the Amazon River said to be at the lowest levels in over 100 years. And as long as the Amazon River basin remains dry, central Brazil should also remain dry. This has some analysts thinking that Brazil’s wheat production could be down by about 3.3% even though the planted area is 12.1% above last year.
- India is reportedly dealing with its own weather problems and wheat supply concerns, which had internal wheat prices at an eight-month high. They will potentially need to increase imports down the road. China seems to be doing the same with rumors continuing to swirl that the country is looking to purchase more US soft wheat.
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, Grain Market Insider made sales recommendations in the late June rally around 720, and again earlier this fall near 604. With those two sales, Grain Market 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, Grain Market 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, has 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, Grain Market Insider recommended purchasing July 590 puts to prepare for this possibility, and back in June, Grain Market 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, Grain Market 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 Grain Market 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. Grain Market 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 Grain Market Insider starts considering the first sales targets.
To date, Grain Market Insider has issued the following Chicago wheat recommendations:
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 retreats lower, support below the market resides between 540 – 533.
Winter wheat percent planted (red) versus the 5-year average (green) and last year (purple).
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 downtrend 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, Grain Market Insider made a sales recommendation in the late May rally around 1170. With that sale, Grain Market 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, Grain Market 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, Grain Market Insider recommended purchasing July 660 puts to prepare for this possibility. Also, back in July, Grain Market 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, Grain Market 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 Grain Market 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. Grain Market 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.
To date, Grain Market Insider has issued the following K.C. recommendations:
Above: Since the end of September, K.C. wheat has been consolidating with initial support just below the market near the September 12 low of 655. If the market retreats lower and breaks through 655, the next levels of support come in around 630 and 575. Initial resistance to the upside may be found around 700 and again near 722.
Winter wheat percent planted (red) versus the 5-year average (green) and last year (purple).
Winter wheat percent emerged (red) versus the 5-year average (green) and versus last year (purple).
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 downtrend 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, Grain Market Insider made a sales recommendation during the July rally near 820. With that sale, Grain Market 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, Grain Market 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 a nearly 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, Grain Market 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, Grain Market 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, Grain Market 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. Grain Market 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. Grain Market 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 mid-winter before Grain Market Insider starts considering the first sales targets.
To date, Grain Market Insider has issued the following Minneapolis wheat recommendations:
Above: For much of September, December Minneapolis wheat was rangebound, and the breakout to the downside on September 29 set the market up to test support near 665, the May ’21 low. Since then, the market has been consolidating, and while support below the market remains near 665, initial support may also be found near 700. If prices turn higher, initial resistance remains between 745 – 760.
Other Charts / Weather
US 7-day precipitation forecast courtesy of NOAA, Weather Prediction Center.
Brazil average temperature courtesy of the National Weather Service, Climate Prediction Center.
Argentina average temperature courtesy of the National Weather Service, Climate Prediction Center.