Grain Market Insider: October 23, 2023
All prices as of 2:00 pm Central Time
| Corn | ||
| DEC ’23 | 490.25 | -5.25 |
| MAR ’24 | 504 | -5 |
| DEC ’24 | 518.25 | -1.75 |
| Soybeans | ||
| NOV ’23 | 1286.75 | -15.5 |
| JAN ’24 | 1305.5 | -14.75 |
| NOV ’24 | 1259 | -8.75 |
| Chicago Wheat | ||
| DEC ’23 | 587.25 | 1.25 |
| MAR ’24 | 615 | 1.5 |
| JUL ’24 | 645.25 | -0.25 |
| K.C. Wheat | ||
| DEC ’23 | 670.75 | 0.75 |
| MAR ’24 | 680.25 | 1 |
| JUL ’24 | 690.5 | 2.25 |
| Mpls Wheat | ||
| DEC ’23 | 737.75 | 7 |
| MAR ’24 | 757 | 4 |
| SEP ’24 | 784 | 2.25 |
| S&P 500 | ||
| DEC ’23 | 4261.5 | 13 |
| Crude Oil | ||
| DEC ’23 | 85.68 | -2.4 |
| Gold | ||
| DEC ’23 | 1988.9 | -5.5 |
Grain Market Highlights
- Lackluster export inspections failed to support the corn market in a general “risk off” environment as traders took profits from last week’s rally and liquidated long positions.
- Harvest pressure and follow through technical selling from Friday’s selloff, weighed heavily on soybeans as they closed within ½ cent of last Monday’s close.
- Firm demand for soybean meal kept that market from experiencing the deep losses of soybean oil, which was dragged lower by softer palm oil and sharply lower crude oil.
- Continued rumors of China’s interest in purchasing US wheat, and concerns about global supplies of high protein wheat may be the supporting factor in the wheat complex that was led higher by Minneapolis contracts. While Minneapolis and KC both closed higher on the day, Chicago closed mixed, likely with short covering adding support to the front month contracts.
- To see the current U.S. 6 – 10 day Temperature and Precipitation Outlooks, as well as the South American 1-week precipitation forecasts, courtesy of NOAA, NWS, and the CPC, 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. On October 19, December corn closed above 500 for the first time since the end of July. While the market was unable to follow through to the upside with more resistance just above the market at the 100-day moving average, the overall trend remains positive with successively higher lows, from mid-August. If the market can maintain a close above 500 and the 100-day moving average, it may aim to test the next resistance near 547. Otherwise, the first support on the downside is the 50-day moving average, near 485. If the market closes below 485, it may run the risk of continuing to trend sideways to lower, and a worst-case scenario could entail a sideways to lower trend into late November, or even early January. 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
- Technical selling pressure stayed in the corn market on additional long liquidation after prices failed on Friday after last week’s price rally. The markets in general showed a “risk-off” type trade as weakness was seen in many commodity and equity markets. December corn was 5 ¼ cents lower to 490 ¼.
- Weekly export inspections for corn were lackluster at 17.2 mb, though within expectations. Softer corn exports are expected in this window as soybeans shipments are the focus of US exporters. Regardless, corn export numbers were short of the needed weekly pace to reach the USDA’s 2.025 billion bushel export target.
- The corn harvest is expected to reach 59% complete on Monday afternoon’s Crop Progress report. This would be up from 43% last week, but rains across the Corn Belt last week may have slowed harvest progress.
- Cash basis on corn has improved, which could be signaling a potential fall low is placed for corn futures. The cash market has been supported by producers being slow sellers, and improved demand by end users reflecting decent margins and looking for corn supplies.
- Harvest pressure likely kicked in as prices pushed through the $5.00 level last week, only to retreat quickly. A wetter forecast could help support prices as harvest pace could be limited this week.
Above: The corn market has largely been rangebound since the beginning of August, with only minor short covering moving the market higher until recently. With the market trading up to 509 ½ and failing, the next resistance level now sits at that recent high, with further resistance near the 20-day moving average and the July 31 high of 516 ¼. If the market retreats, initial support below the market remains between 475 – 480 and then near 460.
Corn Managed Money Funds net position as of Tuesday, Oct.17. Net position in Green versus price in Red. Managers net bought 3,821 contracts between Oct. 11 – 17, bringing their total position to a net short 108,870 contracts.
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 lower, along with both soybean meal and oil, on harvest pressure and follow through technical selling. On Thursday and Friday, soybeans tested the 100-day moving average and failed both times. The 40, 100, and 200-day moving averages have all converged around the 13.20 level in November, which is acting as heavy resistance.
- Weekly export inspections came in very strong again, totaling 90.3 mb of soybeans for the week ending October 19, 2023. Total inspections are now 290 mb, which is up 3% from the previous year. China has become a more active buyer out of the PNW, as Brazil runs low on soybeans and deals with low water levels in the Amazonian rivers.
- Planting progress for Brazil’s 23/24 soybean crop is estimated to be 29.84% complete, which is far below the 37.6% planted at this time last year, as heat and drought has caused some to wait for better conditions. There have also been reports of many producers re-planting their soy crop.
- Crop progress will be released later today, and expectations are that the soy crop will be reported as at least halfway complete, but the 7-day forecast is expected to be very wet for the central and western Corn Belt, which could delay further progress.
Above: In the middle of October, the market pierced the upper end of the 1285 – 1323 resistance area and tested the 50-day moving average, before retreating lower. If the market can maintain a close above resistance at 1334, it would be poised to make a run to test 1370. Otherwise, initial support to the downside may be found near 1300 and again near 1273. Key support for the move remains down near 1250.
Soybean Managed Money Funds net position as of Tuesday, Oct. 17. Net position in Green versus price in Red. Money Managers net sold 4,150 contracts between Oct. 11 – 17, bringing their total position to a net short 1,984 contracts.
Wheat
Market Notes: Wheat
- Weekly wheat export inspections were disappointing at 6.2 mb. Total 23/24 inspections have now reached 254 mb, which is down 27% from last year, and are running below the pace needed to meet the USDA’s 700 mb export goal.
- Argentina has had significant drought conditions, but they have recently received good rains as well. Much more will be needed to improve crops and soil moisture, but at this point any precipitation is welcomed. General concern about global production remains, especially of higher protein wheat, which may account for Minneapolis futures rallying more than Chicago or KC today.
- Australia’s wheat crop, according to some private estimates, could now be as high as 26-28 mmt, while the USDA is projecting a 24.5 mmt harvest. The increased production may be a result of recent rains that have eased the drought and helped to stabilize the crop or even increase yields.
- According to Ukraine’s agriculture ministry, their wheat harvest at 22.3 mmt is up 15% year on year. However, their exports of wheat total only 4.1 mmt, which is down 6.7% year on year. Recently there has not been much talk surrounding the Black Sea, but it is being reported that up to 20 vessels have safely traveled via their humanitarian corridor since it was opened. It is unclear, though, what the contents and size of the ships has been.
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: After its push lower on Sept. 29, December wheat has slowly regained its value and is trading in the same 570 – 618 range it did prior to its break lower. For the market to push through the top side of the range, more bullish input will be needed. If so, the market would be poised to test the 645 – 664 area. If not and the market retreats, initial support could be found near 568 and then down between 547 and 540.
Chicago Wheat Managed Money Funds net position as of Tuesday, Oct. 17. Net position in Green versus price in Red. Money Managers net sold 72 contracts between Oct. 11 – 17, bringing their total position to a net short 104,407 contracts.
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.
K.C. Wheat Managed Money Funds net position as of Tuesday, Oct. 17. Net position in Green versus price in Red. Money Managers net sold 1,081 contracts between Oct. 11 – 17, bringing their total position to a net short 26,951 contracts.
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 upward, with initial support between 711 and 708. If prices continue higher, initial resistance remains between 745 – 760.
Minneapolis Wheat Managed Money Funds net position as of Tuesday, Oct. 17. Net position in Green versus price in Red. Money Managers net sold 2,223 contracts between Oct. 11 – 17, bringing their total position to a net short 25,729 contracts.
Other Charts / Weather
