Grain Market Insider: October 24, 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
- Despite a flash sale totaling 117,000 mt tons of corn for the 23/24 marketing year, December corn settled lower for the third session in a row, pressured by technical selling, continued harvest pressure and weakness in the wheat complex.
- Sharply higher soybean meal, and higher Board crush more than offset lower soybean oil and led soybeans to rally back and settle higher on the day after making new lows for the week.
- Soybean oil settled at a new 4-month low amid low RIN values, and weaker crude and palm oil. Whereas strong export demand for soybean meal continues to support meal prices and crush demand for soybeans, while also potentially generating excess bean oil supply.
- A strong US dollar and unconfirmed rumors of Chinese interest in US wheat continue to plague the wheat market as all three classes closed lower on the day, with Chicago and Minneapolis giving up any gains made from Monday’s rally.
- To see the current U.S. 3 – 4 week Temperature and Precipitation Outlooks, 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, 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 resistance near 547. Otherwise, if the market closes below the 50-day moving average near 485, it may run the risk of continuing to trend sideways to lower, with a worst-case scenario being 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 held 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, weakness in the wheat market and technical selling pressure pushed corn futures lower on the session. December corn futures lost 6 ¼ cents in weak price action on Tuesday.
- Corn harvest has reached 59% complete according to the USDA weekly Crop Progress report. This was in line with analysts’ expectations and 5% above the 5-year average.
- A strong Midwestern storm will be working its way across the Corn Belt over the next few days. Rainfall with good coverage and a sharp drop in temperature is forecasted into the start of November. Wetter than normal forecasts may limit harvest progress through the end of the week in some areas.
- South American weather will likely stay dry and hot for areas of Brazil, but Argentina could see some overall improvement. While South American weather is still in its early stages, the corn market is lacking any true weather premium.
- The weak price action on Tuesday is concerning as December corn closed under the support of $4.85, and March under $5.00. The soft close and downward momentum could lead to additional long liquidation in corn futures on Wednesday.
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 July 31 high of 516 ¼. If the market retreats, initial support below the market remains 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 has traded at a discount to the 2023 crop for nearly its entire contract life and extended out to 142 versus the Jan ’24 contract in late July, with it recently trading between 17 ¾ and 66 cents. Since July, the Nov ’24 contract has mostly traded between 1250 and 1320 and 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 began the day lower, but ended with gains thanks to big support from soybean meal. Continued drought in Argentina impacted their production and export of soybean meal, with the US able to pick up some of that export business. Soybean oil was lower today with lower crude and veg oils.
- Soybeans also got support from purchasing agreements that were signed today between Chinese agricultural companies and US commodity exporters at a ceremony held in Des Moines and organized by the US Soybean Export Council. 11 different agreements were made, and now trade will look to see when these purchases will be announced by the USDA.
- Yesterday’s Crop Progress report showed soybeans at 76% harvested as producers rush to get work complete before more rain falls. This is up from the 5-year average pace of 67%. The central and western Corn Belt are forecast to receive significant rain over the next 7 days.
- South American weather is coming more into focus as planting continues in poor conditions. The new 10-day forecast is showing an extended trend of hot and dry conditions in Argentina and Brazil apart from southern Brazil. Many producers are already replanting due to the dryness.
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.
Soybeans percent harvested (red) versus the 5-year average (green) and last year (purple).
Wheat
Market Notes: Wheat
- With US winter wheat now 77% planted and emergence at 53%, crop ratings are expected to be released next week. Expectations are for conditions to be better than last year due to the improved soil moisture levels in the southern Plains. Traders look for a rating of 45%-49% in the good to excellent category.
- According to the ag ministry, Ukraine is estimated to have shipped about 700,000 mt of ag goods through the humanitarian corridor since it was opened. Officials believe that it is possible, however, to transport between 2.0-2.5 mmt per month on those shipping lanes. Grain also continues to leave the country via the Danube River.
- Matif wheat futures closed in the red for the third time in the past four sessions. This pressured the US market today, as did the US Dollar Index, making a big move higher. As of this writing, the dollar is up 0.75 at 106.28. This historically high level does not help the export market, especially as Russian wheat offers are still said to be dirt cheap around $235 per mt.
- Consultancy group, APK-Inform, reduced their estimate of Ukraine’s grain harvest to 53.4 mmt versus 54.2 previously. The wheat output forecast was unchanged at 21.5 mmt, so the revision came down to a lower corn harvest projection.
- There continues to be talk that China is looking to purchase more US wheat, though there have not been any announced sales over the reportable level of 100,000 mt. However, there is some chatter that China will try to stimulate their economy – if true this could lead to more import demand for commodities.
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. Since making a mid-summer high in late July, the Dec ’23 contract has been in a downtrend, but after finding support at 540 on September 29, the market has steadily rallied, briefly piercing 600 and the 50-day moving average. With weak US export demand driven by cheap Russian exports being the dominant headwind, it appears that prices may be finding value in the 540 – 616 range established since early September. 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 625 – 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. The July ’24 contract has been trading at a premium to the Dec ’23 contract since late April, which has steadily increased to about 55 cents, September 29, it traded as far out as 71 ¾ cents. Fund positioning and weak fundamentals have driven Dec ’23 closer to the mid to upper 500 range, and July ’24 to the low to mid 600’s. The market risk for July ’24 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.
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 near 690 – 700 and again around 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 upward, with initial support between 711 and 708. If prices continue higher, initial resistance remains between 745 – 760.
Other Charts / Weather
