Grain Market Insider: September 1, 2023
The CME and Total Farm Marketing offices will be closed
Monday, September 4, in observance of Labor Day
All prices as of 1:45 pm Central Time
| Corn | ||
| DEC ’23 | 481.5 | 3.25 |
| MAR ’24 | 496.5 | 2.5 |
| DEC ’24 | 509.5 | 2 |
| Soybeans | ||
| NOV ’23 | 1369.25 | 0.5 |
| JAN ’24 | 1382.75 | 0.75 |
| NOV ’24 | 1293 | 0.25 |
| Chicago Wheat | ||
| DEC ’23 | 595.5 | -6.5 |
| MAR ’24 | 622 | -6.75 |
| JUL ’24 | 647.25 | -7.25 |
| K.C. Wheat | ||
| DEC ’23 | 722.75 | -4.5 |
| MAR ’24 | 728 | -5.75 |
| JUL ’24 | 718 | -5.75 |
| Mpls Wheat | ||
| DEC ’23 | 759.75 | -7 |
| MAR ’24 | 778.5 | -6 |
| SEP ’24 | 787 | -7 |
| S&P 500 | ||
| DEC ’23 | 4559.25 | -6.5 |
| Crude Oil | ||
| NOV ’23 | 84.96 | 2 |
| Gold | ||
| DEC ’23 | 1966.9 | 1 |
Grain Market Highlights
- A quiet news day and a 3-day weekend ahead kept many traders on the sidelines. Others covered short positions, as December corn consolidated within yesterday’s trading range to close only moderately higher on the day.
- Another flash sale of soybeans to unknown destinations, the fifth in a row, and rallies in both crude and palm oil lent support to the soybean and soybean oil markets, although weaker meal added resistance to soybeans which settled only slightly higher after giving up overnight gains.
- After trading on the positive side of unchanged, all three wheat classes fell victim to continued short selling on weak export demand and the possibility of a new Black Sea grain deal, as traders hedge long positions in other grains with wheat.
- Following through from yesterday’s turnaround on ideas that the U.S. economy is faring better than its European counterparts, the U.S. dollar continued its rally in today’s session overtaking losses from earlier this week. The rally in the dollar may be creating headwinds for U.S. exports, like wheat, which become more expensive in the world market as the dollar rises in value.
- To see the current U.S. 7 day Total Precipitation Forecast and the 8 – 14 day Temperature and Precipitation Outlooks courtesy of the NWS and NOAA, scroll down to the 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
Active
Sell DEC ’24 Cash
2025
No Action
Puts
2023
Active
Exit All DEC ’23 580 Puts ~ 100c
2024
No Action
2025
No Action
Corn Action Plan Summary
- Grain Market Insider sees an active opportunity to sell the remaining, previously recommended, DEC ‘23 580 puts to lock in gains. At the end of June, Insider recommended buying DEC ’23 580 puts for approximately 30 cents in premium plus fees and commission. At the time, the U.S. Drought Monitor was showing dryness across the Midwest and weather forecasts were calling for hot and dry conditions. Since then, conditions have improved and DEC ’23 corn has dropped over 100 cents with the recommended 580 puts gaining over 200% in value. With much of the growing season behind us, we are at the time of year when market lows are often made, and while the market may continue to recede into harvest, it is still subject to unforeseen weather like the 2020 derecho, or headlines from the Black Sea that could shock prices higher.
- Grain Market Insider sees an active opportunity to sell a portion of your 2024 corn crop today. The 2023 growing season has been marked by hot and dry conditions, changing weather forecasts, and geopolitical volatility that has moved prices dramatically in both directions for both the 2023 and 2024 crops. We recognize that $5 is not the $6 or $7 that we have seen in recent memory, but much like the runup in 2012, some of the best prices for the 2013 crop were made in the summer of 2012 before they retreated that fall and into the next calendar year. Now that the 2023 growing season is winding down, 2024 prices continue to be historically favorable to get another early sale on the books, and Grain Market Insider suggests selling another portion of your 2024 production on a DEC 24 HTA contract, or DEC 24 Futures contract, so basis can be set at a later more advantageous time.
- No Action is currently recommended for 2025 corn. 2025 markets are very illiquid right 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.
Market Notes: Corn
- Corn prices consolidated, trading within Thursday’s trading range as the market squared positions for the 3-day weekend, waiting for new news. Dec corn gained 3-1/4 cents on the day but was still down 6-1/2 cents on the week.
- News was relatively quiet on Friday as the market keeps a close eye on the forecast for excessive heat across the middle of the country going into next week. While most of the corn crop is in the finishing stages, the high temperature will speed up maturity, and limit any additional potential the corn crop could have in most areas.
- Grain markets are becoming concerned about the water levels on the Mississippi River for the fall harvest window. Barge restrictions have been put in place, limiting grain movement, and will have the potential to impact cash basis levels going into the fall months.
- September corn futures moved into the delivery window against long contract positions, and again the CBOT reported “Zero” deliveries against the September contract, which is supportive of price.
- The wheat market and outside markets have potential to influence the corn price going forward. Wheat futures continue to push to new calendar year lows and a strong U.S. Dollar Index limited gains, but crude oil closed at its highest levels since last summer, which should support ethanol and corn prices.
Above: After trading mostly sideways since the end of July, December corn posted a bearish reversal on 8/21 after testing the 495 – 516 resistance level. While the reversal is a bearish development, prices could turn higher if the market receives additional bullish input. Should that happen, resistance above the market remains between 495 – 516. If not and prices turn lower, support 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 action is recommended for 2023 soybeans. This season the market has experienced a lot of volatility, not only from USDA reports but also from the changing weather forecasts, crop conditions, and export sales. We ended the month of July experiencing hot conditions with little rainfall and weak export sales. Since then, conditions have become more favorable, and export sales have picked up. While much of the crop remains in drought conditions, which can maintain upside potential, timely rains may come and push prices lower. Much like in 2012, when July was dry, and the pattern changed in August, when decent rain fell in parts of the western Corn Belt and IL, sending Nov ’12 soybeans down 20%. For now, Insider may not consider suggesting any additional sales until after harvest. Although, we will continue to monitor the market for any upside opportunities in the coming weeks.
- No action is recommended for 2024 crop. Grain Market Insider continues to monitor any developments for the 2024 crop, though it may not be until after harvest or toward year’s end before we will consider recommending any 2024 crop sales.
- No Action is currently recommended for 2025 Soybeans. 2025 markets are very illiquid right 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.
Market Notes: Soybeans
- Soybeans ended the day slightly higher and essentially unchanged despite prices beginning the session significantly higher. Soybean meal closed lower, but soybean oil ended higher with support from crude oil and higher Malaysian palm oil.
- Export sales have been active with a new sale reported every day this week as the U.S. becomes more competitive with Brazilian offers for new crop soybeans. Today a sale of 198,000 mt of soybeans was sold to unknown destinations.
- There are slight chances for better rainfall in the middle of the Corn Belt over the next 7 days, but the benefits may be limited with harvest nearing. Temperatures are forecast to be hot but have turned slightly cooler than expected over the next week. The heat and dryness may push the crop into early maturity.
- Soybean crush has been very active with profitable crush margins. The U.S. Energy Department reported that 1.21 billion pounds of soybean oil was used to make biofuels in June which is a new record high and up 49% from a year ago.
Above: After filling in the chart gap that was left between 1390-1/2 and 1394-3/4, the market has drifted lower in conjunction with stochastic indicators crossing over in overbought conditions indicating a possible downward market reversal. For now, if prices continue to slide lower, the market may find support near 1330 and again around 1300. If prices regain upward momentum, initial resistance will be in the 1400 – 1410 area.
Wheat
Market Notes: Wheat
- Current U.S. export sales commitments are running 23% behind last year, and the slow pace not only adds resistance to prices but also fuels funds that are using the wheat market to hedge long positions in soybeans.
- IKAR raised its production estimate for the Russian wheat crop to 91 mmt, up from 89.5. The agency also increased its Russian wheat export estimate to a record 50 mmt, which is up from last year’s 46 mmt.
- News of UN Sec-General Guterres sending Russia a set of proposals to revive the Black Sea grain deal is likely adding resistance to the market. Putin and Turkish President Erdogan are set to meet Monday to begin discussions.
- Australia has been dealing with very hot and dry conditions for this year’s wheat crop. After forecasting a 34% decline in production back in June, some analysts believe the country may reduce exports by as much as 10 mmt for the 23/24 season, which could be a major blow to a key buyer, China. By comparison, Australia exported over 32 mmt for 22/23.
- El Nino rains have yet to come to help Argentina’s wheat crop, which is beginning to lose its yield potential in prime areas according to Buenos Aires Grain Exchange. Although forecasts for rain in September could help the crop get through its next growth stage.
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
Active
Enter(Buy) JUL ’24 590 Puts ~ 30c
2025
No Action
Chicago Wheat Action Plan Summary
- No new action is recommended for 2023 crop. Since the end of May, the wheat market has been largely rangebound, influenced by weak demand, changing headlines from the Black Sea region, and the corn market with its own demand and weather concerns. With harvest in the rearview mirror, U.S. production has been better than expected and demand remains weak. Still, many supply questions remain unanswered from the Black Sea region, which could push prices in either direction. While Insider will continue to monitor the downside for any breach of major support, we would need to see prices pushed toward the 800 level before considering any additional sales.
- Grain Market Insider sees an active opportunity to buy July ’24 590 Chicago Wheat Puts on a portion of your 2024 SRW Wheat crop. While weather has been a dominant feature of the market this year with dry growing conditions and harvest delays, slow export demand and cheap Russian exports remain major headwinds to prices. The market has turned lower in recent weeks and July Chicago wheat broke through a major support area around 657. Closing below 657 support signals that the major trend may be turning down and poses the risk that prices could erode further in the weeks ahead, possibly to the next level of support, the May low of 573. If the 573 level fails, the next support could be the 468 – 514 level. Buying July ’24 590 Chicago wheat puts on a portion of our SRW production should help protect future sales from further downside erosion, while still allowing for upside appreciation should the market turn higher.
- No Action is currently recommended for 2025 Chicago Wheat. 2025 markets are very illiquid right 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.
Above: The Chicago wheat market appears to be consolidating between 650 and 596. If the market breaks out to the upside, the next level of resistance may be found near 665, if not, and the market drifts lower, the next level of support below the market may be found near 573.
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
- We continue to look for better prices before making any 2023 sales. As more becomes known about this year’s crop with some reports of better-than-expected yields, questions remain about the world wheat supply. War continues in the Black Sea region, Ukraine’s export capabilities remain uncertain, and dryness continues in key production areas of the world. With a world stock-to-use ratio at its lowest level in 8 years, we continue to target 950 – 1000 in the December futures as a potential level to suggest the next round of sales. At the same time, we continue to watch the bottom end of the range that prices have traded in since late 2022. A close below the bottom end would reduce the probability of getting to 950 – 1000 and would increase the risk of prices falling into the 600 – 650 range.
- No action is recommended for 2024 K.C. wheat. This year has been dominated by production concerns regarding the 2023 crop, and considering slow export demand and cheap Russian prices continue to be major headwinds for U.S. prices. Insider recently recommended buying July ’24 puts to protect unsold grain if prices continue to retreat further. While war persists in the Black Sea region, production concerns continue in the southern hemisphere due to El Nino, and the world stocks-to-use ratio remains at an 8-year low, there are still many uncertainties that could shock prices higher. Plenty of time remains to market the 2024 crop, and after recommending buying July ’24 660 puts, unsold bushels will be protected if prices make new lows, and if prices turn around and rally higher, Insider will be looking for opportunities to consider recommending additional sales north of 850.
- No Action is currently recommended for 2025 KC Wheat. 2025 markets are very illiquid right 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.
Above: December KC wheat broke through the bottom end of its trading range and may be poised to test the September ’21 low of 670 unless bullish input enters the market to turn prices higher. If so, initial resistance above the market may rest near 772 – 780.
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 action is currently recommended for the 2023 New Crop. Weather has been a dominant feature to price volatility this growing season, with continued dryness concerns in not only the US, but also Canada and Australia. While there typically isn’t a strong likelihood of higher prices until after harvest is complete, both weather and geopolitical events can change suddenly to move prices higher. Insider will consider making sales suggestions if prices improve, while also continuing to watch the downside for any further violations of support.
- No action is currently recommended for 2024 Minneapolis wheat. This year has been dominated by production concerns regarding the 2023 crop, and considering slow export demand and cheap Russian prices continue to be major headwinds for prices. Insider recently recommended buying July ’24 puts to protect unsold grain if prices continue to retreat further. While war persists in the Black Sea region, production concerns continue in the southern hemisphere due to El Nino, and the world stocks-to-use ratio remains at an 8-year low, there are still many uncertainties that could shock prices higher. For now, plenty of time remains to market the 2024 crop and Insider is content to see how the market develops before suggesting making any additional sales. After recommending buying July ’24 K.C. wheat 660 puts for the liquidity and high correlation to Minneapolis wheat’s price movements, unsold bushels will be protected if prices make new lows, and if prices turn around and rally higher, Insider will be looking for opportunities to consider recommending additional sales.
- No Action is currently recommended for the 2025 Minneapolis wheat crop. 2025 markets are very illiquid right 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.
Above: The December contract resumed its downward slide and traded through the May low of 769, and is now showing signs of being oversold, which can be supportive if prices turn higher. If prices do turn higher, nearby resistance could be found near 785 – 795 and again around 810 – 820. Otherwise, the next support level below the market could come in near the June ’21 low of 730.
Other Charts / Weather
