Grain Market Insider: September 11, 2023
All prices as of 1:45 pm Central Time
| Corn | ||
| DEC ’23 | 485.75 | 2 |
| MAR ’24 | 500.25 | 2.25 |
| DEC ’24 | 512 | 3.5 |
| Soybeans | ||
| NOV ’23 | 1369 | 6 |
| JAN ’24 | 1384 | 6 |
| NOV ’24 | 1302.5 | 6.75 |
| Chicago Wheat | ||
| DEC ’23 | 584.5 | -11.25 |
| MAR ’24 | 610.75 | -11 |
| JUL ’24 | 637.5 | -10.25 |
| K.C. Wheat | ||
| DEC ’23 | 723.75 | -8.25 |
| MAR ’24 | 726.75 | -8.75 |
| JUL ’24 | 713.75 | -9 |
| Mpls Wheat | ||
| DEC ’23 | 766.75 | -4 |
| MAR ’24 | 783.25 | -4.5 |
| SEP ’24 | 792.75 | -2.5 |
| S&P 500 | ||
| DEC ’23 | 4539.75 | 28.5 |
| Crude Oil | ||
| NOV ’23 | 86.75 | -0.06 |
| Gold | ||
| DEC ’23 | 1946 | 3.3 |
Grain Market Highlights
- Position squaring and mild short covering ahead of tomorrow’s USDA update kept the corn market in positive territory, despite export inspections that came in on the light side.
- Anticipation of lower ending stocks, support from soybean meal, and position squaring before the USDA report kept the soybean market in a relatively tight range, but solidly on the positive side of unchanged at the close of today’s markets.
- Follow through buying from Friday’s bullish reversal lent support to soybean meal, while increasing palm oil supplies continue to weigh on the soybean oil market. On balance, crush margins continue to be very profitable, with December Board Crush gaining 1-3/4 cents, and closing at 187-1/4 per bushel.
- Weekly export inspections that came in at the upper end of expectations for the week ending September 7 did not translate into support for the wheat market, as total cumulative inspections remain 26% below last year. All three classes closed lower on the day, with both Chicago and K.C. contracts making new lows for the move, negating last week’s bullish reversals.
- To see the current U.S. 8 – 14 day Temperature and Precipitation Outlooks, and the 8 – 14 day precipitation forecasts for Brazil and Argentina, 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
No Action
2025
No Action
Puts
2023
No Action
2024
No Action
2025
No Action
Corn Action Plan Summary
- No action is recommended for 2023 corn. Volatility has been a dominant feature this growing season with slow demand and increased planted acres, followed by hot and dry growing conditions that rallied prices nearly 140 cents and back down again. With the growing season mostly 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 influences that could move prices higher. For now, after locking in gains from the previously recommended purchased 580 puts, Insider is content to wait until after harvest when markets tend to strengthen before considering suggesting any additional sales.
- No action is recommended for 2024 corn. Like the 2023 corn market, prices for the 2024 crop have been dominated by volatility from slow exports and adverse growing conditions which led to a near 80 cent trading range during the summer months. Plenty of time remains to market the crop, and while demand continues to be slow, many uncertainties remain that can move prices higher. After recommending an additional sale for the 2024 crop, Insider may not consider suggesting any further sales until later this winter or possibly even spring. We will continue to monitor the market for any upside opportunities in the coming weeks.
- 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
- Consolidation continues with position squaring before Tuesday’s USDA WASDE report. Dec corn added 2 cents on the session as prices moved in a quiet 6 cent trading range.
- Export inspections for the week ending September 7 remain light. The U.S. shipped 24.6 mb of corn last week. China did receive shipment on 8.8 mb of corn last week.
- Early harvest could keep pressure on the corn market. Forecasted weather for the next couple of weeks is to remain dry overall, which could aid harvest. Cash basis could fade as fresh bushels are moved into the cash market.
- Corn ratings are expected to fall again this week. Analysts forecast on average that the weekly Crop Progress report would show 52% of the U.S. corn crop in good to excellent condition, down 1 percentage point from the previous week. Crop ratings move more to the back burner this time of year, as crop conditions are expected to slip, and the crop matures.
- Tomorrow’s USDA report will be looking at crop production and likely making demand adjustments. Expectations are for yield to be lowered to 173.5 bushels/acre from 175.1 last month. If the USDA makes potential demand adjustments, forecast carryout could still be over 2.0 billion bushels. A sleeper item in the report could be the addition of more planted corn acres.
Above: The corn market has largely been rangebound since the beginning of August. Two bearish reversals have been posted, one on 8/21 and another on 8/29, and the market continues to be under their influence, though trade has been primarily sideways. Above the market, resistance remains between 495 – 516, and below the market, support may be found near 460 and again near 415.
Corn Managed Money Funds net position as of Tuesday, Sept. 5. Net position in Green versus price in Red. Managers net sold 6,565 contracts between Aug. 29 – Sept. 5, bringing their total position to a net short 93,913 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 action is recommended for 2023 soybeans. This season the market has experienced a lot of volatility, not only from USDA reports but also from changing weather patterns, crop conditions and export sales. While export sales have improved, growing conditions have continued to be variable and questions remain regarding what final yields will be, keeping prices supported. 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 higher with support from higher soybean meal, while soybean oil was relatively unchanged on the day. Soybean oil has trended lower over the past month, possibly limiting gains in soybeans, as global veg oils slip.
- Tomorrow, the USDA will release the WASDE report, in which they will revise yields, export demand, and potentially acreage. Average estimates are for yield to drop by 0.7 bpa, for harvested acres to increase slightly, and most importantly, for ending stocks to fall by about 40 mb for 23/24, which could elicit a bullish market reaction.
- Malaysian palm oil has been on a downward trajectory, falling over 3% today and 5.2% last week, as they see the highest palm oil inventory in 7 months with August production nearly 9% above July. While veg oils have been slipping, crude oil continues to trend higher.
- Crop progress will be released later today, and estimates are for good to excellent ratings to fall by 2-3%. The soybean crop seems to be shrinking at a time when export demand for soybeans is ticking up, and the ending stocks number may be getting dangerously tight. Brazil’s monster soybean crops are the biggest bearish factor.
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.
Soybean Managed Money Funds net position as of Tuesday, Sept. 5. Net position in Green versus price in Red. Money Managers net sold 8,175 contracts between Aug. 29 – Sept. 5, bringing their total position to a net long 82,810 contracts.
Wheat
Market Notes: Wheat
- Wheat export inspections of 14.9 mb brings the total 23/24 inspections to 175 mb, which is down 26% from last year. Total exports are estimated by the USDA at 700 mb, however, this could potentially be revised in tomorrow’s WASDE report.
- Tomorrow’s USDA report is expected to have minimal changes for wheat numbers. U.S. carryout is expected to come in at 614 mb versus 615 mb previously, and world ending stocks are anticipated to be 265.0 mmt versus 265.61 mmt. If true, that would be the lowest in seven years.
- Offering weakness to U.S. futures prices, Paris milling wheat futures gapped lower on Monday, and though the U.S. Dollar Index was lower today, it has been higher for eight consecutive weeks.
- With Russia’s wheat harvest now 71% complete, Sov Econ revised their Russian export estimate higher, from 48.1 to 48.6 mmt., and according to consultancy IKAR, Russia’s FOB export values fell to $240 per mt., both of which keep pressure on U.S. exports.
- Russia is said to have rejected offers from the UN and Turkey that were aimed at re-opening the Black Sea export corridor. For now, Ukraine will have to transport what they can by rail and truck out of Europe, but many European nations have refused to import Ukrainian grain for fear of lowering their domestic values.
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 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.
- No action is recommended for 2024 Chicago wheat. Considering slow export demand and cheap Russian prices continue to be major headwinds for U.S. prices, Insider recommended buying July ’24 puts to protect unsold grain if prices continue to retreat further. Plenty of time remains to market the 2024 crop with many uncertainties that could shock prices higher, like the world stocks to use ratio at an 8-year low, war in the Black Sea and production concerns in the southern hemisphere. If prices turn around and rally higher, Insider will be looking for opportunities to consider recommending additional sales north of 825, if not, and prices make new lows, unsold bushels will be protected by the recommended July ’24 590 puts.
- 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 recently broke out of the lower end of its trading range, which signals prices could continue to move lower. The market is showing signs of being oversold, which can be supportive if prices reverse to the upside. For now, the next level of nearby support is between the May low of 573 and the December 2020 low of 565, with initial resistance on the upside coming in between 590 and 615.
Chicago Wheat Managed Money Funds net position as of Tuesday, Sept. 5. Net position in Green versus price in Red. Money Managers net bought 1,200 contracts between Aug. 29 – Sept. 5, bringing their total position to a net short 78,681 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
- 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 K.C. wheat posted a bullish reversal on September 5 from oversold conditions and followed through into the previous trading range. If prices continue higher, resistance above the market remains near 772 – 780. Otherwise, support below the market rests near the September 5 low of 724-1/2, and again near the September ’21 low of 670.
K.C. Wheat Managed Money Funds net position as of Tuesday, Sept. 5. Net position in Green versus price in Red. Money Managers net sold 3,873 contracts between Aug. 29 – Sept. 5, bringing their total position to a net short 9,838 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 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: On September 5, the December contract posted a bullish reversal from oversold conditions with some follow-through. If prices continue to the upside, nearby resistance could be found near 785 – 795 and again around 810 – 820. Otherwise, the next support level below the market is near the Sept. 5 low of 756-3/4, and then near the June ’21 low of 730.
Minneapolis Wheat Managed Money Funds net position as of Tuesday, Sept. 5. Net position in Green versus price in Red. Money Managers net sold 5,179 contracts between Aug. 29 – Sept. 5, bringing their total position to a net short 11,413 contracts.
Other Charts / Weather
