Grain Market Insider: September 20, 2023
All prices as of 2:00 pm Central Time
| Corn | ||
| DEC ’23 | 482.25 | 6 |
| MAR ’24 | 496.75 | 6.25 |
| DEC ’24 | 511.25 | 4.5 |
| Soybeans | ||
| NOV ’23 | 1320 | 4.5 |
| JAN ’24 | 1336.25 | 4.5 |
| NOV ’24 | 1272.25 | 8 |
| Chicago Wheat | ||
| DEC ’23 | 588.75 | 4.75 |
| MAR ’24 | 614.75 | 4.5 |
| JUL ’24 | 639.5 | 3.5 |
| K.C. Wheat | ||
| DEC ’23 | 729 | -2 |
| MAR ’24 | 734.5 | -1.75 |
| JUL ’24 | 724.25 | 1.75 |
| Mpls Wheat | ||
| DEC ’23 | 783.5 | 3.75 |
| MAR ’24 | 799 | 4 |
| SEP ’24 | 803.75 | 3 |
| S&P 500 | ||
| DEC ’23 | 4458.75 | -31.25 |
| Crude Oil | ||
| NOV ’23 | 89.4 | -1.08 |
| Gold | ||
| DEC ’23 | 1957.2 | 3.5 |
Grain Market Highlights
- While last week’s ethanol production tumbled well below expectations, the corn market was resilient and closed higher on the day with follow-through buying coming in part from Tuesday’s bullish reversal.
- Support near the 100-day moving average held again today as soybeans garnered strength from higher meal prices and a flash sale of 120k mt to unknown destinations for the 23/24 marketing year.
- Soybean meal lent support to soybeans as it uncovered follow through strength and technical buying from Tuesday’s bullish reversal. While soybean oil continued its move lower in concert with lower palm oil, as falling open interest implies traders likely liquidated long positions.
- Higher Paris milling wheat futures and a lower US dollar provided underlying support to the wheat markets which traded on both sides of unchanged prior to settling the day mixed, with Chicago and Minneapolis on the positive side alongside deferred K.C. contracts. While nearby K.C. closed lower on the day.
- The US dollar traded lower throughout the day in anticipation of the Fed leaving interest rates unchanged at the end of today’s meeting, but rallied on comments implying that another rate hike may be needed in the future, and they may remain elevated for some time. The lower dollar likely added some support to the grain markets, as it makes US exports more competitive in the world market.
- To see the current U.S. 3 – 4 week Temperature and Precipitation Outlooks, courtesy of the Climate Prediction Center, 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
- Additional short-covering and technical buying supported the corn market as the December contract closed 6 cents higher on the session. The friendly price action was a good follow-through from yesterday’s reversal higher in trade.
- Ethanol production last week slipped to 94.7 million barrels, down from 100.4 million barrels the previous week, though still well above last year’s production at 88.8 million barrels. Corn used for ethanol productions in the first 15 days of the marketing year totaled 209 million bushels, relatively steady with last year’s usage levels.
- Corn harvest continues to ramp up, with early yield results being extremely variable based on the weather for the past growing season. Harvest pressure will likely affect the cash basis. The long-range forecast should support harvest activity overall as rainfall totals will be variable, but temperature trend above average for the next two weeks.
- Though extremely early, Brazil weather could be triggering some weather premium into the grain markets. Forecast are staying on the hot and drier side for large portions of Brazil and could impact planting pace or germination in some regions.
- The strong price action sets the corn market up for some potential bullish follow through. Managed money is holding a large short position in the corn market, and the turn higher could trigger additional short covering and technical buying.
Above: The corn market has largely been rangebound since the beginning of August, and it continues to be under the influence of two bearish reversals, one posted on 8/21 and the other on 8/29. Above the market, resistance remains between 495 – 516, and below the market, 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 changing weather patterns, crop conditions, and export sales. While export demand currently lags last year’s numbers, ending stocks are also currently estimated at a tight 220 million bushels. 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 began the day lower but ended the day higher after finding support again at the 100-day moving average. Soybean meal also ended higher while soybean oil moved lower. Technical buying likely kicked in with soybean futures sharply oversold.
- This morning, the USDA confirmed a sale of 120,000 tonnes of US soybeans for delivery to unknown destinations for the 23/24 marketing year. This is the second sale of the week as US exports pick up slightly but remain overshadowed by Brazil’s exports.
- Yesterday, Brazil’s CONAB estimated that the soybean crop for 23/24 would increase to a new record large production of 162.8 mmt, as planted acres expand by 2.8%. Many of those acres are coming from a decrease in corn acres, but dry weather from the El Nino weather pattern could hinder Brazil’s production.
- Low water levels on the Mississippi River are negatively impacting basis for many producers, but rains forecast in the northwestern Plains and Midwest through Saturday could make their way to the river and raise water levels in the next two weeks.
Above: Since negating the bullish reversal of September 13, the market has retreated into the 1300 – 1330 support area and is becoming oversold. Should 1300 support fail, the next target area of support is near the May 31 low of 1270. If prices turn higher, initial resistance sits between 1368 and the 50-day moving average.
Wheat
Market Notes: Wheat
- Today the Federal Reserve issued a pause in interest rate hikes but did indicate that rates may stay higher for longer. This pause may have gotten the grain bulls interested, with higher closes in corn, soybeans, and Chicago wheat.
- The US Dollar Index was marginally lower today and as of writing, still negative but much closer to neutral. The dollar is also overbought and may be due for more downside.
- In addition to the lower US dollar and steady interest rates, Paris milling wheat futures rallied about 0.5% in today’s trade and lent additional support to US wheat prices.
- Russia continues to be the anchor that keeps the US wheat market dragging along. Their total grain harvest is expected to reach 130 mmt (with 123 mmt harvested so far). According to their agriculture minister, they also expect to export 60 mmt of grain this season.
- The EU’s soft wheat exports as of September 17, have totaled 6.32 mmt since the season began on July 1, representing a 27% decrease from last year’s totals of 8.7 mmt for the same time frame.
- Egypt will reportedly source almost one-half million tonnes of wheat from France and Bulgaria. Originally, they were going to purchase from Russia, but apparently Moscow blocked the deal due to a pricing disagreement which fell below the Russian floor of $270 per ton.
Action Plan: Chicago Wheat
Calls
2023
No Action
2024
No Action
2025
No Action
Cash
2023
Active
Sell DEC ’23 Cash
2024
No Action
2025
No Action
Puts
2023
No Action
2024
No Action
2025
No Action
Chicago Wheat Action Plan Summary
- Grain Market Insider sees an active opportunity to sell a portion of your 2023 Soft Red Winter wheat crop. The wheat market has been very volatile in recent weeks, following corn on weather and headlines regarding Russia and Ukraine. Harvest is now behind us, and while war continues in the Black Sea and weather continues to be variable, demand remains weak with cheap Black Sea supplies continuing to undercut U.S. offers. Of course, changing headlines can still jolt the market higher. Prices have retraced into nearby resistance, and Insider recommends taking advantage of this rally to make an additional sale on your 2023 crop.
- 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 800, 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: Following the USDA’s 9/12 update, the market posted a bullish reversal and traded into the 590 – 615 resistance area. If the market breaks through to the upside, further resistance could be found between 645 – 665. Otherwise, if the market turns lower, the next level of support lies between 570 and the December 2020 low of 565.
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 action is recommended for 2023 K.C wheat crop. Since the end of May, the wheat market has been 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 bin, U.S. production has been better than expected and demand remains weak. Still, many supply questions remain unanswered from the Black Sea region and the southern hemisphere, 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 750 – 800 before considering any additional sales.
- 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, and plenty of time remains to market the 2024 crop. 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 800.
- 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: Following the USDA update on September 12, the December contract posted a bullish key reversal, where the market made a new low for the move, yet closed higher. If prices continue higher, resistance above the market remains near 770 – 780. Otherwise, support below the market rests near the September 12 low of 709, and again near the September ’21 low of 670.
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 this season with production concerns not only in the U.S., but also Canada and Australia. While prices have been weak due to low export demand, weather and geopolitical events can change suddenly to move prices higher. If prices begin to improve, Insider will consider making sales suggestions, 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 K.C. wheat 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, and plenty of time remains to market the 2024 crop. 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 north of 800.
- 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, and while the market initially retreated, the reversal was not negated. Currently, nearby resistance remains near 785 – 795 and again around 810 – 820. The next support level below the market remains near the September 5 low of 756-3/4, and then near the June ’21 low of 730.
Other Charts / Weather
