Grain Market Insider: September 6, 2023
All prices as of 1:45 pm Central Time
| Corn | ||
| DEC ’23 | 485.75 | -0.25 |
| MAR ’24 | 500 | -1 |
| DEC ’24 | 511 | -1.25 |
| Soybeans | ||
| NOV ’23 | 1376.25 | 11.25 |
| JAN ’24 | 1389.25 | 10.25 |
| NOV ’24 | 1297.5 | -1.25 |
| Chicago Wheat | ||
| DEC ’23 | 609 | 9.75 |
| MAR ’24 | 634.5 | 9.5 |
| JUL ’24 | 659 | 11.25 |
| K.C. Wheat | ||
| DEC ’23 | 749.5 | 25 |
| MAR ’24 | 752 | 23.25 |
| JUL ’24 | 737 | 19.25 |
| Mpls Wheat | ||
| DEC ’23 | 782.5 | 20.25 |
| MAR ’24 | 800.5 | 20.5 |
| SEP ’24 | 810 | 16.5 |
| S&P 500 | ||
| DEC ’23 | 4517 | -35 |
| Crude Oil | ||
| NOV ’23 | 86.82 | 0.81 |
| Gold | ||
| DEC ’23 | 1942 | -10.6 |
Grain Market Highlights
- Despite the USDA’s 3% drop in corn crop’s good/excellent crop rating to the lowest level since 2012, the corn market rallied into resistance near the 20-day moving average and faded lower into the close.
- A 5% drop in good/excellent crop ratings fueled the soybean market to finish higher on the day, though intraday profit taking and weakness from the corn market likely weighed on prices that closed just below last night’s open.
- Soybean meal ended the day higher with carryover strength from soybeans, while soybean oil traded lower on profit taking and lower palm oil.
- Technical buying and the addition of war premium with renewed attacks on Danube River facilities and Kyiv sent the wheat market higher throughout the day, with K.C. contracts leading the way.
- To see the current U.S. 7-day 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
- Despite strength in other grain markets and reduced crop ratings, corn futures faded off session highs, with December corn finishing ¼ cent lower on the session.
- Front-end futures are still supported by the lack of deliveries versus the September contract, reflecting a tight overall corn supply.
- Price action was relatively neutral on the session as corn prices consolidated at the top of yesterday’s strength. The lack of follow-through given slightly more bullish news and strength in other grains was disappointing overall.
- USDA crop ratings saw the corn crop drop to 53% good/excellent, down 3% from last week. Key states of Illinois and South Dakota lost 10% week over week. At 53% good/excellent, this is the lowest rating for U.S. corn crop since 2012, which was significantly lower at 22% good/excellent. Warm weather has pushed maturity with 18% of the crop now mature, 2% above 5-year average.
- Brazil corn harvest continues to pressure the market. AgRural estimates Brazil’s 2nd crop harvest has reached 88% as of August 31st, vs. 98% last year. They also estimate the 1st season crop for 23/24 is 13% planted, vs. 9% last year.
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.
Corn condition percent good-excellent (red) versus the 5-year average (green) and last year (pink).
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 higher along with soybean meal, while soybean oil closed lower. Yesterday’s crop ratings were bullish for soybean prices, but the recent decline in Malaysian palm oil has put pressure on soybean oil.
- Yesterday’s crop ratings showed the good to excellent rating for soybeans falling sharply by 5% to 53%. The poor to very poor rating also increased by 3% to 17%. These are the worst ratings since 2012.
- Palm oil futures fell for the third consecutive day which pressured soybean oil, but India is set to import 10 mmt of palm oil which is a 26% increase from last year, and global palm oil production is expected to fall by 10% due to poor production.
- The Argentinian government has once again introduced a “soybean dollar” program to incentivize producer selling. This program is a new version which allows exporters to keep 25% of the foreign currency received from their sales abroad instead of having to fully sell it in the official exchange market.
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.
Soybeans condition percent good-excellent (red) versus the 5-year average (green) and last year (pink).
Wheat
Market Notes: Wheat
- The addition of war premium on oversold conditions likely led to the market’s strength, as all three classes of wheat closed higher on the day with follow-through buying from Tuesday’s bullish reversals.
- There were renewed drone attacks on Kyiv and Ukraine’s Ag facilities in the Danube River port of Ismail that damaged grain elevators and killed one worker. Additionally, according to Romania’s President, one of the attacks came within a half mile of their border with Ukraine, and with Romania being a NATO member, the risk of escalation is heightened.
- SovEcon raised its 23/24 estimate for Russia’s wheat exports to a record 48.6 mmt, up from 48.1 mmt. The agency cited “increases in production, high export pace, and record-breaking sales early in the season,” for its reasoning. The high export numbers further show Russia’s recent dominance of the world wheat export market.
- As for the southern Hemisphere, Conab revised its estimate of Brazil’s wheat crop to 10.2 mmt, down 0.2 mmt from its last report. The revised estimate is in line with the USDA’s most recent forecast of 10.3 mmt.
- The USDA reported that Spring wheat harvest is 74% complete as of Sunday, September 3, 3% behind the average for this date, but a 20% jump from last week. Winter wheat planting has also begun, with the crop estimated to be 1% planted versus 3% on average.
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 continues to be rangebound with initial support at the low end coming in near 590 – 595, with resistance at the upper end near 650. 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 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.
Winter wheat percent planted (red) versus the 5-year average (green).
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.
Spring wheat percent harvested (red) versus the 5-year average (green) and last year (purple).
Other Charts / Weather
