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Grain Market Recap

This week literally and figuratively started out with a bang. The news that Russia destroyed Ukrainian grain facilities along the Danube on Sunday evening sent corn and wheat futures soaring higher on Monday, but neither corn nor beans were able to maintain their strength through the balance of the week. Meanwhile, November soybeans floated continuously lower as the week progressed in spite of a flurry of flash sales on 2023-24 new crop soybeans. 

 

Corn:

December corn futures charged higher on last Sunday night’s open after 2 Ukrainian grain export facilities along the Danube river were destroyed. That strength permeated in Monday’s session, and December corn settled 32 cents higher at 568-2. The risk in the market rapidly turned toward, “What if peace talks begin?”, and the strength in December corn was effectively sapped. Corn futures proceeded to sell off each day following Monday’s rally, and closed 12 cents lower on the week at 530-2.. Unfortunately, the weakness in the contract is well substantiated. Between significantly higher than expected planted acreage, and a lackluster demand situation (exports down more than 32% year over year), it’s been very difficult to buy into a bullish narrative. Corn bulls looking to re-enter the market next week will have to look toward 518-525 to find support. Funds remain mostly undecided on the December corn contract, holding a net position of just 25,054 contracts. Broken down, that is 180,113 long positions, and 155,059 short positions.

 

Soybeans: 

It was mostly a ho-hum trade for November soybeans this week. Much like corn and wheat, November soybeans put in their highest price for the week during Monday’s trading session. After trading to our 4-star resistance level at 1435, November soybeans  The market was largely unimpressed with the flash sales reported on Wednesday, Thursday, and Friday, and proceeded to close the week at 1382-4, down 19-2 cents. Unlike corn, the bullish narrative for soybeans is much easier to believe. As the story goes, “the bean crop is made in August”, and we are set to experience extreme heat across the majority of the corn belt in the coming days and weeks. Furthermore, we have notably fewer acres than anticipated allocated to soybeans, and the demand outlook is much stronger than corn. At 182-4, soybeans are sitting on the lower end of our pivot pocket, and Bulls will look for support around 1378 next week to begin making that next push higher. Managed funds are buying into the bullish narrative, holding a sizable net-long position of 111,784 contracts (142,159 long positions and 30,375 short positions).

 

Wheat: 

The Russia-Ukraine conflict news pushed September wheat futures to the limit on Monday, closing 60 cents higher at 757-4. The high for the week came on Tuesday, while the contract had expanded limits, trading all the way up to 777-2 (our noted 4-star resistance level), before ultimately moving lower. As the risk transitioned toward, “What if peace talks resume in the Black Sea?”wheat futures lost their vigor pretty rapidly. After settling lower on Wednesday, Thursday, and Friday, September wheat futures closed the week just 6-6 cents higher at 704-2. Wheat futures have made modest gains over the last three weeks, but it largely remains the least supported component of the grain complex. Put simply, demand just isn’t there for American wheat. Rallies in the wheat complex are appealing selling opportunities, and bears will look for the contract to hit resistance between 744-745 next week. Despite the rally over the last three weeks, managed funds remain mostly in the bear camp holding a net-short position of 42,109 contracts (57,876 long positions and 99,985 short positions). 

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