AUDIO COMMENTARY

Will prices take off until summer/fall
Will prices do what they’ve done the past few years
Where’s the top for corn & beans?
Should you make sales
Demand/Funds

Listen to today's audio below

MARKET UPDATE

Futures Prices Close

Overview
Grains rally across the board today, with soybeans and wheat adding onto strength from yesterday.

The war has peaked some interest and discussion regarding possible smaller crops in Ukraine.

The biggest thing today was probably the export sales. They weren’t amazing, but they were good enough to gain some interest from the funds.

Today's Main Takeaways

Corn
Corn posting another day of gains today. Trading almost another +8 cents higher again here today, nearing upside resistance on the charts.

One thing that bulls are looking at is the war headlines. We had news of tanks being sent to Ukraine and saw Russian missle strike, but it just hasn’t provided as much strength to both corn and wheat as the bulls would like. Nonetheless if things keep escalating I can’t help but think this support prices.

However, until there is that massive war headline or some other major change in the headlines, there just isn't that much fresh news to help prices keep pushing higher. But there is definitely the possibility we see this change.

We also have the rains in Argentina which will likely continue to add pressure to both the corn and bean markets for the time being. We also have discussions about more planted acres here in the US.

Despite the favorable South American weather, the overabundance of rains in Brazil could actually start to cause problems and benefit the corn market looking long term. As Brazil is already running behind on their harvest which is slowing the planting of their second crop corn.

For prices to continue higher, bulls would just like to see a greater demand story or more fund interest. Perhaps we see China's appetite for US exports increase, or maybe the war continues to escalate. Bith of these being headlines that could support that demand story.

Main Factors

Chinese appetite
Overall demand
South America weather
- Argentina rain
- Brazil harvest delays
War escalation & headlines
Funds

Taking a look at the charts, corn again making its way up to resistance of the top trend. If you take a look at the faded line, that was our previous trendline, and we saw a clear break through. If corn can again break out to the upside, I don't see a ton of reason why we couldn’t see a test of $7.

Corn March-23

Soybeans
Soybeans able to add onto strength from yesterday following their recent 5 straight days of lower prices.

There really wasn’t anything major to cause the rally today. Biggest thing today might’ve just been the solid export sales following a week of lower prices, perhaps sparked some interest in the funds.

There are still plenty of uncertainties surrounding the bean market. South American weather is still the main thing that has the chance to put pressure on beans going forward. As their forecasts have started to improved. Argentina is finally getting some rain, but traders are still debating how much improvement if any that these rains will make. The other big thing going forward is that Brazil's crop is still expected to be one for the record books.

Another thing being talked about is how much meal Agrentina crushers are going to be able to produce this year, as they have obviously dealt with the terrible drought conditions but also they are still battling inflation and the devaluation of currency. If they do continue to struggle, this could lead to meal demand start to shift towards the US.

Main Factors

South American weather
- Argentina rain & drought
- Is the damage already done?
Chinese appetite for U.S. exports
Soymeal
Funds

The charts actually look pretty good from beans. We bounced almost exactly where we needed to. We remain in a very solid and clear upward trend. Only thing that has me slightly nervous if we can make a leg higher or not is the Argentina rain. If we do break out past our recent highs, there is room to run. But ultimately I think South American weather and other headlines such as China will be the things that dictate whether we see that or not. Beans also sit far ahead of their moving averages, so if they were to see a massive break lower, prices have the possibility to correct down to the $14.50 or so range where the moving averages currently sit.

Soybeans March-23

Wheat
Wheat adding on again to their three day rally off their recent lows. As Chicago and MPLS both gain +8-11 cents while KC rallies an impressive +22 cents.

Export sales today came in better than expected which helped support our small rally today.

Bears continue to look at global competition as the US is just over priced relatively to the rest of the world. But there are some countries like India, whose wheat prices just hit a new high. So ultimately we could see this story start to change.

Recently there has again been more discussion over the war escalation leading to a lot of talk about smaller crops over in Ukraine. Keep in mind Ukraine is one of the worlds leading exporters in wheat. We also have the possibility that both Russia and Ukraines production numbers are simply being overestimated.

We also have some parts of the US expected to hit run into some brutally cold temps. Which opens the way to possible damage to crops that lack snow cover, and some are saying many areas do indeed lack cover due to the recent warm temps.

The funds have been a large part of keeping a lid on wheat prices. But I think we start to see this narrative shift. There is a lot of talk that the funds want out of these long corn and short wheat spreads. I think we see this happen and start to see the funds taking a stab at buying wheat. Further supporting prices to the upside.

So overall, I think we continue to see strength in the wheat market. We are 40 cents off our lows and nearing a break out to the upside. I think all of the possible bullish factors outweigh the bearish ones looking forward, and I think the weather and war lead to some short covering.

Main Factors

War escalation and headlines
U.S. weather, warm temps & possible winter kill
Global prices & competition
Funds

Wheat is so close to breaking its downtrend from October. We already broke our 2023 downtrend. I don’t see why wouldn’t break out and keep pushing higher.

Chicago March-23

KC March-23

MPLS March-23

Highlights & News

USDA raises food price forecasts to increase +7.1% this year.
Mexico is looking to reduce corn imports by 30-40% by 2024.
94% of Russia's winter crops were reported in good conditions.
India announced it will auction government owned wheat to curve domestically high prices.
The ethanol report wasn’t very good, reporting a 7% increase in ethonol inventory.
Bank of Canada said they don't think they'll raise rates past 4.5%.

Other Markets

Crude oil up +1 to 81.16
Dow Jones up +135
Dollar Index up +0.224 to 101.640
Cotton up +0.84 to 87.50

In Case You Missed It..
Here are a few of our past updates in case you missed them

Yesterday's Audio - When to Make Sales
Listen Here

Yesterday's Market Update
Read Here

Jan. 24th Audio - $20 Corn?
Listen Here

Sunday's Weekly Newsletter - Should Grain Be Higher or Lower Than Last Year?
Read Here

Jan. 20th Audio - Why You Shouldn’t Be Making 2023 Sales
Listen Here