Since the open on Oct 25^th 

 

Corn:

Dec 21 up 41 @ 5.79

Dec 22  up 23 @ 5.55

 

Beans:

Jan 22 up 8 @ 12.49

Nov 22 up 18 @ 12.41

 

Wheat:

Dec 21 up 56 @ 8.06

July 22 up 36 @ 7.96

 

Crude:

Dec 21 down .50 @ 83.67

 

                 When looking at retracements of the range (futures high to futures low during the year) on corn we are sitting right above the 50% retracement level at 5.79, which in a normal 10 year period only happens 50% of the time. If we can hold current levels we have a good shot at 5.90-6.00 as the next major resistance and benchmark. If you’re having a larger than average crop and looking to protect some more on this nice “post” harvest rally some March put options around that 5.60-5.70 strike level might look like a pretty affordable play. Basis will be strong especially for the next 45-60days, historically speaking our best basis is in Dec and April/May. Support in the charts at 5.69, with resistance at 5.83 and 6.06.

 

                On beans keep in mind Friday was first notice day for Nov futures so grain buyers will have rolled to the Jan (F) and might have slightly adjusted their bids to account for a 12c  carry from Nov to Jan Futures. I’m assuming over the next week basis will return to where it was prior to the X/F roll or better. Historically as we start wrapping up bean harvest in early November bean basis tends to heat up pretty quickly but then stabilize as the Upper Mississippi closes. However, this year might be different in that regard simply because we haven’t seen nearly as much Chinese buying off the Gulf for Oct/Nov/Dec and that is a little concerning by this time of year. Also, looking at retracements on beans Jan futures currently trading at 12.46 is only about a 15% retracement of the range. So for unsold bushels there to me the play is to wait until we get to a more typical post-harvest recovery time frame which is December through February. If you’re need cash flow before then there are ways to accomplish that and stay long beans via brokerage account. Support in the charts at 12.18 and resistance at 12.46 and 12.60.

 

                Wheat keeps trying to buy acres as world stocks are at the lowest we’ve had in about 15 years. It would appear a bullish market is resuming for the time being, albeit not as violent as 2022, probably do in part to lower demand at this time and the fact that futures came in to harvest $1.50 higher than they were last year. We’ll see over the next few weeks if prices have curbed demand or if funds like commodities as a hedge against inflation.

 

Couple interesting notes from Richard Feltes, Head of Market Insights at RJO:

• Wheat rallied $2.01 Nov/Dec 2007 before tacking on another $7.89 Jan/Feb 2008. (07/08 global stks/use ratio 14.9% vs 35% today)
• Corn rallied 80 cents Nov/Dec 2007 before tacking on another $2.70 Jan-June 2008. (07/08 global corn stks use ratio 14.3% vs today 25% today)
• 2022 global winter wheat crops off to a “mixed” start with pesky dryness across ½ of Ukraine/ ¼ Argentina & western ¼ of US HRW while delayed planting in PRC worrisome. EU/Russian winter wheat crops along with most of US winter wheat areas enjoying ample moisture.
• Bottom line – while rare, there is precedent for late year rally in grains. Tightening global wheat supplies (especially high pro), inflation tailwind, concern over reduced 2022 US corn area and tight fertilizer induced cut in 2022 Brazil safrina corn yield collectively inducing domestic/global grain end users to extend forward coverage. Wheat is the leader and will remain so until market unable to advance on bullish news. Recall old trading adage – “the nation with ample wheat supplies has many problems- the nation without enough wheat has only 1 problem”.

 

Have a great harvest week and let’s keep talking about the post harvest plan and make sure we are looking out towards 2022 to see if your farm should be locking any prices in or protecting prices in some way.