Closing Market Comments August 4, 2022

Today’s Prices

Grain markets finished higher to sharply higher today as weather is starting to look more threatening next week combined with rumors of China sniffing around for U.S. beans.

Grain Market News

High Temperatures

ON Tuesday we seen 100s up into western Iowa, southeast South Dakota and the heat did back off yesterday with the 100s in Missouri, Kansas, and then south into Texas.

Texas, Oklahoma, southern Kansas, Missouri, and Arkansas has been brutalized by heat and dryness this summer.

The heart of the belt saw temperatures mostly in the upper 80s and low 90s with a few mid and upper 90s in eastern Nebraska yesterday.

7-Day Observed Precipitation

Heat and dryness are expected to rebuild next week in the western belt and into the plains.

The areas that are highlighted have not seen much rain over the last week and those are the areas that will very quickly see crop stress develop if the forecast is correct calling for hotter, dryer weather.

Iowa and Nebraska are somewhat the epicenter of this latest weather threat.

Current Conditions

Midday today was mostly in the upper 70s and low to mid 80s, we will see mostly 80s and a few low 90s today but not excessively hot as front pushed through overnight.

The frontal boundary is through the eastern belt down into the delta leaving most of the central, western, and northwestern belt dry in today’s radar.

7-Day Precipitation Forecast

The forecast does call for some rains from eastern South Dakota, northern Iowa, Minnesota into Wisconsin.

Those rains would be very beneficial for South Dakota, southern Minnesota, and northern Iowa if they do happen.

Unfortunately, central southern Iowa, Nebraska, Kansas, into Missouri, and portions of Illinois look to see very little rain over the next week.

Again, temperatures expected to heat up.

Temperature Outlook

The 6–10-day shows that heat in the central and western belt with the most significant heat in the northern Plains.

The heat hangs on into the second week of the forecast going through August 17th, again with the western belt and the plains seeing the most significant heat.

Today’s forecast is also dryer for almost the entire US corn and bean belt all the way out past the middle of August and that helps generate some of the buying and sharply higher prices today.

Grain Market News

Cropland

One week from tomorrow we will get USDA’s August crop report and it appears that analysts will be looking for a slightly lower yield.

One of the items we can look at is the vegetation health index and this compared to a year ago.

It shows that most of the western belt into the plains is well below the year ago with their vegetation health and the eastern belt also lower than last year when it comes to vegetation health.

The areas that have improved are in the northern plains which suffered severe drought last year but is much better this year.

Also, some isolated areas in Iowa, Missouri, Wisconsin, and Minnesota are looking better currently.

This indicates that this year’s yield will struggle to match last year levels.  

World Soybean Basis

Its worth noting that following Brazil’s harvest, February through June, they were typically equal to or cheaper than U.S. soybeans.

But the basis in Brazil has been rallying sharply and has exploded to the upside over the past couple of weeks.

This leaves Brazilian basis well above the U.S. basis, U.S. now the cheapest in the world and this should result in much better export sales now through the fall and Winter and likely into the early 2023.

U.S. export sales have been very slow over the past couple of months, but we expect them to ramp up significantly moving forward.

Corn: Weekly Export Sales

Export sales you can see outside of 1 week in mid-June that was very good, corn sales have been disappointing May-July.

That’s due to Brazil being extremely cheap and most of the world business going to South America in either Brazil or Argentina.

As we mentioned Brazil’s bean basis exploded to the upside and Argentina exploding to the upside over the last 3-4 weeks.

This should cause our export sales to increase significantly.

Soybeans: Weekly Export Sales

Soybean export sales net negative 11 so basically a zero.

That’s been the case with zero or a net negative in the last 5 of the past 6 weeks.

U.S. export sale of soybeans should ramp up dramatically beginning in August, in fact there was rumors of China sniffing around in the marketplace today.

We expect big sales to be announced now through early 2023.

September Corn Chart

Corn prices up sharply today, the extremely choppy trade that we have experienced over the last couple of months is continuing.

Up sharp last week, down sharp Monday and Tuesday, and now rallying sharply again.

After falling back earlier this week the corn market came back to test the 10- and 20-day moving average and we bounced off nicely.

That would put 6.23-6.36 as the next target if we can get friendly weather or bullish weather news in tomorrow’s trade.

September Soybean Chart

Soybean prices also extremely volatile over the past couple of months with big moves up and big moves down.

Last week we were up sharply, early this week down sharply, and now a big move to the upside nearly a 50 cent higher move today.

That has the charts looking better after we found support at the 10- and 20-day moving averages.

If we get friendly news tomorrow or into next week the upside target on bullish weather would be in the 14.38-14.89 range.

September KC Wheat Chart

Wheat prices still in a consolidating mode near the lower end of the range that has been in place for about the last month and a half.

The good news is the market continues to find support at the 8.14 -8.24 level.

The bad news is we have been unable to break out to the upside in a big way.

We are trading right at the 10- and 20-day moving averages an if we get some friendly news and if we break above the resistance levels it may signal that next move towards the $10 level.

Questions or Comments

September KC Wheat Chart

Wheat looks to be trying to form some bottoming action, we believe that is going to continue but remain choppy in the short term.

We do believe that wheat prices globally are under valued and that this market as we move through the summer and into fall is likely to retest the $10 level at a bare minimum.

Even though wheat prices are not exploding, this is no place to be making sales.

September Soybean Chart

Soybean prices have been choppy going down and up multiple times.

The chart has turned lower over the last couple days which has hooked the technical indicators lower as well.

Soybeans had broken through our 10-20 day moving average and now we have corrected down to that level which should be a good area of support.

We will see if over the next couple days if the level around the $13.50-13.80 can continue to hold.

September Corn Chart

Corn prices have been very choppy, going back to the month of June we fell sharply, rallied, fell sharply, rallied, fell again, rallied last week into Friday, and now we are setting back again.

Bottom line is we are carving out a range between 5.60-6.60.

Friday’s disappointing close with lower prices yesterday and today does have the chart turning downward in the short term. Technical indicators have turned lower as well.

Closing Market Comments August 2, 2022

Today’s Prices

Grain prices finished lower for the second day in a row on the potential for increasing tension between China and the US and a forecast that isn’t ideal but less threatening.

Grain Market News

Corn Crop Condition

The corn crops held steady at 61% good to excellent, that is just slightly below the 20-year average and 1% below last year.

The US corn crop condition would hint at a yield slightly below trend.

Corn Change in G/E

We saw 8 states that improved, mostly in the eastern corn belt and in the delta.

We saw 2 states held steady and 8 states decline including Ohio going down by 4% points.

States decline offsets states that have improved leaving the US rating at 61% good to excellent unchanged from last week.

Soybean Crop Conditions

Soybean conditions improved for the first time this growing season 1% to 60% good to excellent which is the same as last year and at or just a fraction below the long-term average.

Next week crop conditions are likely to decline by maybe 1-2% and that could pull us below both last year and the 20-year average.

At this time the US soybean crop condition rating is hinting at a yield that would be slightly below trend.

Soybeans Change in G/E

Soybeans had 11 states improve while only 5 states declined including Iowa down by 2 percent which offset the Illinois improvement of 7%.

The US rating improved by 1% going up to 60% good to excellent.

High Temperatures

Yesterday’s high temperatures saw temperatures in the upper 90s and the 100s from the Mexican border up to the Canadian border.

But the bulk of the heat was in the plains and therefore avoided the heart of the US corn and bean belt.

The eastern belt mostly in the mid and upper 80s, while the central belt was in the mid-80s to mid-90s.

Bottom line is temperatures are somewhat favorable in the eastern belt, lightly stressful in the central belt, and extremely stressful out in the plains.

24-Hour Observed Precipitation

The past 24 hours we had one stripe of rain that basically went through Illinois, not the entire state, but went through the central portion.

In fact, down in portions of the east central Illinois are there was an area that had 8-12 inches of rain over the last 24 hours.

That is too much rain in any area, but there were areas that had 1-3 inches and that was beneficial.

Unfortunately for the central belt into the northwestern belt into the plains only a few scattered showers.

Current Conditions

Temperatures were already in the 90s in the western half of the belt with 80s mostly in the eastern belt, and we should see a lot of upper 90s even 100s in the western belt and certainly in the plains where crop stress is going to increase

The eastern belt should remain mostly favorable.

The rains in Illinois are continuing, most of those rains have been drifting almost south, so the areas that had rain are getting more while areas that missed out continue to miss out.

Topsoil Moisture

Topsoil moisture as of July 31st did have some improvements like Illinois, Indiana, Ohio, Pennsylvania, and down in the delta.

The central belt had some slight drying like Minnesota, Iowa, and then in the western belt North Dakota, South Dakota, and Nebraska all seen drying.

Soil moisture did improve slightly from 43% short to very short last week to 38% short to very short this week.

U.S. Topsoil Moisture

As of July 31st, we are at 38% short to very short which is a slight improvement from last week at 43%.

This compares to 39% last year, so similar, and just slightly above the long-term average.

We do believe if the forecast is correct soil moisture is probably going to be in that 44-46% short to very short and that will be like what we saw last year as well.

7-Day Precipitation Forecast

The eastern belt could get anywhere from 3 quarters to an inch and a half the next 7 days, the central portions could get a quarter to 3 quarters, but very little or no rain is expected in the plains.

The plains will see significant stress developing or increase and then stress could continue in portions of Minnesota, Iowa, and Missouri.  

Temperature Outlook

The 6-10 day forecast continues to call for above normal temperatures and that continues in the 8-14 day.

It may not be as hot as the previous forecast but still looks to be above normal.

Along with that we have below normal precipitation for the western half of the belt in the 6-10 day and most of the belt in the 8-14 day.

Below normal precipitation does not mean 0 precipitation, but it means on average we will see less than average rainfall.

September Corn Chart

Corn prices have been very choppy, going back to the month of June we fell sharply, rallied, fell sharply, rallied, fell again, rallied last week into Friday, and now we are setting back again.

Bottom line is we are carving out a range between 5.60-6.60.

Friday’s disappointing close with lower prices yesterday and today does have the chart turning downward in the short term. Technical indicators have turned lower as well.

September Soybean Chart

Soybean prices have been choppy going down and up multiple times.

The chart has turned lower over the last couple days which has hooked the technical indicators lower as well.

Soybeans had broken through our 10-20 day moving average and now we have corrected down to that level which should be a good area of support.

We will see if over the next couple days if the level around the $13.50-13.80 can continue to hold.

September KC Wheat Chart

Wheat looks to be trying to form some bottoming action, we believe that is going to continue but remain choppy in the short term.

We do believe that wheat prices globally are under valued and that this market as we move through the summer and into fall is likely to retest the $10 level at a bare minimum.

Even though wheat prices are not exploding, this is no place to be making sales.

Questions or Comments

Closing Market Comments August 1, 2022

Today’s Prices

Grain prices finished sharply lower today as the weather forecast is less threatening than it was Friday combined with lower outside markets, and the 1st cargo of grain shipped out of the Ukrainian port.

Grain Market News

7-Day Observed Precipitation

The past 7 days we have seen significant rainfall down to the southern portions of the US corn and bean while very little rain fell in the central and northern portions of the belt.

We believe that declines in some areas around the northern and northwestern belt could offset the improvement in crop conditions down south, so therefore we would not be surprised to see conditions about steady.

14-Day Observed Precipitation

The past 2 weeks we can see that again the southern belt has received good rain but there is also an area from central Indiana and central Illinois up through the western and northwestern belt that has received minor amounts of rain.

This is where crop conditions could decline the most quickly if we don’t see better rains soon.

30-Day Precipitation % of Normal

From southern Illinois, southern Indiana, portions of the Ohio Valley combined with a stripe of rain from southeast Minnesota northeast Iowa through northern Illinois, northern Indiana, and into Ohio that has seen good rains.

Central Nebraska had a pocket of rain, central South Dakota had a pocket of rain, but we also have seen a number of pockets where rainfall has been much below normal.

Temperature Anomaly

Mot of the belt has been above normal with tremendous heat own to the south.

July saw above normal temperature and mixed precipitation.

High Temperatures

Yesterday’s high temperatures show 80s in most of the central and eastern belt with 90s in the plains even 100s in the southern plains.

Up in the Pacific northwest where white wheat and Durum wheat are significant temperatures are very hot from 100-108 across much of that region.

Current Conditions

Our current conditions show temperatures mostly in the 80s as of 1:30 with 90s in the western belt and into the plain states.

Very little precipitation is being shown right now but we did have a little rain from eastern Iowa, Illinois, and Indiana.

7-Day Precipitation Forecast

The forecast calls for decent rain with 3/4 to an inch and a half in much of the eastern belt and a quarter to three quarters in portions of Iowa and the central belt.

The plains from the Canadian border to the Mexican border look to be mostly hot and dry over the next week.

Temperature Outlook

Our 6–10-day forecast continues to look like above normal temperatures and that continues in the 8-14 day for the entire central US corn and bean belt.

Most of the belt looks to have below normal precipitation in the 6-10 day and the 8-14 day.

Temperature Anomaly

If the forecast is correct temperatures will be well above normal in the plains, and slightly above normal in the eastern belt over the next 7 days.

Soil Moisture Anomaly

From today through August 15th, southern Indiana, southern Illinois, into the Ohio Valley could see an improvement in their soil moisture while most of the belt sees soil moisture on the decline.

Grain Market News

September Corn Chart

Corn prices after rallying sharply, down sharply today but the good news is we closed at 6.09 and that was fairly close to the middle of today’s range.

The market currently has overhead resistance at 7.36 with initial chart support at the 5.80-5.85 level.

September Soybean Chart

Soybean prices also rallied every day last week, in fact they rallied 6 days in a row.

Today we saw a sharp correction, but we are still trading above $14 as we closed at 14.06 today.

We currently have overhead resistance at $14.89 and chart support in a gap area around the $13.50 level.

September KC Wheat Chart

Wheat prices are shooing some bottoming action, it looks like we could be developing a U shape bottom in the wheat market, and this would be logical given the fact we are wrapping up the winter harvest.

Wheat has support at last weeks low at 8.14, overhead resistance around the $10 level, and today we closed at 8.66.

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Questions or Comments