Closing Market Comments May 7, 2021

Today’s Prices

Grain markets close higher again as the weather for Brazil’s safrinha corn crop continues to generate further crop losses on nearly a daily basis and U.S. weather although not overly threatening, is far from ideal.

Weekly Price Summary

Grain Market News

U.S. Drought Monitor vs Last Year

The dryness in the north Plains in ongoing but we also have dryness in the portions of IA, southern MN that is getting quite a lot of attention. Last year there was virtually no drought in the U.S. at this time. Subsoil moisture was adequate, even surplus and that caused us to have significant prevent plant based on the excessive moisture in late May and early June but clearly we did not have the same drought conditions that we have this year. Not only in the corn belt but nearly the entire western U.S. is some sort of drought. This is substantially different than a year ago.

U.S. Drought Monitor vs Early May 2012

As of May 8th in 2012 we had some dryness in MN, northwest IA, and clipping in ND but the bulk of the corn and bean belt was not experiencing drought in 2012 at this time. We did have drought taking place down in the southeast U.S. and the southwest Plains but again, the heart of the belt was not experience major drought at this time in 2012. Drought increased dramatically as we moved into June, July, and August. What does this mean for our grain markets? It’s very early and the weather patterns can change dramatically from now to June, July, and August but certainly a large share of the U.S. corn and bean belt is experiencing drought conditions already this spring.

7-Day Precipitation Forecast

There is some good news in the precipitation forecast over the next 7 days. We could see 1”-1.5’ in southern IA through all of the Delta and eastern belt. In the western belt we could see 0.25- 0.50” through much of the Plains. Not heavy out there but at least something. But many of the rain events that have been on the map over the past month have not delivered soaking rains.

6-10 and 8-14 day Forecast

The longer-term forecast shows moderating temperatures for the northwestern belt while the southeastern belt remains cool. Extending that out to the 8-14 day, we see warmer temperature developing in the west and northwest, normal in the central, and a little cool in the eastern belt and Delta. Normal precipitation in the 6-10 day for most of the U.S. corn and bean belt with dryness in the Plains re-emerging but the 8-14 day forecast shows most of the U.S. corn and bean belt with above normal temperatures. The near-term forecast is not ideal with cool temperatures in the southeast belt and dryness re-emerging in the Plains but the 8-14 day would offer improvement with warmer temperatures and better rainfall over most of the belt. Again, this is something that will be a key for the market place early next week.

Grain Market News

U.S. Ending Stocks

World Ending Stocks

July Corn Chart

Corn prices have posted a new contract high and a new contract high close every day this week with today’s price up to $7.35 on the July contract as we approach the all-time highs posted in 2012 at $8.43.

Corn 2020-2021-2022 Crop Years

We have the future prices for 3 separate crop years shown on this chart. Clearly old crop corn with tight stocks leading the way with today’s prices closing at $7.32. About a $1 discount for new crop Dec corn and then another $1 discount for CZ22 corn. At this time we are not overly excited about selling CZ22. Certainly $5.24 is a good price but the markets are in an accelerated uptrend and there is a massive discount for new crop 2022 corn. We’re going to let this scenario play out before we advise sales for the 2022 crop year.

July Soybean Chart

Soybean prices making a new contract high and a new contract high close with prices touching $15.99 during today’s trade. And with prices near $16, we’re getting close to the all-time highs which were just shy of 418.

Soybean 2020-2021-2022 Crop Years

This chart shows 3 crop years, SN21 at $15.89, 2021 SX21 at $14.33 with a $1.50 discount, and 2022 at $12.73 another $1.60 below current market. In fact, SX22 prices at $12.73 is currently $3.16 below the current spot price for U.S. beans. Our attitude is similar with beans. We’re in an accelerated up-leg, there is no sign of topping action, and we have massive discount for new crop 22 beans therefore we’re not yet advise sales for the 2022 crop year even though prices are starting to look more attractive, approaching the $13 level.

July KC Wheat Chart

Wheat prices actually made a new contract high by 1 quarter of a penny today. We now have a double top in wheat but there is no sign of topping action. Today was a new high close and the overall uptrend in wheat is still intact. Wheat is likely going to be primarily a follower to the corn and bean markets. With accelerated wheat feeding in the U.S. and globally, wheat cheaper than corn, it won’t be difficult for wheat to be a follower if corn and beans can work their way to the upside.