Grain markets closed lower today unable to follow through on yesterday’s big rally as weather is not threatening at this time.
Weekly Price Summary
Grain Market News
7-Day Observed Precipitation
The markets saw a very big drop over a 2-3 period. Part of the reason is the rains that have been falling. Much of the Dakota’s have gotten rain. Not everyone has gotten enough but they have gotten some rain in southern MN, northern IA, northern KS, and NE has gotten some rain. All of this has fallen in the last 7 days.
14-Day Observed Precipitation
Most of the U.S. corn and bean belt has had nice rains over the past 2 weeks. In 2 weeks, we should get 2” of rain. Anything in green would be less than average therefore the lighter greens and blues are the areas that will see dryness start to re-develop if we start to see a drier pattern that would develop during June. But one important piece to note, the dry areas over the past 2 weeks have been shrinking, not expanding and that is one of the key reasons the markets have been falling.
U.S. Radar 5-28-21 at 6:15pm
Yesterday corn was limit up. There was talking of freezing temperatures in ND, SD, MN, and into the southern Canadian Prairie. It did get cold last night. This is from 6:15pm so the lows over night might have been slightly cooler than this map but it wasn’t a widespread hard freeze event. There were some temperatures in the 20’s but it wasn’t a widespread freeze event, just some local frost and freezing therefore the market did pullback a little bit in today’s trade. There is a frost advisory for northeast IA tonight as that high pressure moves off to the south and east but a widespread freeze event is not expected.
7-Day Precipitation Forecast
The forecast shows good precipitation in the eastern belt, 1-1.5” is quite likely with 1-3” in isolated areas in the Plains. We’ll be watching to see if the northern Plains and northwestern belt starts to dry out again as the next 7 days show only light precipitation in most of the northern Plains and northwestern belt.
6-10 and 8-14 Day Forecast
The 6-10 day shows warmer temperatures and drier conditions in the northwestern belt and northern Plains. That certainly will need to be monitored and then the 8-14 day forecast shows the northern 2/3’s of the belt with temperatures above normal and average to below average in the southern 1/3 of the belt. Precipitation looks about average in the northwestern belt and northern Plains. Above average in the eastern belt down into the Delta. We think this forecast certainly bears watching especially with the warmer drier conditions expected in the northwestern portion. Overall we do not view it as overly threatening at least based on today’s model.
U.S. Drought Monitor
The weekly drought monitor shows the northern Plains still see extreme drought conditions and much drier than normal from a long-term perspective still exists in the northern belt into the southern Great Lakes region. And although we did get rain and that buys the crops time, additional rains are going to be need in the areas that show color.
Grain Market News
U.S. Corn Ending Stocks
We mentioned that old crop stocks are going to remain tight. USDA is projecting extremely tight stalks at 1.257 bb but given the fact that demand is running at a pace ahead of USDA’s target that number could get even smaller. It’s also worth noting that even with trendline yield USDA is projecting new stocks at 1.507 bb. That is up a little bit from this year but it is still a very tight stocks level and that means there is no room for error when it comes to growing this year’s corn crop.
U.S. Soybean Ending Stocks
Soybean stocks also extremely tight. They haven’t fallen and that has disappointed some of the bulls but part of the reason may be because these stocks are already bare minimum pipeline level and USDA is unwilling to drop it any further. It’s also worth noting that even with trendline yields, USDA is projecting next year’s stocks at 140 mb. As we mentioned in corn, there is no room for error in growing this year’s soybean crop.
U.S. Wheat Ending Stocks
Wheat stocks have inched upward a little bit from the lows that we saw in Jan, Feb, and March up to 872 mb. We’re not running out of wheat but it’s certainly smaller than we’ve seen over the past 5 years and next year’s beginning stocks estimated to be below 800 mb. We are sitting with relatively tight stocks but nowhere near as tight as corn and beans. Bottom line, old crop stocks of corn and beans are extremely tight and new crop stocks of corn, beans, and wheat could very well be tight unless we can produce trendline or better yields.
July Corn Chart
It was a wild ride week in the corn market but overall, it looks like a fairly significant low was established on Wednesday morning. Prices from there rallied sharply, in fact, from Wednesday morning to today’s high was a 70-cent rally. That has the chart looking much better. Techncials looking much better. Weather will be the key going into next week’s trade but at least the chart and technical picture looks pretty good.
July Soybean Chart
Soybean prices have also turned upward off of Wednesday morning lows. The chart and technicals do look better in the soybeans. But like corn, weather is still going to be the driver. Weather will trump chart and technical signals because if weather looks threatening buyers will come running in droves. If the weather looks good, selling could surface. Therefore weather is the key going forward.
July KC Wheat Chart
Wheat prices also bouncing sharply off of Wednesday mornings lows. Technical indicators have turned higher so the chart and technicals look much better than they did the previous 3 weeks but the same thing is true for wheat, weather will be the key. Weather is primary driver for corn and bean prices and wheat, although we’ll be looking for any special stories in wheat, wheat will primarily be a general follower of the corn and soybean price direction.