Grain markets finished mixed in cautious trade ahead of tomorrow’s USDA June crop report.
Grain Market News
U.S. Ending Stocks
World Ending Stocks
South American Production
Covid-19 Global Daily Cases
A little over a month ago we had a huge surge in India and a few other nations but since then over the last 5-6 weeks we’ve seen a fairly dramatic drop in daily Covid-19 cases globally. In fact, we’re challenging the lows that were set earlier this spring and late last summer. Certainly, a much better trend in daily Covid-19 cases.
Covid-19 U.S. Daily Cases
In the U.S., daily cases of Covid-19 have been dropping fairly consistently over the past 5-6 weeks. In fact, the current number of cases are down towards the lowest level we’ve seen since the pandemic broke out over a year ago. This is good news both in the U.S. and globally and should allow restrictions to continue to be eased which should allow for demand to continue to pick up as driving miles, travel, transportation, and commuting all likely to increase as we move through the balance of the summer. That is great news when it comes to demand for biofuels.
Weekly Ethanol Production
We did get a weekly ethanol production report today and it was quite positive for the corn market. Weekly ethanol production surged to 1.067 mil barrels/day. That’s the largest level going back to March, 2020. In addition, the black line is the level needed to reach USDA’s target of corn use for ethanol and that is 990K barrels/day and today’s number at 1.067 mil barrels/day well above the level need. In fact, we’ve been above the level needed the last 4 weeks. It’s also worth noting that ethanol production is getting back close to the level from 2 year ago, prior to the pandemic. Again, this is good news for use and USDA is likely underestimating corn use in the ethanol industry.
Weekly Stocks of Fuel Ethanol
Stocks did rise for the 2nd week in a row to 19.96 mil barrels. Still well below last year and still below the lowest for this time of year over the past 6 years. Today’s increase in ethanol stocks relatively small compared to the huge ethanol production number we got in today’s report. Bottom line, today’s weekly ethanol report was considered supportive for the corn market.
Grain Market News
High Temperatures: Mon June 7th
No surprised it’s hot in the northwestern belt with mid to upper 90’s across SD and MN. Low to mid 90’s in surrounding states. This was well advertised and it’s not the temperatures today that’s the biggest factor but it’s what the forecast is calling for over the next couple of weeks. The eastern belt down into the Delta has seen temperatures in the 80’s for the most part. That is quite seasonal and soil moisture is much better in that part of the country as well.
7-Day Observed Precipitation
Over the past 7 days precipitation has shutoff for the northwestern belt into the central Plains. Much of IA, southern MN, SD, NE, and KS has seen very little to no rain over the past 7 days. This is an area that will need rain fairly soon especially given the extreme heat that we’ve been seeing over the last 5-6 days.
30-Day Precipitation % of Normal
Over the past 30 days this map shows the % of normal. Much of the northwestern belt, northern Plains, even into the southern Lakes has seen much below normal precipitation over the last 30 days.
7-Day Precipitation Forecast
The 7-day precipitation forecast does have some rain in it. Generally, 0.25-0.75” across portions of the northwestern belt and into the northern Plains. A little bit heavy up along the Canadian border in ND. Unfortunately, portions of MN, IA, through the central belt even into IL, IN, OH, MI, and WI could see very little rain over the next 7 days. In fact, most of the rain you see on this map in the western belt is scheduled in into the start of the weekend. Once we get into the weekend and next week very little rain is forecasted. The rains that are expected to fall over the next couple of days are going to be very important for the corn and bean in the western and northwestern belt.
6-10 and 8-14 Day Forecast
The 6-10 and 8-14 day forecast help to explain that. We see heat for the central and western belt in both the 6-10 and 8-14 day and dry conditions for almost the entire belt in the 6-10 day and much of the northern Plains and northwestern belt. With very little precipitation in the forecast and heat in the northwestern belt, again, the rains over the next couple of days become very important.
Predicted Soil Moisture Anomaly Change
The NWS is projecting that we’ll see soil moisture declining in most of the U.S. corn and bean belt over the next two weeks. This map goes from yesterday through June 22nd and this helps clarify the fact that soil moisture looks to be on the decline over the next two weeks. That will likely create crop condition decline if the forecast verifies and if overtime is crop conditions decline consistently, the market will start talking about lower yield potential and start tightening up balance sheets further. Again, the weather is threatening if it does verify.
July Corn Chart
Corn prices have been quite choppy but overall, we are still in an uptrend. We’re trading above all our moving average and technical indicators are still pointed upward, not aggressively but still pointed upward. No sign of topping action from the chart or technicals at this time in corn.
July Soybean Chart
Soybeans are also in an uptrend off the lows from about a week and a half ago. Technical indicators also pointed upward and again we see no sign of topping action, at least not yet in the soybean market either. But please also keep in mind that chart and technical indicators are not going to be the primary driver like they can be at other times of the year but the weather forecast and precipitation totals on a day to day basis are going to be the primary driver of grain price direction.
July KC Wheat Chart
Wheat prices also in an uptrend off of the lows posted a week and a half ago. Technical indicators are pointed upward. No sign of topping action at least not yet in the wheat market either.