Closing Market Comments June 11, 2021

Today’s Prices

Grain markets lower today as funds and fund managers saw rain on the radar this morning. Many farmers may say it’s not enough but nonetheless the rain caused the market to step back in today’s trade.

Weekly Price Summary

Grain Market News

U.S. Corn Monthly Ending Stocks

In yesterday’s report USDA lowered this year’s stocks to 1.107 bb. Keep in mind last year USDA in the June report USDA was expecting stocks at 3.3 bb. We’re sitting at 1.107 bb, a third of what USDA was projecting a year ago. Stocks at 1.107 bb easily the lowest we’ve seen in any given crop report over the last 6-7 years and next year’s stocks may be exceptionally tight even if we were to produce trendline yields. Bottom line, old crop stocks are tight and new crop stocks likely to remain tight unless we can produce yields well above trend. The current weather pattern is not suggesting above trend yields.

U.S. Corn Ending Stocks

This year’s stocks at 1.107 bb certainly some of the lowest we’ve seen over the last 17 years. And next year’s stocks, although they are improving, nowhere near the stocks we had the previous 6 years. Any loss in production could send ending stocks at or below this year’s total. That’s why weather is so important this year, even more important than a typical crop year.

U.S. Soybeans Monthly Ending Stocks

Monthly stocks of soybeans did increase by 15 mb to 135 mb after being steady for 4 months at 120 mb. Stocks are still extremely tight and next year’s stocks, although they did increase slightly, they look extremely tight as well. There is no room in error for production and the threatening weather could cause these markets to get extremely volatile over the next few weeks especially if a warm dry forecast continues to show up into late June and early July.

U.S. Soybean Ending Stocks

Soybean ending stocks at 135 mb, the second lowest over the last 17 years and next year’s stocks at 155 mb, although up slightly, still very tight. Again, no room for any crop losses this year.

U.S. Wheat Monthly Ending Stocks

Old crop wheat stocks fell just slightly to 852 mb. Next year’s stocks at 770 mb. We’re not running out of wheat but stocks are well below anything we’ve seen since 2014-15 crop year. If wheat feeding becomes more significant trying to reduce corn usage or if the spring wheat crop is reduced by dry or drought conditions we might see an even tighter wheat balance sheet but right now the wheat balance sheet as been holding about steady at snug levels but not extremely tight. This leads us to believe that corn and soybeans will likely be the primarily leader of wheat price direction in the near term.

U.S. Wheat Ending Stocks

Wheat ending stocks over the past 17 years shows this year not tight but down significantly from the past 5 years and wheat stocks slipping lower so wheat will be very willing to follow corn and beans if they go higher but wheat is not likely to be the leader.

U.S. Grain Stocks

If we look at a chart the plots corn, beans, and wheat on top of each other, this year’s stocks easily the lowest going back to 2012-2014.At this time USDA is projecting a small increase in stocks next year when combined and most of that due to increased corn stocks. But with weather looking threatening, next year’s ending stocks are at risk of falling lower if we don’t get rain soon.

Grain Market News

High Temperatures: Thurs June 10th

Yesterday’s high temperatures show another day of extreme heat. Upper 90’s, even low 100’s for much of the northwestern belt. It’s not just heat, it’s the extreme heat and it hasn’t been just a day or two but a week or two of extreme heat and it is certainly putting stress on crops in the northwest portion of the belt and portions of the northern Plains.

24-Hour Observed Precipitation

Significant rains did fall in northwestern ND into southern Canada where 1-3”, isolated heavier rainfall did take place. But most of ND saw a 0.25-.075” with isolated heavier totals in the northwestern area. In SD and NE they got some rains as well. SD generally 0.25-0.75” and in eastern NE they did get a pretty heavy batch of rain through much of eastern NE. Those areas did see a very good rain event. Unfortunately, much of southern MN and IA are going to miss out on the better rains as well as portions of IL as the rain has now fallen apart as we move through the day with the exception of northeast KS and portions of northwestern MO.

7-Day Observed Precipitation

Portions of eastern NE and western IA will get filled in with a little bit of rain but very little to no rain fell in much of MN and IA. And the extreme heat combined with the lack of rain in much of the central U.S. corn and bean belt is likely to cause conditions to fall 3-5% in next Monday’s weekly update.

7-Day Precipitation Forecast

The 7-day precipitation forecast from this morning does show the rains that were expected in eastern NE moving south/southeast into KS but as we mentioned, after that rain even passes not much rain forecasted. Much of the central U.S. corn and bean belt are going to remain dry over the next 7 days.

6-10 and 8-14 Day Forecast

In fact, the 6-10 and 8-14 day forecasts show about 2/3’s of the U.S. corn belt warm and mostly dry over the next two weeks. If the forecast verifies, crops are going to be stressed and the markets could get extremely volatile over the next 2 weeks.

July Corn Chart

Corn prices are in an uptrend off of the lows posted about 2 ½ weeks ago but today was a down day and that was enough to hook the technicals and trend followers did not like today’s price action and were fairly aggressive sellers during the day even though the weather forecast looks somewhat threatening.

July Soybean Chart

Soybean prices in a downtrend off of the highs posted Monday. Technical indictors are pointed downward as well. The fact the USDA raised ending stocks for soybeans was seen as a negative factor, pushing prices sharply lower in today’s trade and coming right down to major chart support from our uptrend line that’s been in place since last summer.

July KC Wheat Chart

Wheat prices chopping sideways for a week, almost two weeks now as we did not get much of a change in fundamental news for wheat and although the hard red winter wheat crop looks pretty good in the Plains with KS yields look very good but the spring wheat crop in the northern Plains are seeing stressful conditions. Enough to hold KS wheat about steady recently.