Closing Market Comments June 16, 2021

Today’s Prices

Grain prices finished mixed but mostly lower as weather forecast continue to indicate good chances for rain beginning tomorrow and continuing into next week.

Grain Market News

High Temperatures: Tues 6-15-21

Current conditions remain stressful much of the western belt. High temperatures in the 90’s from IA westward with 100’s in the central Plains. Much more favorable upper 70’s to upper 80’s in the eastern belt yesterday.

Calculated Soil Moisture Anomaly

The soil moisture anomaly as of yesterday shows a tremendous shortage of topsoil moisture across the northern and northwestern belt. These are the areas that are experiencing the most crop stress at this time and need rain desperately. The situation is quite different down in the Delta where from central AR down to portions of LA and MS are seeing excessive moisture.

7-Day Precipitation Forecast

There is some good news for farmers in the forecast. The forecast calls for anywhere from 0.75-1.5” of rain across much of the central and eastern belt over the next 7 days. This rainfall would be extremely welcomed especially in those driest areas. Down in the Delta they’re hoping the tropical storm in the Gulf does not produce excessive rain. Heavy rains are forecasted, anywhere from 5-10” of rain across the Gulf Coast states. Farmers in AR and MS are hoping that rain doesn’t push any further north.

6-10 and 8-14 Day Forecast

The forecast looks mostly non-threatening with below normal temperatures for the most part across the U.S. corn and bean belt all the way out into day 14. Precipitation above normal for the bulk of the U.S. corn and bean belt. The only exception would be the far western portion of the Plains in the 6-10 and the southwestern Plains in the 8-14 day forecast. We view the this forecast from NOAA as non-threatening at this time.

Grain Market News

Soybean Oil

Soybean oil prices have collapsed over the last 4-5 days going from over 73 to 62 so losing 11 cents per pound in less than a week.

Palm Oil

We see a similar drop in palm oil prices. They’ve dropped all the way down to 3,400 compared to 4,900 during May.

Weekly Ethanol Production

Ethanol production did fall from last week down to 1.025 mil barrels per day. We did decline from last week but the level needed to reach USDA’s corn use estimate is just a fraction above a million barrels per day. We’re still above the level needed to reach USDA’s corn use estimate.

Weekly Stocks of Fuel Ethanol

Ethanol stocks rose last week to 20.598 mil barrels. That is up for the 3rd week in a row but it is still the 2nd lowest total for ethanol stocks for the middle of June going back over the past 6 years. With gasoline consumption up and ethanol blending is up as well, larger stocks are required to keep the markets satisfied.

EIA U.S. Weekly Gasoline Demand

This chart shows weekly gasoline demand and current demand is up towards the pre-Covid numbers from early 2020. With Covid cases and deaths still on decline and at the lowest level since the pandemic began we do believe overall restrictions will continue to be lifted. The U.S. as well as the world will get back to a more normal work and travel pace and therefore, we expect gasoline demand to remain strong and demand for ethanol should remain strong as well.

July Corn Chart

July corn prices have bounced nicely over the last couple of days. Unfortunately, the Dec corn has not followed suit. But with July, the lead contract we are in a consolidation area. A very volatile trade over the last month, wide swinging ranges but overall, the market is chopping in a sideways back and forth range. We currently have chart support at the $6.50 level with overhead resistance just above $7 on the July chart.

July Soybean Chart

Soybean prices are also in a very choppy sideways range over the last month or so. But recently the soybean market has fallen hard. We’ve gone below our moving averages which is a negative chart signal but we’re now sitting right on some fairly significant uptrend support. Today’s close at $14.48 is pretty close to chart support and that needs to hold or that could open up additional downside risk for the soybean market. But it is worth noting, technical indicators are very oversold. Therefore, with prices sitting at chart support and technicals oversold not a good day to be making sales.

July KC Wheat Chart

Wheat prices have also been very volatile over the last month or two. Recently they’ve been chopping back and forth in somewhat of a sideways range. We current have chart support down around the $6 level with overhead resistance initially coming in at $6.30 and then the next level of overhead resistance up towards the $6.50 level.