Closing Market Comments June 24, 2021

Today’s Prices

Grain prices finished mixed to mostly lower today as the weather forecast still looks favorable for the bulk of the U.S. corn and bean belt.

Grain Market News

14-Day Observed Precipitation

Average rainfall for June is a little over an inch per week. If you got average rain over the last few weeks you’d be yellow or just into the yellow shade. Southern IA, eastern NE, northern MO into west central IL looks to be in good shape. Both southern portions and northern portions of the eastern belt looks to be in good shape. But we do still have some significant. Anything in blue has been less than a half an inch over the last two weeks. Keeping that in mind a little over a week ago we had severe heat. Northern IA and southern MN is a dry spot. Portions of the Dakota’s and Plains could use a good shot of rain. Southern IL, southern MO, and down into the Delta is drying out but they had surplus rains previous so a couple weeks of dry weather probably not a big factor as you move down into the Delta.

Calculated Soil Moisture Anomaly

It’s clear to see the soil moisture anomaly, which takes current soil moisture compared to average, that the Dakota’s, MN, and northern IA is the area of most concern if the rains don’t materialize over the next couple days.

7-Day Precipitation Forecast

The forecast calls for 1-3”, even 3-5” of rain through much of the central U.S. corn and bean belt. Unfortunately, the northern Plains into southern MN is an area that has been dry and looks to see the least amount of rain and that could allow for crop stress to continue in that portion of the nation. We don’t talk about it often but durum wheat and white wheat in WA, OR, and ID is an area that is going to be seeing virtually no rain and extremely hot temperatures. That is going to do some damage to the wheat crop in the Pacific northwest.

6-10 and 8-14 Day Forecast

The pattern doesn’t look to change. Extreme heat in the northwestern portion of the U.S. and that leaks its way into the northern Plains as well. That’s where we could see the most crop stress going forward. Unfortunately, in the northern Plains that is one of the drier areas that is being projected by the weather maps in the 6-10 and 8-14 day forecast. That certainly is the area of most concern as we move into early July. The forecast actually looks pretty good with below normal temperatures and above normal precipitation southern and eastern portions of the U.S. corn and bean belt.

Grain Market News

U.S. Corn Stocks

These two charts show U.S. monthly ending corn stocks. Last summer in May and June USDA thought this year’s ending stocks would be over 3 bb. As of the June report USDA is projection stocks at 1.1 bb. Extremely tight stocks. Next year’s stocks also projected to be very tight at 1.357 bb. This assumes trendline yields for the nations corn crop. The right side shows the stocks to use percentage. A year ago, USDA was projecting stocks to use this year would be at 22.5%. As of the June crop report USDA is projecting stocks at 7.4%. Again, extremely tight. We’ve seen S/U at 13-16% over the last past 6 years. Next year, USDA is projecting a small increase at 9.2%. This is using a trendline yield for corn.

U.S. Soybean Stocks

Monthly soybean stocks hit a low at 120 mb in the Feb-May reports and then last month, due to a small reduction in U.S. soybean crush ending stocks increased to 135 mb. That is still extremely tight ending stocks with next year projected at 155 mb. That is extremely tight as well. From a stocks to use percentage, we’re still sitting at 3% S/U. That means we’ll virtually run out of soybeans before the end of the year and the new crop harvest begins. Next year’s stocks to use projected at 3.5%. That is also extremely tight.

U.S. Wheat Stocks

Wheat ending stocks have been about stable for about the last 7-8 months. Smaller than the stocks we’ve seen over the previous 5 years and just a little bit above the stocks from 2014-15. We’re not running out of supplies of wheat like corn and beans but the trend has certainly been lower and stocks next year projected to drop next year as well. A similar situation in wheat S/U at 40%. That’s adequate for now but it is the lowest over the past 5 years with next year’s stocks shrinking down to 36.6%. If we start to see lower production numbers for white wheat and durum wheat in the Pacific northwest and spring wheat in the northern Plains, next year’s stocks could slip even lower and could start challenging the lower levels we saw for S/U back in 2014-15.

Corn: Weekly Export Sales

Corn sales came in at a pretty good number at 216 tmt. We only need 87 tmt per week so we are on track to exceed USDA’s export total for corn.

Soybeans: Weekly Export Sales

In soybeans, exports came in at 142 tmt. We only need 27 tmt per week and beans also look like they’re on track or even slightly exceed USDA’s export forecast for the current crop year.

December Corn Chart

Since about April 1st the corn market has seen extreme volatility, big moves up and down over the past 2.5-3 months. With charts near the lower end of the range and technical indicators oversold this is likely not a place to be making sales. Whether or not we can reach the top end of our range again will be dependent on weather. With extremely tight stocks and the calendar being only late June, this market could see additional extreme volatility for the next 6-8 weeks.

November Soybean Chart

Since about the first of April we’ve seen big moves up and down. Recently we’ve seen a big down move, prices coming back down towards chart support. Technical indicators are getting close to the oversold level. The overall game plan continues to be to sell when the market rallies toward or into new highs and then be patient when the market pushes into new lows.

July KC Wheat Chart

This chart formation in that extreme volatility, big moves up and down over the past few months. The chart is starting to try and show signs of stabilizing or even moving higher. It hasn’t been a very aggressive move wheat is going to have a tough time doing it all on its own. With corn and beans under pressure, even though we have problems with spring wheat, durum and white wheat, this market is just gradually move higher as corn and beans are tending to pull wheat back in the last week.

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