Closing Market Comments July 1, 2021

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Today’s Prices

Grain prices finished mixed today as an early rally was met with some profit taking allowing prices to pull back and close mixed.

Grain Market News

Topsoil Moisture

USDA put out a topsoil moisture map. Short to very short with a change from last week noted. ND is 66% short to very short. That improved a little bit from 72% a week ago. SD is 90% short to very short versus 88% a week ago. You can see the northwestern belt as well as the Pacific northwest seeing extremely dry conditions. In portions of the central U.S. corn and bean belt MO, IL, IN, and MI are having some challenges with too much moisture, in fact, flooding conditions in many areas in MO.

Topsoil Moisture Percent Surplus

This map shows the topsoil moisture surplus as of this week. MO, IL, northern IN, and MI are certainly the biggest are of concern when it comes to too much water.

14-Day Observed Precipitation

It’s easy to see the surplus rainfall and moisture in MO and that extends into IL, portions of northern IN, and into MI as well. The areas in pink have seen 10-15” over the last 2 weeks. A few of the areas that are showing purple are looking at 15” or more just in the last 2 weeks.

Yesterday’s High Temp 6-30-21

Temperatures for the heart of the U.S. corn and bean belt have been pretty good recently, mostly in the 80’s. A few upper 70’s and a few low 90’s but the heart of the belt seeing pretty good temperatures this week at least so far. We are starting to see some of the heat in the Pacific northwest working its way into MT and then today into the Dakota’s.

Forecast High Temperatures: Sun 7-4-21

This map shows the forecasted highs for Sunday. If you draw a line from Chicago to about KC anything north and west is looking at 90’s and some 100’s. Unfortunately, this type of heat could take place in some of the areas that are seeing the driest soils and crop stress is going to return very quickly if this forecast is correct.

7-Day Precipitation Forecast

The 7-day forecast is showing some precipitation in the northwestern belt. It’s not heavy but a good share of the northwestern belt could see 0.25-0.75”. A couple areas maybe a little bit more and a couple area a little less. Any rainfall will be welcomed but with temperatures consistently in the 90’s next week, 0.25-0.75” won’t last very long. Any of the heavier or more soaking precipitation is expected to remain down in the deep south and along the Gulf Coast. There is a tropic storm possibly a hurricane that could push into FL and then off the east coast. That precipitation should not affect the U.S. corn and bean belt.

6-10 and 8-14 Day Forecast

The 6-10 and 8-14 forecast show the increasing amount of heat in the northern and northwestern half of the belt, maybe even more. It still looks dry in the northern Plains into the Pacific Norwest over the 6-10 and 8-14 while the southern and eastern belt looks like it should be in fine shape with moderate temperatures that look like they could get plenty of moisture at this time. The weather threat is clearly in the northern and northwestern belt and into the northern Plains.

Grain Market News

Weekly Ethanol Production

Ethanol production improved for the second week in a row to 1.058 mil barrels per day. That’s the 2nd highest weekly total for any week over the last 15 months. It’s also worth noting, ethanol production is now equal to the brown and purple lines. Those would be the 2 years prior to Covid.

Weekly Stocks of Fuel Ethanol

Stocks of fuel ethanol increased for the 5th week in a row to 21.572 mil barrels. That was maybe a little negative but keep in mind, with the large ethanol use larger ethanol stocks are required. And we’re just now getting back into a fairly normal level of fuel ethanol stocks.

Corn: Weekly Export Sales

Corn export sales for old crop sales were somewhat disappointing at just 15 tmt. It was positive but nonetheless near zero but we only need 94 tmt per week for the rest of the year to reach USDA’s export forecast. When we combine all of the export numbers which includes sales, outstanding sales, shipments, and inspections we are on track to hit or exceed USDA’s current export forecast.

Soybeans: Weekly Export Sales

Soybean export sales were also very small number here as well at 93 tmt but we only need 21 tmt to reach USDA’s export forecast. Brazil has been shipping their record large crop very quickly. Their basis levels are improving. The U.S. is becoming more competitive. We would not be surprised to see a few weeks of bigger sales number from through the end of the summer. We do believe export sales are on track to hit USDA’s target if not even exceed USDA by a little bit.

December Corn Chart

Corn prices rallied this morning, followed through to yesterday’s limit up move. Today’s high at $6.11 on the Dec contract, 97 cents above the lows that were posted last week on Thursday, one week ago with most of that rally happening in a 24-hour period. The chart and technical indicators are certainly indicating this market could move towards the previous highs in the $6.28 to $6.38 level.

November Soybean Chart

Soybean prices also pushing to a new high for this move this morning up to $14.23. We’re $1.83 above the lows posted about 2 weeks ago and again, most of that coming within that last 24 hours. In soybeans we have a similar scenario where the chart is pointed upward, technicals are pointed upward, and certainly chart and technicals are indicating this market may be interested in testing the previous highs in the $14.61-$14.80 level.

July KC Wheat Chart

Wheat prices also made a new high for the move this morning up to $6.61, the highest level in over a month. The wheat chart is pointed upward. Technicals were pointed upward but they hooked a little bit today given the very disappointing close, with wheat closing lower after higher trade this morning. This is giving us some mixed signal in wheat but with a short-term uptrend in place and our 10 and 20-day moving averages converging around $6.20, this market should be able to find pretty good support on any small correction over the next couple of days. We can spend a lot of time talking and discussing the chart and technical indicators but weather is going to be the primary factor for grain prices going forward. If the weather is threatening the weather will go up. If the weather much more favorable there is room for the market to fall. Weather will be the key for the next 2 months.

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