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Grain markets finished mostly lower today as the near-term weather forecast continues to look mostly favorable.
Grain Market News
High Temperatures Wed 7-7-21
Most of the central U.S. corn and bean belt was in the 80’s, 70’s to the northwest and a few low 90’s in southern IL. Mostly favorable temperatures.
7-Day Observed Precipitation
Precipitation over the last 7 days shows some pretty good precipitation across SD, southern MN into WI. But at the same time the central U.S. corn and bean belt has been missing out. Much of MO, IA, and IL probably sitting with pretty good soil moisture at this time. But it is worth noting, they’ve been missing out on the rains over the past 7 days. We’re also going to be monitoring a pocket down in the Delta where AR and MS have seen very little rain recently as well.
7-Day Precipitation Forecast
The forecast is mostly favorable and if its correct, areas that have missed out on rain over the past week could be seeing very good rains over the next 7 days. Most of this rainfall in the 7-day forecast falling between now and Monday. If the forecast is correct, we’ll still see less than desired rain in the far northern Plains and also in the central, southern, western Plains. But the heart of the U.S. corn and bean belt does look like it’ll be getting good rains over the next 5-7 days.
6-10 and 8-14 Day Forecast
The longer term map, 6-10 and 8-14 day forecast shows that hint of warmer, drier weather. The 6-10 day has warmer weather in the northern and western belt and that pushes further to the south and east in the 8-14 day forecast with some exceptionally heat possible in the far northern Plains. Precipitation looks to be favorable for the Great Lakes and eastern belt in the 6-10 day as well as in the 8-14 day. Again, we see the potential for some drying to develop in the Plains and northwestern belt as we move into the middle portion of July. Bottom line, current conditions and near-term forecast looks pretty good but there are some hints of threatening conditions returning by mid-July or the 3rd week of July.
Grain Market News
Weekly Ethanol Production
We mentioned that the recent break in prices is good news for demand and when we look at our weekly ethanol production that came out today, came in at 1.067 mil barrels pre day. The ties a level from about 5 weeks ago for the highest level in production going all the way back to March 2020. The combination of Covid restrictions removed, driving miles returning closer to normal, and ethanol production margins being quite positive following the recent break in prices all contribute towards this week’s production, a record for the first week of July. We expect ethanol production to remain at high levels through the balance of this marketing year. If production can remain similar to what we see today, corn use for ethanol use will exceed USDA’s current estimate, maybe by 20-40 mb.
Weekly Stocks of Fuel Ethanol
Despite an all-time record large level of ethanol production for the first week of July, ethanol stocks declined to 21.140 mb. Bottom line, today’s ethanol report was considered a supportive feature for corn demand although most of the markets attention is focused on weather.
U.S. Yield and Production
SA Production and U.S. Wheat Production
U.S. Ending Stocks
December Corn Chart
Corn prices are challenging a gradually uptrend line drawn off two solid points from late May and then again in late June. If that level doesn’t hold than something in the $5 – $5.15 range could be possible for December corn in the near-term. But keep in mind, this is at the lower end of our trading range and technical indicators are getting close to oversold. Bottom line, the near-term chart did turn down over the last 3 or 4 days and there is no sign of bottoming action at least not yet.
November Soybean Chart
A similar scenario in beans, where they’re getting close to a gradual uptrend line drawn off the June lows at $12.40. That uptrend line is about 20-30 cents below where we’re currently trading. If that support level doesn’t hold it could open the door up to the mid $12 level but this is near the lower end of the range and stocks remain exceptionally tight. This is no place to be making sales in soybeans although there is no sign of bottoming action for the charts or the technicals. They are, at least for the moment, pointed downward.
September KC Wheat Chart
Wheat prices have been very volatile this summer like corn and beans. Wheat prices are down near chart support. This is not a place to be making sales on wheat with prices near chart support and technical indicators now in the oversold area. At a bear minimum wheat would likely fill the gap that was left Tuesday morning and then maybe approach overhead resistance which is initially coming in around $6.40.
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