Closing Market Comments July 9, 2021

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Today’s Prices

Grain markets closed mixed today. Rains that have fallen combined with rains in the forecast has traders believing that the corn crop will be in good shape as it heads towards pollination with corn the downside leader.

Weekly Price Summary

Grain Market News

High Temperatures Thurs 7-8-21

The heart of the belt was primarily in the 70’s and 80’s. A few 60’s around the Greak Lakes and 100’s in the western Plains were the exception.

U.S. Drought Monitor

This week’s drought monitor shows drought ongoing in the far northwestern belt and northern Plains while the heart of the belt is in pretty good shape with the exception of IA which is still experiencing drought conditions in many areas.

U.S. Drought Class Change

The yellows and tans show areas where the drought has gotten worse. The greens and blues are areas where the drought has improved. In the northwestern belt the drought got worse. That doesn’t mean we didn’t get any rain. It just means evaporation and moisture use has exceeded rainfall so drought actually expanded in the far northwestern belt and portions of the northern Plains. ND did see a light improvement last week. Eastern NE saw some green as well as portions of the eastern belt and southern Lake’s saw some green where the drought improved.

7-Day Observed Precipitation

Rainfall over the past 7 days has shown some pretty good rains in the western half of ND, much of SD, northern IA, and southern MN. This is an area that desperately needed rain and these rains of 0.5-1.5”, even 2-3” in some areas is going to be beneficial and crop conditions in the northwestern plains or northern belt could see some improvement in next week’s crop report. The lack of rain in much of the central belt like southeast NE, KS, OK, MO, AR, and portions of IL could see crop conditions slip just a little bit due to the lack of rainfall this week but seasonal/mild temperatures would prevent any major losses in most of those states. Bottom line, we expect crop conditions could be steady or up a couple percentage points in the G/E category next week and most of that due to the rains that have fallen in very critical areas of the northwestern belt.

7-Day Precipitation Forecast

The 7 day precipitation shows 1-3” of rain over the majority of the U.S. corn and bean belt over the next 7 days with 3-5” possible from southeast IA, northern MO, and western IL. Some of those areas don’t need any additional rain and isolated areas could see 5”+ over the next 7 days. Unfortunately the northern plains could miss out on the rains and the western/southern Plains that could miss out on the better rains. Those are the areas where dry conditions could expand and we’ll have to monitor that going into next week.

6-10 and 8-14 Day Forecast

Our 6-10 and 8-14 day forecasts show some heat building in the northern belt. We could see some extremely hot temperatures as we move into the 3rd week in July northern Plains going into the far northwestern belt. That will be another item that needs to be monitored. Dryness should expand in the plain states in the 6-10 and 8-14 day while the far eastern belt is going to see above normal precipitation based on today’s forecast. This is a similar pattern to what we’ve seen recently with warmer and drier to the north and west, cooler and wetter to the south and east.

Grain Market News

Brazilian Soybean Fob Basis

This chart is courtesy of AgResource Company and shows Brazilian soybean Fob basis levels. Brazil basis this year in mid to late May was down at 35 cents under. They’re now 95 cents over. This rapid and large increase in Brazil soybean basis levels has allowed U.S. soybeans to become competitive on the global market for the first time going back to February and March.

Corn: Weekly Export Sales

Corn sales improved to 173 tmt, above the 85 tmt needed to reach USDA’s export forecast. Old crop exports are on track to reach USDA’s target and we believe USDA will leave its old crop estimate for U.S. export of corn unchanged in Monday’s report. We do expect USDA to raise and raise significantly new crop exports of corn based on the Brazilian crop losses.

Soybean: Weekly Export Sales

Soybean export sales 64 tmt, not much but above the level needed to reach USDA’s export forecast. We’ve almost reached USDA’s sales total already so very little is needed for the next 7 weeks. U.S. export of soybeans are running at a pace ahead of USDA’s target and USDA will likely need to raise its export forecast for beans by something in the neighborhood of 10-20 mb on the balance sheet. They may not make the change this month but certainly in the next month or two it does appear USDA will have to just slightly raise the U.S. old crop exports for soybeans.

U.S. Yield and Production

SA Production and U.S. Wheat Production

U.S. Ending Stocks

December Corn Chart

Corn prices have pushed right down towards chart support. This market has been extremely volatile, probably more volatile than we’ve ever seen in the history of the CBT. We have been seeing consistent chart support in the $5 – $5.20 range. We expect that to continue with overhead resistance in the $6-$6.20 range. Anything within these ranges can be expected as we move through the rest of the summer growing season. It’s worth noting, prices are currently near the low end of the range with technical indicators peeking into the oversold area. This is no place to be making new sales.

November Soybean Chart

Soybean prices have been in a sideways and also, a very choppy range over the past 4 months. Recently we had somewhat of a pennant formation with lower highs and higher lows. That’s a narrowing formation telling us the market is becoming somewhat comfortable at least for the moment with prices in this range until there are major changes in the news. That could come from weather or next week’s July crop report but for the moment the market seems content to be trading from something around the $13 level to around $14.  

September KC Wheat Chart

Wheat prices have pushed down towards the lower end of the range with technical indicators oversold. Typically, when technical indicators get oversold it is signaling that we’re near a temporary or even a longer term bottom. We’ve seen that often over the past 5-6 months and we’re sitting with prices near chart support and technicals indicators oversold. This is no place to be making sales in wheat.

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