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Grain markets were higher to sharply higher today as traders in general nervous about the potential for another wave of hot, dry weather beginning next week.
Grain Market News
World Soybean Meal Basis
This chart shows world soybeans meal basis level, courtesy of the AgResource Company. Beginning about a month ago, soybean meal in Brazil has been at or above U.S. levels much of the time and currently trading a U.S. levels, making U.S. soybean meal much more competitive than it had been in April, May, and June when Brazilian meal was much cheaper. Argentina meal basis has been rising. It’s still cheaper than the U.S. but it has been rising. That is expecting to continue and the U.S. soybean meal should become more competitive in the months and weeks to come.
Brazilian Soybean Fob Basis
Soybean basis levels in Brazil over the past 4 years. This year is in red. Brazilian basis in April, May, and June was historically cheap and that allowed for Brazil to capture most of the world business for soybeans over the last 4 months. But over the last 30 days, Brazilian basis levels have exploded to the upside from $0.35 under the CBT to $1 over. That’s a $1.35 rally in a little over a month and its making U.S. soybeans much more competitive.
Weekly Ethanol Production
We did get a weekly ethanol production did slip from last week’s level down to 1.041 mil barrels/day. But that’s still 11.8% above the year ago level. At the current pace we should not only hit but should exceed USDA’s corn use projection over the next 6 weeks.
Weekly Stocks of Fuel Ethanol
Stocks of fuel ethanol held approximately steady from last week and we are a little above the year ago level for stocks. Stocks of fuel ethanol are still somewhat low compared to the pre-Covid years of 2018 and 2019. Bottom line, ethanol production should remain strong and ethanol stocks certainly not a burden, maybe even a little tighter than the desired by the ethanol and blending industry.
Grain Market News
High Temperatures Mon 7-12-21
The weather is a mixed bag. Near term things look pretty good. Yesterday’s high temperatures shows mostly 80’s across the heart of the corn and bean belt. It was certainly hot in western KS and eastern CO but that’s not the heart of the belt.
14-Day Observed Precipitation
The NWS has a gap in their data in the southern Plains but you can see anything in yellow is 2” or more over the past two weeks. Much of the belt has gotten a good shot of rain and should be ok to withstand some hot dry conditions if they don’t last too long.
U.S. Radar 7-14-21 at 1:30pm
Rains moved across southern SD and northern NE last night and then through southern MN and northern IA today. Those rains are now moving into extreme northwest IL and into WI.
7-Day Precipitation Forecast
The 7 day precipitation forecast shows that drier trend for the northwestern belt. We did get rains earlier today. That’s why they don’t show up on this map because they have already fallen. Nonetheless, going forward through the next week, virtually no rain is expected in the northwestern belt and northern Plains.
6-10 and 8-14 Day Forecast
Unfortunately, that hot, dry forecast could continue. You can see the dividing line right through IA. North and west could be warm to even hot over the next two weeks and also dry over much of the northwestern belt over the next two weeks as well. So certainly, the forecast is threatening despite the fact we’ve gotten good rains recently.
December Corn Chart
Corn prices look very good on the chart. Not only has the chart turned higher along with the technicals turning higher. We’ve pushed above our moving averages and we’re in the process of trying to fill the gap that was left in the Dec chart following the 4th of July weekend. Overhead resistance is around $5.73, 15-20 cents above where we closed today would be initial overhead resistance. If that can be taken out than $6.11 becomes the next target on the Dec chart.
November Soybean Chart
Soybean prices also trending higher, making a new high for this move. Filled the gap that was left in the chart following the 4th of July weekend making $14.00 the next level of overhead resistance on the Nov chart. Technical indicators for beans also look quite good therefore no sign of topping action in corn or soybeans.
September KC Wheat Chart
Wheat prices also making a new high for the move. The chart looks good. Technicals look good. The next level of overhead resistance up around $6.50, about 20 cents above where we close today. That’s where our downtrend line comes into play but wheat also showing no sign of topping action at least with the short term chart and technical indicators.
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