Closing Market Comments July 21, 2021

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Today’s Prices

Grain markets closed mixed today. The forecast still looks somewhat threatening but questions and concerns regarding U.S. biofuel policy kept traders very cautious and prices trading mixed on the day.

Grain Market News

Weekly Ethanol Production

Ethanol production was down for the 2nd week in a row, down to 1.028 mil barrels per day. We’re still well above the year ago level, in fact, 13% above a year ago and we’re still at a pace that will allow us to reach USDA’s corn use estimate but it was disappointing that corn use for ethanol was down a little bit this week.

Weekly Stocks of Fuel Ethanol

Maybe more disappointing than a little bit lower ethanol production was that lower production still resulted in higher stocks. In fact, a big increase in stocks to 22.5 mil barrels. The ethanol report today considered lightly negative for corn prices.

Grain Market News

High Temperatures: Tues 7-20-21

In the near term we still have mostly favorable conditions. Temperatures in the 80’s across the vast majority of the corn and bean belt. As of yesterday, Tuesday high temperatures were in the 90’s and 100’s mostly in the northern and western Plains.

7-Day Observed Precipitation

The 7 day observed precipitation map shows we’re starting to get some drying taking place in the northern Plains and western belt. Even portions of southwestern IA starting to dry out again  and with heat expected to build we believe the forecast is actually a positive for prices going forward if the forecast verifies.

14-Day Observed Precipitation

The markets aren’t shooting to the upside right now partly because of the biofuel uncertainty that we discussed but also because over the past couple of weeks there has been good rains over much of the heart of the corn and bean belt. That’ll buy U.S. corn and bean crops a little bit of time if it does turn hotter and drier.

30-Day Observed Precipitation

The 30 day observed precipitation shows anything in green would be extremely dry conditions where stress is ongoing. Areas in pink and purple have had excessive amounts of rain, standing water which has been detrimental to crops in those areas.

U.S. Radar: 7-21-21 at 1pm

Our U.S. radar at 1pm shows a continuation of what we’ve seen this week and that is very little to no precipitation falling across the bulk of the corn and bean belt and that could continue well into next week. Some models are hinting that the dry pattern could continue into the start of August.

7-Day Precipitation Forecast

The 7-day precipitation forecast shows very little rain falling in the Plains and into the central U.S. corn and bean belt. These lighter green colors in MO and IL are less than 0.10” and even the second shade of green is 0.20” so at this point very little to no rain is expected in the western belt into the Plains over the next 7 days.

6-10 and 8-14 Day Forecast

Unfortunately the forecast over the next 2 weeks continuing to point towards warmer than normal conditions for the entire belt and drier than normal conditions as well. It won’t be completely dry and we won’t have searing heat everywhere but generally warmer and drier conditions are going to cause soil moisture to decline. Crop conditions are likely to slip lower and yield ideas within the trade are probably going to start slipping lower as we approach the first of August.

Vegetation Health Index

Yesterday we showed crop conditions ratings which are below last year. This map shows vegetation health index. On the left is July 15th this year and on the right is July 14th of a year ago. You can clearly see the drought conditions causing poor vegetation health in the northern Plains and also in the Pacific Northwest. IA is seeing mixed conditions but certainly below what they had a year ago.

Vegetation Health Change

This shows the vegetation health change compared to last year. Most of the western corn belt including the northern Plains and the Pacific Northwest all seeing significantly lower vegetation health index compared to a year ago. Areas that are seeing better conditions would be portions of IN, OH, and MI and the far western Plains. But the heart of the belt does show lower vegetation health than we had a year ago.

December Corn Chart

Corn prices are in an uptrend. The market isn’t exploding to the upside but we have been working our way higher. In fact today the high at $5.73 came within a half of a cent of closing the gap at $5.73’4. Bottom line, the chart still looks pretty good. Technical indicators are still pointed upward. No sign of topping action yet in the corn market with technical indicators only at the midway point.

November Soybean Chart

Soybean prices are also in an uptrend on the chart. Technical indicators are pointed upward. Not sharply higher but are pointed higher and there is still room to move from a chart and technical perspective. No sign of topping action at this time in the soybean market although today we did have a lower high for the second day in a row. If the uptrend is going to continue we’d like to see prices challenging the $4.18 and the $4.23 level over the next few days.

September KC Wheat Chart

Wheat prices posted a new high for the move yesterday at $6.74. Today was an inside day. Meaning we didn’t take out yesterday’s high or yesterday’s low. But the overall chart formation is still pointed higher with the technicals still pointed higher as well. Although technicals are getting into the overbought range, no sign of topping action in the wheat market at this time.

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