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Grain markets finished sharply lower today as weather models adding some rain for next weekend in portions of the belt. That was enough to cause the longs to panic and bailout ahead of the weekend.
Weekly Price Summary
Grain Market News
Yesterday’s High Temperatures 7-22-21
Yesterday’s high temperatures shows the 90’s creeping to the east. Most of the Dakota’s into the 90’s with 100’s in the west and 90’s and 100’s also in the western Plains like eastern CO. Yesterday’s highs still mostly favorable for the heart of the belt. Upper 80’s very common. We’re going to see a lot of 90’s in the months to come. Temperatures at midday today already in the 90’s in the central U.S. corn and bean belt.
High Temperature Forecast 7-27-21
Looking at temperatures out into next week on Tuesday, July 27th, temperatures still in the mid and upper 90’s in the western half of the belt with 100’s common across the Plains. Extreme scorching heat is projected in the northern Plains like ND and MT.
7-Day Observed Precipitation
We had good rains from late June to into mid-July but over the past 7 days the rainfall has ended for most of the central belt. In fact, much of the heart of the belt has seen no rain over the past week. Unfortunately, about another week of dryness is very likely and then we’ll see what forecast brings Sunday into Monday and then next week into the first week of August.
Today’s midday radar at 1pm shows no rain across the heart of the U.S. corn and bean belt. That has been the case all week long.
7-Day Precipitation Forecast
When we look at the 7-day precipitation forecast, very little rain for the central U.S. corn and bean belt. A little bit of rain in the Great Lakes region while the Plains, with the exception of a few pockets, looks to be dry over the next week. Keep in mind, temperatures will be reaching into the 100’s so not good news for corn and bean crops in the western belt and the Plains.
6-10 and 8-14 Day Forecast
The 6-10 and 8-14 day forecast continues to show above normal temperatures in the 6-10 day and above normal temperatures in the 10-14 day. And when we look at precipitation, below normal precipitation for the bulk of the corn and bean belt in the 6-10 day and little bit of an improvement in the eastern belt and the Great Lakes in the 8-14 day but still dry in the western belt and into the Plains. The forecast at this time does look threatening but the marketplace is looking at the possibility of better rain chances next weekend and that’s what pushed prices lower in today’s close.
Grain Market News
U.S. Corn Exports
This chart shows U.S. corn exports over the past 20 years. This year, the 2020/21 year, USDA is projecting corn exports at 2.85 bb. Next year USDA is projecting 2.5 bb. We believe that is significantly too lower. We believe exports will be at least as high as this year at 2.85 bb and that would be up 350 mb from USDA’s projection. And, it is possible that the U.S. could export 3 bb of corn in the next crop year. Exports are going to be at record levels given the massive losses in Brazil, tremendous crop losses in Canada and in addition, we’re starting to hear of some potential losses in the Black Sea region and in China due to tremendous flooding. The bottom line, although USDA is projecting exports to be down substantially next year, we believe they’ll be at least as large as this year, if not larger.
U.S Soybean Exports
USDA projecting this year’s export will be 2.27 bb and we’re on track to reach that level. But next year USDA is projecting exports to drop by about 200 mb. But the fact that Chinese demand is extremely strong and the majority of Brazil’s surplus has been shipped out. Brazil’s soybean basis has risen over a $1.30/bu over just the last 6-7 weeks and the U.S. is very quickly going to return to the cheapest source in the world. Exports are going to be exploding to the upside once new crop harvest brings bushels to town. It’s very likely that next year’s exports could be equal to this year at the 2.27 bb and that’s about 200 mb larger than USDA is currently estimating. This potential record demand for corn and beans which will start in Sep and really ramp up in Oct forward is not going to be just for a few weeks. It will be for at least 6 months, possibly longer and this tremendous demand for U.S. grain likely to cause the U.S. supply and demand situation in late winter and early spring to be very similar to this past year. We’ll be discussing the fact that we’re using up our grain at too fast of a pace and we’ll be at risk of running out for the 2nd year in a row.
December Corn Chart
Corn prices down sharply today as longs are getting tired of no follow through to the upside and they bailed out during today’s trade. But the bottom line is that technical indicators for corn dead center in the middle of a neutral range as the trade waits for additional information. Prices also literally dead center in the middle of the range that’s been in place all summer with $5.00-$5.25 the low end of the range with $6.00-$6.25 being the upper end of the range. We’re dead center in the middle of the summer long trading range as the market waits for additional weather updates next week.
November Soybean Chart
Similar situation in soybeans where the technical indicators have not been overbought or oversold. They’ve been chopping around in a neutral range. Today, technicals are lower but very close to the middle of the range while prices also very close to the middle of our entire summer range for soybeans. The lower end of the range is $12.50-$13.00 which would likely be an area where end users are buyer with $14.50-$15.00 the upper end of the range where we may find some selling. Prices right now dead center in the middle of that range waiting for fresh new information. With corn and bean prices in the middle of their range, this is no place to be making major decisions.
September KC Wheat Chart
Wheat prices have also been chopping around recently. Technical indicators did get overbought and turned lower following the recent break over the last 2-3 days. But prices are still very close to the middle of their range as well. Anything below $6 would likely be a place where end users would step in to buy while anything above $7 a place where producers may be looking for a place to sell. Again, we are dead center in the middle of that range.
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