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Grain markets finished mixed today as news items are not providing a decidedly bullish or bearish story to cause the market to go too far in either direction.
Grain Market News
High Temperatures Tues 8-3-21
Temperatures for the majority of the U.S. corn and bean belt have been seasonal in the upper 70’s to low mid 80’s. That is almost ideal for growing crops given you have adequate moisture.
3-Day Observed Precipitation
This week has been dry so far. The 3-day observed precipitation shows no precipitation across the entire central U.S. including the heart of the corn and bean belt.
7-Day Observed Precipitation
We did get some good rains last week on Fri and Sat and those rains in portions of SD, NE, IA, MO, and even into WI and IL. Other areas have been less fortunate and did not pick up on the rains last week. ND, northwestern MN, and large portion of the Plains did not pick up the rain. Those will be the areas that find stress the soonest if we don’t get better rains by this coming weekend.
The radar today shows the heart of the belt completely dry. We do have some rains, nothing heavy, scattered showers across the Plains states, ND, SD, and western NE.
7-Day Precipitation Forecast
The 7-day precipitation forecast has been increasing the rainfall totals that are expected primarily this upcoming weekend, Sat and Sun. IA could get 1-2” of rain if today’s forecast is correct. Some of that rain spills over into southeast MN, northwest IL, and WI could get additional rains as well.
6-10 and 8-14 Day Forecast
The longer-term outlook is very similar to what we’ve seen the past couple of days. Above normal temperatures for the 6-10 and 8-14 day forecasts. Above normal precipitation in the Great Lakes and into the eastern corn belt. Some of that better rain could spill over into IA in the 6-10 day forecast.
Grain Market News
Weekly Ethanol Production
One of the demands items that is close to USDA’s target and not likely to see major changes. Ethanol production this week came in at 1.013 mil barrels/day. That is 8.8% above the year ago level and the year-to-date total is 3.1%. That is below USDA’s estimate of 4.1% but if we look at last year’s numbers compared to what we expect this year in the final 3-4 weeks we should be able to come in very close to USDA’s target.
Weekly Stocks of Fuel Ethanol
Stocks of fuel ethanol down just fraction from last week and pretty much in line with where stocks have been pre-Covid years of 2018 and 2019.Stocks are adequate but by no means burdensome. Today’s weekly ethanol report was considered neutral for grain prices.
There is increasing concern regarding covid and the Delta variant. This chart shows the global cases and U.S. cases. Globally the daily cases have had a big increase. We’ve also seen an increase in global deaths but the good news is that it is nowhere near the previous two peaks. In the U.S., daily cases have seen a tremendous spike. In fact, they’re the highest levels we’ve been at going back to the Jan/Feb/Mar timeframe. That has some in the economic and business community concerned that it could slow the U.S. recovery. A good piece of news is that although the daily cases have seen a tremendous increase, the deaths have not seen a tremendous increase. Not acceptable by any means but at least we’re not seeing a tremendous surge like we’re seeing in daily cases. Bottom line, the Delta variant and increase in new daily cases certainly causing the market to become cautious in the business and economic community.
Delta Variant Prevalence in U.S.
This map shows new cases being reported of Covid-19 and shows the percent of new cases that is the Delta variant. The Delta variant is 79% of the cases reported in the southeast, 85% on the west coast, and 93-96% in the Rocky’s and Plain states. Bottom line, 83% of all new cases of Covid-19 are reported to be the Delta variant.
December Corn Chart
Corn prices are stuck in a fairly narrow range. The market has quieted down significantly from the major gyrations we saw in the market back earlier in the summer. Part of that is due to the fact that we’re no longer fearful of running out of old crop. Old crop stocks will still be tight but at least we’ll make it to the new crop. Secondly, we’re no longer looking at the opportunity of a 2012 drought repeat. Yes, we have severe drought in some areas but from a U.S. corn and bean belt perspective we’re not looking at a major disaster, just some adjustments based on weather going through the next 30-45 days. This has resulted in the market still trading choppy but in a fairly narrow range over the past month. Today’s prices right in the middle of that recent narrow range. Technical indicators also very close to the neutral 50% level on your short-term stochastics.
November Soybean Chart
Soybean prices have also developed a more narrow range versus the bigger ranges we saw earlier in the season. Reasons are about the same, we’re making it through the old crop without running out and new crop, although it may not be a bumper crop, at least it won’t be a complete disaster from a nationwide perspective. Current weather may not be ideal but its not excessively threatening and that is allowing soybeans to push down towards the lower end of the range that has been in place for a little over a month. Technical indicators are getting close to the oversold range. The last few times we got down into that area it was pretty much identifying the possibility of a buying range on the chart. We can see going back to the March/April timeframe, when the technical indicators have gotten close or into oversold levels that was typically a pretty good signal of bottoming action. Weather is still likely to be the primary driver but we do want to note that technical indicators are getting into the overbought range for the first time in over a month.
September KC Wheat Chart
Wheat prices posted a new high for the move up to $7.13 in today’s trade but turned around and close at $6.94, nearly 20-cents off the high and posted a key reversal. This could signal that wheat is ready to have a little bit of a correction. What was overhead resistance will now provide chart support. So $6.75 would present some major chart support. Not only a double top but also where some moving averages and our uptrend line all come into play. It’s also worth noting the technical indicators did hook to the downside based on today’s key reversal.
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