Closing Market Comments August 18, 2021

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Today’s Prices

Grain prices finished mixed today as the news is mixed and traders are waiting for additional information before pushing prices too far in either direction.

Grain Market News

Pro Farmer Corn Yield

Pro Farmer Bean Pods

Weekly Ethanol Production

Ethanol production down to 973 mil barrels/day. That was somewhat disappointing as ethanol production has slipped a little bit lower for the 6th consecutive week. Ethanol production is still running above the year ago level and one reason production may be slipping may be because new crop corn is about $1-$1.40/bu cheaper than nearby corn. That may be encouraging some ethanol producers to try to hold off and wait for cheaper new crop supplies.

Weekly Stocks of Fuel Ethanol

Weekly stocks of fuel ethanol was down to 22.287mil barrels on lower production. Good news that is down for 3 consecutive weeks and well below the level we were at in the pre-COVID era. Today’s weekly ethanol production report should be considered neutral to maybe lightly negative.

Brazil’s Safrinha Corn Harvest

We’ve talked a lot about Safrinha’s Brazil corn crop and its down dramatically form what expected a few months ago. Harvest is lagging behind normal. Keep in mind, the planting season got started 2-3 weeks late. Right now harvest is running about 1 ½ weeks behind average. This year’s harvest for Safrinha corn is 72% complete and that compares to 81% last year and 85% on average. The bottom line, with harvest pushing towards 80% complete this week we’re not expecting any additional major changes in the Safrinha corn crop. In fact, USDA’s current estimate of 87 mmt is probably 2-3 mmt too high.

Grain Market News

High Temperatures Tues 8-17-21

We’ve highlighted the tremendous difference between the heart of the belt which has been primarily in the 80’s over the last couple of week versus extreme heat in the Plains. Sometimes in the central and southern Plains but over the past few days in the northern Plains where temperatures have been well into the 100’s. Crops in much of the eastern belt should be doing pretty well while crops in the north and west likely struggling due to dryness in many locations.

7-Day Observed Precipitation

In addition to the heat that we’ve highlighted in the central and northern Plains, dryness has also returned with virtually no rain falling in the northwestern belt and northern Plains over the 7+ days.

7-Day Precipitation Forecast

The good news is the areas that are the driest are the areas that could see some pretty good rains if the 7 day forecast is correct. 1-3” in the Dakota’s and western MN with 0.5-1.0” possible across eastern NE, IA, and southeast MN.

6-10 and 8-14 Day Forecast

The 6-10 and 8-14 day forecasts do show warm temperatures could continue in the heart of the U.S. corn and bean belt in the 6-10 day and then during more average in the 8-14 day. Unfortunately, it looks like dry weather could return to the Plain states in the 6-10 day and continue in the northern Plains and northwestern belt in the 8-14 day. We view as the overall forecast as neutral at best.

December Corn Chart

Corn prices fulling back towards our moving averages and uptrending line. That’s also an area that we broke out to the upside following the August crop report last week. The corn market should find fairly solid support on any move below $5.6- with $5.94 current overhead resistance. Technical indicators have been stuck in a neutral range for over a month.

November Soybean Chart

Soybean prices also setting back today, right where the 10, 20, and 40-day moving averages are all converging. That’s very close to the center of the range that’s been in place over the past month, almost 2 months now. The market is reluctant to move into the upper end of the range or lower end of the range at this time given the fact the market would like more information on yield prospects as we move through August.

September KC Wheat Chart

Wheat prices are firmly in an uptrend that has been in place going back to early July but wheat has had a significant correction off of the highs posted late last week. An uptrend line posted off of the lows posted in early July with some of the lows posted in mid to late July brings chart support in just above the $7 area and today, wheat prices closed 20-cents off the morning lows.

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