Closing Market Comments August 31, 2021

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Today’s Prices

Grain prices were lower today as most of the U.S. has adequate soil moisture to go through the filling stage. Combine that with some negative news regarding export faciality that may have been damaged by hurricane Ida and prices lower across the board.

Grain Market News

Weekly Covid

Weekly cases globally have been expanding sharply. The current spike in cases is pushing the number of global covid cases close to the levels we saw back around the first of the year and again in the spring. Unfortunately, weekly deaths have been on the rise as well and again, not at the same level that we were at during the previous 2 surges but getting close. In green shows vaccines administered weekly and the global community continues to administer heavy numbers of vaccines globally. On the right are U.S. cases and weekly cases continue to rise sharply. They’re not exceeding but at least challenging the levels we saw back around the first of the year. Unfortunately, weekly deaths have also been rising due to the Delta variant. U.S. vaccines have been increasing slightly but we’re not going to get to the levels seen previously given the majority of the population has been vaccinated. Bottom line, Covid cases, hospitalizations, and deaths are on the increase and that has investors concerned about the U.S. and global economic recovery and that spills over bearish influences into the grain markets as well.

Cargill Export Facility

We mentioned that export facilities have seen some damage. This is a picture of Cargill’s Export Facility as Reserve Louisiana in the New Orleans region. There is certainly work that needs to be done before exporting can commence.

Grain Market News

El Nino/La Nina

This chart shows the El Nino/La Nina forecast for the central equatorial Pacific. The chart is shown as sea temperatures either above normal or below normal, below the zero line. Above normal sea surface temperatures would be considered El Nino and below normal sea surface temperatures would be considered La Nina. Last year we had a La Nina, cool ocean temperatures in the equatorial Pacific, 1.2-1.3 degrees below normal in Oct, Nov, and Dec. That’s entering the heart of the South American growing season. Currently sea surface temperatures are declining. They’re not exceptionally cold but they’re expected to be 1.2-1.3 degrees below normal. Very similar to last year and almost the identical timeframe, Oct, Nov, and into Dec. Typical cool temperatures or La Nina are associated with dry conditions for southern Brazil and Argentina. This past year the warmer temperatures were more focused on central and northern Brazil and affected their Safrinha corn crop. Nonetheless, this situation will need to be monitored very closely as we head towards the South American growing season.

3-Day Observed Precipitation

Over the past 3 days we’ve had additional precipitation, 1-3” of rain from eastern, southeastern SD, western IA and eastern NE. Areas could use some additional rain. There was certainly some storm damage but rains seen as beneficial in the western belt. We also got some scattered rains in the eastern belt where they can use some additional rain but the heaviest and most soaking rains from hurricane Ida are remaining to the south and east of the primary growing region for corn and beans.

U.S. Radar

Rainfall this afternoon shows some light scattered rains in central IA. Some scattered rains in the eastern belt and then hurricane Ida remanence are swirling south of the OH valley. That precipitation is expected to move off to the north and east of the next few days.

7-Day Precipitation Forecast

Another half to 2” of rain is expected across the western belt. Some 1-2” rains in southern OH as the remanence of hurricane Ida pass by. Otherwise, there is no real significant threats on the precipitation map.

6-10 and 8-14 Day Forecast

The 6-10 day forecast shows below normal temperatures as well as in the 8-14 day. And also accompanied with a drying trend for most of the central U.S. including a good share of the U.S. corn and bean belt. Temperatures cool and dry do not appear to be threatening for the U.S. corn and beans crop and there is not frost in the forecast, at least not yet.

U.S. Vegetation Health Index

The northwestern belt and northern Plains seeing vegetation health down substantially from last year. We also see an area from KS into MO and AR and portions of southern IL that have vegetation below a year ago. But there are areas where vegetation health is better than a year ago. Eastern NE and IA, eastern IN and OH are a couple of examples as well as portions of the southeast U.S. When we look at the whole U.S. growing region and the vegetation health index, it does seem like it’ll be difficult to achieve trendline yields when our vegetation health for the most appears to be below the year ago level.

December Corn Chart

Corn prices broke down through chart support today but did turn around and closed at $5.34 which was above chart support. A little bit of something for everyone in today’s trade. Very disappointing, sharply lower earlier followed by a rebound into the close. For the most part we still believe anything below $5.30 is an area where you want to be a buyer and as we get into the $5.70-$5.70 area you want to be a seller and today’s prices clearly at the lower end of the range.

November Soybean Chart

Soybean prices have been drifting lower, in fact, today’s low challenging the $12.77 low that was posted about a week and a half ago. We have a similar thought in beans and that anything below $13 is the lower end of the range and likely a buying opportunity with anything up around the $13.75 area likely to create a selling opportunity and certainly soybeans near the lower end of the range that’s been in place the past 2 months.

September KC Wheat Chart

Wheat prices also pushing down towards the lower end of the range, below $7. That’s the low end of the range and likely a better buy than a sell with the upper end of the range in the $7.25 plus area. With this in mind, corn, beans, and wheat all appear to be at the lower end of their price range and not a place where we want to be selling at this time.

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