Closing Market Comments September 1, 2021

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Today’s Prices

Grain prices finished lower to sharply lower for the third day in a row as concerns continue about export potential out of New Orleans following hurricane Ida.

Grain Market News

Soybean Exports to China

This map shows soybean exports to China in 2017/18 and 2018/19 for the first 7 weeks of the marketing year, Sept and Oct. The Mississippi River export markets are very significant as harvest approaches. There’s a lot of fear in the market right now about the potential loss of export business. We will note that some exports will be shipped to other ports or terminals. Some exports won’t be lost but simply delayed. We also believe the Industrial community will do a very impressive job of getting business up and back online. That does not mean we haven’t seen some significant damage or that there is no problems at all but we do believe the market is overreacting to this event.

Weekly Ethanol Production

Weekly ethanol production very disappointing at 905K barrels/day. That’s the lowest for the first week of Sept over the past 6 years. We’re hearing that ethanol plants are taking seasonal and maintenance downtime right now for two reasons. There’s not a lot of corn available and number two, what is available for the old crop is much higher priced and therefore many ethanol plants are waiting until new crops supplies become available.

Weekly Stocks of Fuel Ethanol

Weekly stocks of fuel ethanol down slightly from last week at 21.1 mil barrels. This is just 1% above stocks last year at this time when COVID was a major factor.

Futures-Based Ethanol Production Margin

This chart shows future-based ethanol production margins and this chart is courtesy of AgResource Company. Board margins are very good at approximately $1/bu. With this in mind, we believe ethanol plants will be aggressively ramping up once the new crop harvest begins and supplied become available.

Soybean Crush Margin

Similar situation to soybean crush margins. Very profitable up over $1/bu. And again, the lack of available supplies combined with the higher price for old crop supplies has the soybean crush plants trying to be patient waiting for new crop supplies.

Grain Market News

14-Day Observed Precipitation

The northwestern belt has received generally 2-4” of rain over the past 14 days with many areas seeing 5” or more. The NWS has a gap in their data so we don’t have data down in the Delta but we can see in the eastern belt rains have been more scattered. 2” would be about normal this time of year for a 2-week period. We do see some areas that haven’t received much rain in portions of the eastern belt and the southwestern Plains has been quite dry as well.

7-Day Precipitation Forecast

The forecast shows another 0.5-1.5” expected in the western to northwestern belt into the Plains states over the next 7 days with lighter amounts expected into the eastern belt and the OH Valley.

6-10 and 8-14 Day Forecast

The longer-term weather maps shows the 6-10 day calling for below normal temperatures in most of the belt and the 6-10 day and the 8-14 day both calling for drier than normal conditions over the next two weeks. Once we get through the rain event coming through Thurs-Sat, the next two week’s look relatively cool and dry. We view the weather as mostly favorable and certainly non-threatening at this time.

December Corn Chart

Corn prices have been hit hard this week. $5.58 was the high Monday morning. $5.18 was today’s low. In two and a half trading sessions we’ve dropped 40-cents in the corn market. A lot of that is due to the problems down at the Mississippi Gulf and export terminals. Technicals are again oversold. Prices are near the low end of our trading channel. Therefore, this is no place to be making sales.

November Soybean Chart

Soybean prices also trending lower. Bean prices down about $0.60 from Monday’s high and again, similar to corn the primary reason for fall over the last 3 days is the fact that export terminals are down following hurricane Ida’s passing through on Sunday. Bean technicals entering the oversold range. Prices near the low end of the range and again, this is no place to be making sales in beans.

December KC Wheat Chart

Wheat prices also pushing down towards the lower end of the range and down sharply from Monday’s high. Technical indicators are just now entering into the oversold range. The bottom line is that corn, beans, and wheat have all been hit hard the last 3 days. Prices near the lower end of our trading range. Technical indicators into or getting close to the oversold area. This is no place to be making sales and in fact, end users should take advantage of this break by taking on additional ownership.

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