Closing Market Comments September 7, 2021

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Today’s Prices

Grain markets finished lower today as there’s a lack of bullish news, harvest is approaching, and the Gulf area is still trying to get exports up and running again.

Grain Market News

U.S. Yield and Production

U.S. Ending Stocks

World Ending Stocks

Grain Market News

El Nano/La Nina

This graph shows the NWS El Nino or La Nino forecast. The zero line means that sea surface temperatures are close to average. Anything above zero would be El Nino and anything below average would be La Nina. Last year La Nina built to where temperatures were about 1.3 degrees below average in Oct, Nov, and Dec. The current NWS forecast is almost a repeat with temperatures expected to go 1.4 degrees below average in Oct, Nov, and Dec. Right now, the forecast for the sea surface temperatures is very similar to what we saw a year ago and that would produce dryness in southern Brazil or Argentina. This is certainly something that needs to be monitored.

GRACE-Based Drought Indicator

The drought conditions slashed the Brazilian corn crop by about a billion bushels. The map on the left is groundwater or deep water. Brazil’s growing region is almost all of Brazil is short on ground water. And then when we look at Argentina, they are mostly short of ground water supplies as well. On the right is surface soil moisture. Again, most of Brazil’s growing region has below normal soil moisture and the same is true in Argentina. Therefore, we need to monitor this closely as we enter into the South American growing season.

High Temperatures

As we approach harvest temperatures mostly in the 80’s across the U.S. corn and bean belt. We don’t view this a threatening unless you happen to be in a pocket that is lacking soil moisture but those pockets are relatively small.

7-Day Observed Precipitation

Over the last 7 days, good rains in the western belt and into the Plain states. The OH Valley and Delta did pretty well. Overall we think the precipitation that has fallen over the last couple of weeks could allow crop conditions to be steady or even a little bit better in today’s weekly update of crop conditions.

7-Day Precipitation Forecast

The forecast shows some light rain in the eastern corn belt otherwise mostly dry conditions for the next 7 days. That should be quite favorable as we approach harvest especially given the adequate rains that have fallen recently.

6-10 and 8-14 Day Forecast

The long-term forecast calls for above normal temperatures for the entire U.S. corn and bean belt for the next two weeks. Below normal precipitation in the 6-10 day and mixed with it wetter in the Great Lakes and eastern belt in the 8-14 day and remaining dry in the Plains. Overall, we view this forecast as mostly favorable and likely a negative factor for the grain markets at this time.

GRACE-Based U.S. Drought Indicator

When we look at surface soil moisture in the U.S. we can see a tremendous improvement at least in the topsoil. We still need more rain to resolve the overall drought conditions but topsoil moisture has improved nicely in the northwestern belt and a good portion of the northern Plains over the last couple of weeks.

U.S. Vegetation Health Change

Looking at vegetation health compared to last year at this same time. The far northwestern belt and northern Plains, Dakota’s, MN see vegetation well below a year ago at this time. Iowa had the derecho on Aug 10th and then no rain in much of Aug and Sep and that allowed the vegetation health to be decline but this year it is improving with the rains that have fallen recently. Therefore, vegetation health in IA and NE is better than is was a year ago, given the fact that soil moisture has improved and things are greening up nicely this year versus last year. The eastern belt, Delta, and Plain states mostly mixed from a year ago.

December Corn Chart

Last week, Wed, Thurs, Fri we started to see the market trying to stabilize but today the market got hit hard and pushed down to a new low on the lack of bullish news and fund liquidation. As we mentioned last week, we’re near the lower end of the trading range that has been in place all summer. Technical indicators are extremely oversold. This is no place to be making sales in the corn market especially with a crop report coming out this Friday.

November Soybean Chart

Soybean prices also near the lower end of the range. We didn’t take out last week’s low but we’re still at the lower end of the range and technical indicators are oversold. Again, this is no place to be making sales in soybeans at this time.

December KC Wheat Chart

Wheat prices rallied significantly off last week’s low just below $7. And even though we were down today, the chart still looks pretty good for wheat and technicals look pretty good as well. We’ll just have to watch the corn and bean markets to see if they want to pull wheat down but on its own the wheat chart and technicals look pretty good.

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