Closing Market Comments September 13, 2021

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Today’s Prices

Grain prices traded on both sides but finished a little bit lower as the trade tries to determine if the yield will be above or below USDA’s most recent estimate released on Friday.

Grain Market News

USDA Monthly Corn Yield Estimate

This graph is over the past 8 years and shows USDA’s estimate that comes out with each crop report. Last month USDA projected yield at 174.6 bpa. On Friday, USDA raised the yield by 1.7 bu to 176.3 bpa. Some feel that could go a little higher and others feels its overdone and it’ll work lower. That is what’s creating this mixed feeling and mixed trade in the grain markets as well.

USDA Monthly Soybean Yield Estimate

The U.S. soybean yield increased to 50.6 bu/ac compared to 50.0 bu/ac last month. We’re hearing similar talk in the soybean market. Some feel yields will increase as we move towards October. Others feel it’ll decrease. This will likely prevent either the bulls or bears from gaining a significant hand until we have better hand until we have a better idea on U.S. yields.

Grain Market News

U.S. Corn – Monthly Ending Stocks

This graph shows the month by month ending stocks that come out in USDA’s reports. Old crop stocks from this past year that ended Aug 31st were up to 1.187 bb, up slightly from where they were earlier in the summer. New crop stocks were up from last month to 1.40 bb but still remain within the same range that we’ve been in over the last couple of months and still remain very tight.

U.S. Corn – Ending Stocks

On yearly basis, stocks at 1.408 bb are higher than stocks on Aug 31st but we’re still well below the stocks we had the previous 6 years and there is very little room for error. Any increase in demand. Any loss of U.S. production would cause stocks to slip lower and from current levels, there is not a lot of room for error.

U.S. Soybean – Monthly Ending Stocks

We have a similar scenario in soybeans where monthly ending stocks do show stocks at 175 mb. That’s lower than earlier in the summer but it’s still very small. And new crop stocks are estimated at 185 mb. Although that has increased slightly it is still extremely tight and there is no room for error.

U.S. Soybean – Ending Stocks

On an annual basis our ending stocks at 175 mb as of Aug 31st and then 185 mb for new crop, still very tight and no room for error. If demand would increase, or our yields or production would decrease stocks could very quickly become too tight and that would cause a sharp rally. Again, no room for error on U.S. soybeans.

U.S. Wheat – Monthly Ending Stocks

Monthly wheat ending stocks shows we ended last year with 844 mb and new crop stocks projected at 615 mb. The tightest over the last 8 years.

U.S. Wheat – Ending Stocks

Looking at ending stocks for U.S. wheat on an annual chart, 615 mb is very tight. With the exception of 2014, it would the tightest going all the way back to 2008. We have a similar scenario for corn, beans, and wheat ending stocks and that is, stocks are tight and there is no room for error. This will likely prevent any major pullbacks in prices. Doesn’t mean we can’t have prices slip lower from time to time but any sustained break is not likely until crops can be guaranteed next summer.

7-Day Observed Precipitation

As we enter harvest, the heart of the belt dry weather has been in place for most of the U.S. corn and bean belt last week.  A little bit of rain in the eastern belt and Great Lakes region but the majority of the U.S. corn and bean belt has been dry over the last week. That will help crops move towards harvest but any crops that are sitting in areas that have missed out on recent rains are likely not getting the rains they want to finish the filling stage. But before we get bullish, most areas have adequate moisture to finishing that filling process. It’s only isolated areas that do not.

7-Day Precipitation Forecast

There’s not a lot of rain in the forecast. There’s a little bit in MN, KS/MO, and a little bit of rain in the far eastern belt. Not a lot of rain in the forecast which should allow crops to rapidly mature and head towards harvest. The rain in the Gulf region is from tropical storm Nicholas. It’s not expected to be severe.

December Corn Chart

A little bit of something for everyone. Corn prices did close lower but following last Friday’s key reversal to the upside, it was an inside trading day. The chart is still showing sign of wanting to bottom but we have overhead resistance from a downtrend line that’s in place and some moving averages. And if the bulls want prices to rally, we first need to bump through some moving average and our downtrend move up into the $4.45-$4.50 would certainly have this market looking better from a chart perspective.  But we do need to point out that we may be seeing some bottoming action from the chart and technicals, we still have a downtrend in place and have to push through overhead resistance.

November Soybean Chart

Similar situation on soybeans where we had a key reversal on Friday followed by an inside trading day today. Really no advantage for the bulls or the bears today. Short term it does appear that the market is trying to turn higher. Technical indicators have turned higher but similar to the discussion in corn, we still have a downtrend in place and we still need to bump through that overhead resistance in order to get the chart looking more impressive.

December KC Wheat Chart

Wheat prices were able to close a little bit higher on the KC chart today. That makes the chart look a little bit better. Technical indicators turning just a little bit. But keep in mind we still have a downtrend in place with overhead resistance from our moving averages and our downtrending line. So wheat also has some overhead resistance. The difference with wheat is that we’re not challenging yet. Wheat could raise into the $7.10 level which would be 20-25 cents in order to get towards overhead resistance. While corn and soybeans are starting to challenge, just a little bit, that overhead resistance level.

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