Closing Market Comments September 15, 2021

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Today’s Prices

Grain markets finished higher to sharply higher today as the news is gradually turning more friendly for the grain markets.

Grain Market News

Crude Oil

The crude oil chart shows from early-July to late-Aug that crude oil has fallen sharply but the recent rally not only has prices bouncing but breaking through overhead resistance and breaking through convincingly with 73.14 today’s high, the highest level we’ve been in over a month.

Weekly Ethanol Production

We’re also getting more supportive news from the ethanol industry. Not wildly bullish news but at least more supportive. Ethanol production increased for the second week in a row and is now above the year ago level. We expect as we see more new crop bushels come to town that we’ll gradually see ethanol production rising to levels need to reach USDA’s corn use for ethanol level in the black line. Ethanol production margins are positive. It’s just a matter of getting bushels from the combine to the ethanol plant so more ethanol plants can run full speed.

Weekly Stocks of Fuel Ethanol

The lower production has not been due to lower gasoline usage. Gasoline usage has remained firm. That has allowed ethanol stocks from early August to fall for 7 weeks in a row. As ethanol production has been down, stocks have been falling on strong demand. This should allow for a very strong rebound in the ethanol industry over the next couple of months.

Grain Market News

Dec Seasonal Corn

This chart is a seasonal chart for corn over the past 7 years. The oval on each crop year represents the seasonal lows, the lowest price seen in the July-Nov timeframe. Seasonal lows in 2014 were set in late Sept and rallied from there. In 2015 seasonal lows were set in Sept a rallied from there. In 2017 it was more of a sideways or flat market. 2018 prices rallied off the Sept lows. In 2019 prices rallied off the Sept lows and last year prices rallied significantly off the Aug lows. Bottom line, over the past 7 years the seasonal lows for corn were set in Aug or Sept and in general, we had a solid uptrend from late Sept through Oct in most years.

Nov Seasonal Soybeans

A very similar scenario with seasonal soybeans. In 2014 traded higher off the Sept higher. 2015-2019 all rallied from the Aug-Sept lows and then last year the market made a major rally from the Aug lows. With this in mind, the trend from late Sept through Oct is an uptrend in most years. With some of the news starting to turn more friendly and the key reversal on Friday following the Sept crop report we do believe odds are increasing that both corn and soybeans saw their seasonal lows last week on Friday.

High Temperatures

U.S. weather shows well above normal temperatures in the eastern belt, upper 80’s and lower 90’s. In areas where they haven’t had very good moisture over the last 30 days, that is probably pushing crops towards maturity quicker than the farm would desires. The good news, a cold front did push through the eastern belt overnight last night into this morning. Some rains fell and temperatures have cooled.

7-Day Observed Precipitation

We can see that rain that fell overnight in portions of the eastern belt. Unfortunately, there are also large areas that did not get any rain from the cool front that passed through. Those areas may see crops continue to push towards maturity, possibly at the detriment of a proper fill.

7-Day Precipitation Forecast

There is some rain in the forecast. Mostly MN, IA, and MO while the eastern corn does look mostly dry over the next 7 days. Unfortunately, the southwestern Plains also look dry and that area will need to monitored as the winter wheat planting season kicks into high gear.

6-10 and 8-14 Day Forecast

The 6-10 and 8-14 day forecasts show above normal temperatures for virtually all of the U.S. corn and bean belt. Precipitation is more mixed. Wet in the eastern corn belt in the 6-10 day and in the far eastern belt in the 8- 14 day while dryness remains in the western and southwestern and that could extend further into the western belt. This is not a major concern for U.S. corn and soybeans as harvest is approaching but it could be a concern for winter wheat.

December Corn Chart

Corn prices had a very good day surging to the upside, making a new high for the move at $5.34 but more importantly we broke through the 10-day and 20-day and we broke through the downtrend line. This gives us more confidence that we established seasonal lows last Friday, the day of the crop report.

November Soybean Chart

Soybean prices although we do believe we’ve may have seen a seasonal low last week on Friday, beans are a little bit more reluctant to surge higher. We’ve been chopping sideways the last 3-4 days and so far have not been able to take out the highs that were posted on the key reversal day last Friday. We do believe beans will work higher, testing initially overhead resistance at $13.25 and from there we’ll see if the market has enough momentum to push above our downtrend line that’s been in place going back to late May early June.

December KC Wheat Chart

The wheat chart also looks quite impressive. Wheat prices up sharply today pushing through the 10-day, 20-day, and 40-day moving averages. Now testing and attempting to push through the downtrend line that’s been in place since earlier in August. We are at an initial level of overhead resistance and the market may want to take a little breather. We wouldn’t be surprised to see the wheat market testing that $7.29, $7.30 level over the next week. The technical indicators also looking quite good, pointed higher and just now moving into a neutral range.

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