Closing Market Comments September 22, 2021

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Today’s Prices

Grain prices finished higher today, partly on a chart and technical bounce but also due to good support coming in from outside markets.

Grain Market News

Weekly Ethanol Production

Weekly ethanol production for last week was at 926K gal/day. That was down slightly from last week but up from last year. Most of the slow start for ethanol production this year we believe is not due to reduced driving miles.  We believe it was due to the lack of old crop corn available to ethanol plants and as the new crop harvest kicks in, ethanol production will be increasing significantly as well.

Weekly Stocks of Fuel Ethanol

Weekly stocks increased to 20.11 mil barrels. That is just fractionally above last year’s level and well below the pre-pandemic level. We believe ethanol production will be increasing and ethanol stocks will need to increase as well to provide a better cushion for the high usage that is expected this year.

Grain Market News

7-Day Precipitation Forecast

No rain fell in the northern belt or northern Plains. No rain west of the MS River in to the central Plains. And the southern Plains through the Delta and lower OH Valley look dry for the next 7 days. This is a very favorable forecast for early harvest to ramp up over the next couple of weeks.

6-10 and 8-14 Day Forecast

The longer-term forecast calls for above normal temperatures and below normal precipitation for the heart of the corn and bean belt. In fact, for most of the central U.S. over the next two weeks.

El Nino/La Nina Forecast

This chart looks at sea surface temperatures in the equatorial Pacifica at a location called Nino3.4. Anything above zero means water temperatures above average and below zero means below average. Above average temps are considered an El Nino event and below normal would be considered La Nina. Last year South America did have a La Nina. It started around their planting season, Sept-Oct, and continued through the heart of their growing season, Nov-Feb. In central and northern Brazil had an extreme drought. Their soybean crop had already been harvested to it got by, in fact, it was a record. But their Safrinha corn crop which accounts for about 75% of Brazil’s corn production was a disaster and about a billion bushels of production was lost. This year the NWS is projecting we’ll see a significant La Nina event in a similar timeframe. Beginning in Sept-Oct and then peaking out in Nov-Feb, similar to last year. But this year’s La Nina event may be even more significant than last year as temperatures in the equatorial Pacific maybe even cooler than they were last year at the same time. This does not guarantee they’ll have weather issues in Sout America but it certainly bears watching as La Nina conditions are typically associated with drier than normal weather in Argentina and southern Brazil.

Global Drought Monitor

Global drought monitor maps show Brazil’s growing region suffering under severe drought conditions, especially in central and northern Brazil’s growing region and even Argentina is drier than normal and experiencing some drought conditions. It’s early, equal to about the end of March, in South America so they’re just now getting started with their planting season but the current weather conditions combined with a forecast for La Nina bears watching.

Covid Data

Spreading of the Delta variant globally resulted in a surge peak of the Covid-19. The first major peak was in late 2020 and early 2021 and then another peak in the April/May timeframe and now another peak in the Aug/Sep timeframe. Global deaths also seeing three different peaks. The good news is that the most recent peak of global cases is on the decline for the 3rd week and global deaths are on the decline for the 3rd week in a row. And the rate of global vaccinations remain quite strong. There is some evidence that the most recent outbreak of Covid-19 primarily due to the Delta variant is on the decline globally. Here in the U.S., data shows cases may have peaked and dipping again. Deaths have not yet declined. We’re still seeing an increase in deaths and vaccinations are holding steady as we continue to try and vaccinate a larger population in the U.S. Our take home point is that Covid-19 appears to be on the decline again from the most recent surge but it still a significant issue.

December Corn Chart

Corn prices had a pretty good day. An outside day up, trading above the 10-day moving average and challenging the 20 day. Technical indicators have returned to the upside direction and so the chart and technicals look pretty good for corn following today’s strong close.

November Soybean Chart

Soybean prices also had an outside day up. It’s a pretty good-looking chart. Yesterday day was a reversal day to the upside and today follow through so the chart is looking a little bit better for beans and the technical indicators returning to an upward direction as well giving chart and technical buy signals in today’s soybean market.

December KC Wheat Chart

Wheat prices also posted an outside day up and a strong close. The wheat market still looks as though it made a significant bottom the day of the Sep crop report and today’s rebound certainly looks good on the chart and it was enough to give the technical indicators a little bit of a hook. A higher day tomorrow would certainly look good on the charts

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