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Today’s Prices
Grain markets finished mixed today with markets generally reversing from recent trends with soybeans up and corn and wheat down.
Grain Market News
U.S. Corn Crop Condition
As we approach the end of the U.S. growing season and harvest advances, the U.S. corn crop conditions was held steady at 59% G/E. That was slightly below last year’s level at 62% G/E. We would expect USDA to report crop conditions 1, maybe 2 more weeks but overall we’re expecting crop conditions to remain about steady at the tail end of the season.
Corn Condition by State
U.S. Corn Harvest
Corn harvest advanced to 29% complete. That is one of the faster harvests we’ve seen for corn but we had an early planting season and a relatively warm, dry growing season and harvest is advancing ahead of average.
U.S. Soybean Crop Condition
Soybean crop conditions held steady, well below last year’s rating which was 64% G/E. It is very possible that next week’s rating which we expect to be about steady, should be the last soybean crop condition rating for this growing season.
Soybean Condition by State
U.S. Soybean Harvest
The U.S. soybean harvest is 34% complete compared to 35% complete last year. Like we mentioned in corn, it was an early planting season, relatively hot and dry growing season and harvest is advancing well ahead of the black bar which is the 13 year average of 23% complete for this time of year. The forecast is indicating that harvest should be able to push ahead at a pace ahead of average.
Grain Market News
Corn vs Ethanol
Ethanol prices trading around $2.20/gal. That is relatively high for the price of ethanol and corn prices have fallen significantly with current price at $5.37/bu. When we take the corn price divided by the ethanol price it gives us a corn to ethanol ratio. In July, Aug, Sept and now into Oct we have a very cheap corn to ethanol ratio typically indicating very profitable environment for producing ethanol. Despite relatively cheap corn compared to ethanol in July, Aug, and into early Sept there wasn’t much old crop corn left to be processed and therefore ethanol production was lower. But now that new crop bushels are being harvested and working their way into the pipeline, we believe ethanol production is going to ramp up quickly now especially with margins very, very profitable. This chart just shows the relationship between corn and ethanol.
Futures Based Ethanol Margin
This graph is courtesy of the AgResource Company. Ethanol production margins extremely profitable and again, as more corn works its way into the pipeline ethanol production should be ramping up over the next few weeks.
Ethanol vs Gasoline
Gasoline futures have rallied up $2.35/gal, ethanol at $2.20/gal. That means ethanol is 13-15 cents below the price of gasoline. That is good for the outlook of blending ethanol into gasoline. Bottom line, the economics for the ethanol industry are quite good right now and the supplies of new crop corn that are being harvested are certainly going to be working its way quickly into the industry.
December Corn Chart
Corn prices continue to be in an uptrend off the lows posted the day of the Sept crop report on Sept 10th. Today’s prices were lower but we found support at the uptrend line and the 40-day moving average. And if these points can hold, the next target after $5.48 would be the spiked highs from early Sept at $5.58. We do believe corn can work its way higher into the $5.50-$5.60 range over the next few weeks. One item of caution is the technical indicators where today’s lower price did turn the technicals down and that would be the one time of caution when you look at the chart and technicals today.
November Soybean Chart
It was a big day on the bean chart in the fact that early today we posted a new low for the move down to $12.31. Took out the lows from the double bottom back in April and June at $12.40-$12.42. The market then reversed and closed above yesterday’s high. That is a key reversal to the upside on the bean chart. That could be fairly significant especially if we see a little bit of follow through to the upside tomorrow. We’re not wildly bullish especially after USDA surprisingly found 81 mb in the Stock’s report last week but a higher close could indicate beans working into the upper $12 range over the next few weeks. Technical indicators hooked to the upside on today’s key reversal to the upside.
December KC Wheat Chart
Wheat prices challenged the contract highs at $7.64 but a disappointing close yesterday and follow through to the downside today. The chart does look a little bit disappointing for the wheat market and the technicals have turned down. We’re not bearish in the long term in wheat but we have to respect the chart and technical signals. This market could have a pullback into the $7.20-$7.30 range.
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