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Today’s Prices

Grain prices finished mostly higher today as the uptrends in corn and wheat continue to lead to the upside.

Grain Market News

Soybean/Corn Ratio

Thoughts of tighter corn stocks and larger beans stocks combined with ideas that input costs, specifically fertilizer could cause lower acreage of corn and maybe larger acreage of beans is allowing the bean to corn ratio to drop fairly significantly. The bean corn ratio would be bean prices divided by corn prices.  When we see a chart like this trending lower it indicates that corn prices are gaining on soybean prices. Earlier this spring and summer when there was talk of the U.S. running out of beans the bean to corn ratio was 2.62. That means soybeans were 2.62x’s the value of corn. Today we’re sitting on a ratio of 2.23 which is down dramatically. Again, evidence that the market is somewhat bullish corn and somewhat bearish beans.

Corn: Weekly Export Inspections

Corn inspections somewhat disappointing at 24 mb, less than half the level needed to reach USDA’s export forecast. But keep in mind corn exports are typically slow this time of year as the marketplace is focused on exporting soybeans and then we look for big increases in exports the second half of the year and that could very well be the case again this year. Even with that thought in mind, export inspections this week were disappointing for corn.

Soybeans: Weekly Export Inspections

Soybean export inspections were very good at 83 mb. Last week’s total was raised by 17 mb. A week ago USDA reported export inspections at 77 mb. Today USDA updated last week’s number to 94 mb so that’s a big number. Currently export inspections YTD are down 36 %. USDA is projecting exports will be down 7.7%. If we could maintain export inspections of 80-100 mb/week into Dec and Jan there is a chance we could reach USDA’s estimate. As of today, YTD export inspections are still somewhat disappointing mostly due to a very slow start to the marketing year.

Wheat: Weekly Export Inspections

Wheat export inspections a marketing year low, very disappointing just 4.238 mb, about ¼ of the level needed to reach USDA’s export forecast. U.S. ports are putting a priority on shipping beans and that is hurting wheat. Typically, we see that in the Oct-Nov timeframe but we don’t want to see too many weeks of disappointing sales. Our YTD exports are down 15.4%, that’s a little lower than USDA’s target of down 11.8%. We do need to see exports increase nicely through the winter into the 20 mb range if we’re going to reach USDA’s target.

Grain Market News

Baltic Dry Index

This chart is the Baltic Dry Index which is an index that gives us an idea on freight weight rate for shipping bulk commodities around the world. The Baltic Index has dropped down to 3519. That is down about 34% compared to early Oct. We’re still relatively high but this is a dramatic drop in freight weight in just the last 30 days.

Long Term Baltic Dry Index

When we look at a long-term map showing about 35 years of history, you can see extremely high freight rates across the ocean back in 2008 when crude oil went to about $145/barrel. Even though we’ve seen a sharp break recently from about 5500 down to 3500, it’s still one of the higher rates since 2010. The reason we bring this up is because the sharp break recently may encourage some global buyers to start booking some grain and locking in some cheaper freight weight.

Covid Data

Global weekly cases of Covid were dropping fairly consistently for about 2 months but now over the past couple of weeks they’ve stabilized somewhat. We’re hoping that’s not a change in trend as we head into the winter flu and cold season. Global deaths have also stabilized, maybe increased a little. We’ll continue to monitor this carefully to see if there is another resurgence in Covid or a variant going forward. In the U.S. we’re still trending lower as far as weekly cases and weekly deaths. That is good news and as long as that trend remains in place we should see not only the U.S. as well as the global economy not only stabilizing but strengthen.

U.S. Radar

U.S. weather shows so rain showers and sprinkles across portions of the southern belt. Earlier today there was show reported in central NE, in fact, we heard North Platte NE was reporting a couple inches of snow. Nothing heavy but certainly cold air and sprinkles, not conducive for drying but the good news is the forecast going ahead is mostly dry.

7-Day Precipitation Forecast

The forecast shows we’ll have a dry week for the next 7 days and that should allow many farmers to wrap up their corn and soybean harvest. The 6-10 and 8-14 day forecasts for the U.S. hinting at warmer temperatures and mostly dry conditions so we do not see any major threats to the harvest at this time.

3-Day Observed Precip in SA

We mentioned in Argentina they got some rain and this map shows Argentina got good rains of an 1” or more in 60-70% of their growing region. Just northeast Argentina missed out. In Brazil, most of central and northern Brazil got rain while only the southern portions really missed out so rainfall over the weekend was good.

SA 2-Week Precip Forecast

Rains going into next week look pretty good as well. Week one shows central and northern Brazil getting some pretty good rain. We also see some very good rains in portions of northern and northeastern Brazil which missed out this past weekend. The second week of the forecast shows good rains in central and northern Brazil and a little bit less rain in Argentina. Overall, we do not see any major threats in Sout American weather at this time.

December Corn Chart

Corn prices have exploded to the upside, $5.82 for today’s high. The highest level seen since mid-Aug. The corn market has rallied significantly as we’ve mentioned 76 cents but that has taken the technical indicators into an extremely overbought situation. Although there is no sign of topping action from the chart or technicals, this is a place to start exercising caution versus getting overly bullish following the big runup over the past 3 weeks.

November Soybean Chart

Soybeans have been mostly a follower, in fact, very reluctant to follow corn up today. At one point beans were up a dime or so but fell back to close about unchanged. As the market is expecting bullish news for corn and bearish news for beans in next week’s Nov crop report. As you can see from today’s chart, although soybeans are near the upper end of the range of where they’ve been the last month, beans have not been able to breakout of the upside. We continue to find overhead resistance from the downtrending channel, the 40-day moving average. Although there is no sign of a major top in soybeans they have certainly struggled to move higher with the corn and wheat market.

December KC Wheat Chart

Wheat prices have also exploded into new contract highs with Dec KC wheat over $8. Technical indicators are extremely overbought. This is not a place to be getting bullish in wheat. There is no sign of topping action from the chart or technicals but we do believe following the recent sharp rally and technicals overbought this is a place to exercise caution in you’re a bull.

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