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Today’s Prices
Grain prices were sharply lower today on a combination of negative chart and technical signals but also a sharply lower energy market.
Grain Market News
Crude Oil
Crude oil prices after rallying to a high of $85.41 per barrel. Crude oil down sharply $3.49/barrel today and it does look like the energy markets are a little toppy from a chart perspective.
Unleaded Gasoline
Gasoline prices have fallen 20 cents per gallon and again, at least in the short term the chart has taken a downturn. That is negative item for the grains at least as long as the downtrend in the energy markets would continue.
Natural Gas
Natural gas no exception, after hitting a peak at $6.59, natural gas has fallen sharply as well. In general, energy prices seeing a correction and that is providing a negative influence on the grains especially today.
Weekly Ethanol Production
Good news from ethanol production numbers. Report showed ethanol production at 1.107 mbd. That is up just one tick from last week and it’s just one tick away from the all-time high that was produced back in Dec 2017 at 1.108 mbd. Bottom line, ethanol production is running at record levels. In fact, this week’s ethanol production was up 15% from last year. Ethanol production YTD after the first two months of the marketing year 7.3% above a year ago, well above of USDA’s target of ethanol production being up 2.5%. Ethanol production margins remain very positive and in fact, record large profits. New crop corn is readily available. Certainly, they may have pay up to get it but at least its readily available and we expect ethanol production to remain strong in the near term.
Weekly Stocks of Fuel Ethanol
Weekly stocks of fuel ethanol did increase just slightly from last week up to 21.124M barrels. That is up 2.3% from last year but keep in mind last year fuel use, ethanol use, and ethanol stocks were relatively low due to the pandemic. So these are still relatively low levels of stocks of fuel ethanol. We view today’s weekly ethanol production report “as expected” but certainly supportive for corn demand and corn prices.
Grain Market News
3-Day Observed Precipitation
Here in the U.S. weather is all about harvesting and most of the corn and bean belt has been dry over the past 3 days. Combines should be running wide-open in many areas. The exception would be portions of the southwestern and extreme southern portions of the belt where they did get a little bit of light rain over the past couple of days.
U.S. Radar
Today’s radar at midday shows no precipitation in the heart of the U.S. corn and bean belt. Just a few sprinkles in the Great Lakes region and a little bit of rain down in the Delta but the majority of the U.S. corn and bean belt high and dry, combines should be running wide-open.
5-Day Precipitation Forecast
The forecast shows virtually no rain in the belt and that would be this week and weekend. If this forecast is correct, combining will be wrapping up for both corn and beans in much of the Midwest over the next 5-7 days.
SA 2-Week Precip Forecast
We mentioned globally weather was non-threatening and that’s the case for South America. Brazil looks pretty good in the first week of the forecast and pretty good in the second week of the forecast. The exception might be pockets in southern Brazil where they could missed out. That will need to be monitored but no major problem at this time in Brazil. In Argentina, light to moderate rains in the first week of the forecast and most of Argentina in the second week. If this forecast is correct most of Argentina should remain in pretty good shape in the near term.
December Corn Chart
Corn prices hit a new high for the move yesterday at $5.86. It was a disappointing close and follow through to the downside today. Significant chart support comes in at $5.48. That is where our uptrend line comes into play. It’s a breakout level above the Oct spike highs. It’s also where a number of our moving averages come into play. Something around the $5.48 level should provide pretty good supportive in the near term. But with the charts turning downward and the technical indicators hooking to the downside, additional downside risk is present over the next few days.
November Soybean Chart
Soybean prices are stuck in a very narrow situation where we have a downtrend line from the upper end of our channel and the 40-day moving average providing overhead resistance. We had the 10 and 20-day moving averages and an uptrend line providing support. This has left soybeans in a very narrow range over the past week. The positive for beans there has been a lot of spreading of the last 3 weeks, buying of corn and selling of beans. As those traders are trying to take profit, they’re selling corn and buying beans. That could provide at least a little bit of support for soybeans.
December KC Wheat Chart
Wheat prices look very similar on the chart to corn prices. We had a new high posted yesterday at $8.14. It was a disappointing close and we had follow through to the downside today. Wheat has significant chart support at a breakout level, $7.64 to $7.69. That was overhead resistance. Now on a pullback it could become the next level of chart support. Technical indicators were overbought and the down move over the last day and a half has turned those technical indicators lower as well.
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