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Today’s Prices
Grain prices finished stronger today, following through on yesterday’s performance following USDA’s Nov crop report.
Grain Market News
Weekly Ethanol Production
Weekly ethanol production actually fell this week to 1.039 mbd. That is down significantly from the previous 3 weeks. Somewhat of a surprise but it’s still above the black line. We need about 1M barrels per day to reach USDA’s forecast and most believe we’ll exceed USDA’s forecast by 50-100mb, maybe even 150 mb by the end of the year.
Weekly Stocks of Fuel Ethanol
Stocks of fuel ethanol did increase a little bit to 20.29M barrels. But that is only up fractionally from last year’s level and well below the stocks we experienced prior to Covid. We would expect ethanol stocks will continue to trend higher with stocks peaking in March.
November 2021 Corn Yield
Yesterday’s crop report showed yields in the U.S. compared to one month ago declining in much of the central and eastern belt. IL, IN, MO all saw yields decline but those declines were not enough to offset significant increases in much of the northwestern belt and northern Palins were the Dakota’s, MN, and NE all saw yields increase from a month ago. The bottom line, the national yield increased from 176.5 to 177 bpa and that would be an all-time record large yield for the U.S.
USDA Corn Yield Estimate
This chart shows the monthly estimates for USDA’s corn yield. If 177 bpa continues through the end of the year it would be a record. The record was set in 2017 at 176.6 bpa. USDA has projected yields to be up above 180 bpa in years past. The grey line 2018 in Sept USDA was projecting a yield of 181.3 bpa but it ended up at 176.4 bpa. Another instance was in 2020 when in August USDA was projecting a national yield of 181.8 bpa and that yield ended up being 172 bpa. If the U.S. yield ends up being 177 bpa it would be a new record yield. The next time USDA will address or adjust yields if necessary will be in the Jan crop report. USDA does not adjust yields in the Dec crop report.
November 2021 Soybean Yield
Similar scenario as in corn, where portions of the eastern belt saw yields decline. Portions of the northwestern belt increased. The difference in soybeans is that IA yields were down and that allowed the national yield to be pulled lower from 51.5 to 51.2 bpa. Of all the numbers in yesterday’s USDA report, the lower U.S. soybean yield was probably the biggest surprise.
USDA Soybean Yield Estimate
The U.S. yield at 51.2 bpa and if that continued through the Jan final report would not be a record. The record was set in 2016 at 52 bpa.
Grain Market News
SA 2-Week Precipitation Forecast
The first week of the forecast is on the left and Brazil’s primary growing region shows central and northern Brazil getting plenty of rain. The only complaint may be some areas getting too much. But southern Brazil forecasted for scattered rain but nothing severe given temperatures are still moderate. We’ll want to watch to see if they get better rains in southern Brazil as we approach later Nov. On the right is the second week of the forecast and again, central and northern Brazil’s rains very good, maybe a little bit less than desired in southern Brazil. In Argentina, very good rains forecasted for this week with generally 1-2” in the first week of the forecast but much drier in the second week of the forecast. We’ll need to watch southern Brazil and Argentina going forward. Those are the areas that could be prone to dry conditions if La Nina conditions continue to develop.
Nino3.4
Anything above the zero line is warmer than normal sea surface temperatures in the equatorial Pacific. Anything below zero line are cooler than normal temperatures. Above normal temperatures are El Nino conditions and below normal temperatures are considered La Nina. We are currently in a La Nina already. Temperatures are about 1.1-1.2 degrees below normal. They’re expected to continue to decline into the heart of the South American growing season, Dec, Jan, and Feb. And that is why many are concerned that we could see dryness develop in Argentina and southern Brazil as we move deeper into their growing season. This will certainly be monitored closely by the trade.
December Corn Chart
Corn prices rallied sharply yesterday and rallied sharply again today. The $5.48 level that we broke above in late Oct now became chart support. That support held yesterday and since then we’ve had a sharp rally of 24 cents off yesterday morning’s low. Certainly, the chart looks much better than it did just a day and half ago. Technical indicators have turned upward from a neutral position. All of our moving average, the 10, 20, and 40-day moving averages are all pointed upward and lined up. Therefore, that tells us there is additional upside potential with overhead resistance now at last week’s high at $5.86.
January Soybean Chart
Soybean prices had an inside day. Keep in mind, yesterday even though soybean prices closed 22 cents higher they were 52 cents higher at one pointed earlier in the day, immediately following the report and then turned around to close mid-range. Today’s prices were up a little bit but it was an inside day but nonetheless the chart does look much better following yesterday’s sharp rally which was enough to turn the technical indicators higher as well. Overhead resistance initially at $12.40. That is yesterday’s high. Then $12.66 but we’d have to break above our long term downtrend to get to that level and the market would need some friendly news in order for that to happen. Bottom line, chart and technicals do look better for beans today and there is additional upside potential.
December KC Wheat Chart
Wheat prices exploded to the upside over the last two days. Wheat prices have rallied 45 cents off of the lows posted on Monday morning. That’s a huge move and enough to push KC wheat up to new contract highs up to $8.19. The technical indicators have turned back upwards again and therefore there is no sign of topping action in wheat following today’s push to new contract highs.
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