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Today’s Prices
Grain markets were lower today giving back some of recent gains on a lack of fresh, bullish news.
Grain Market News
U.S. Corn Harvest
U.S. corn harvest has reached 91% complete. Just slightly below last year’s level and well ahead of the 13 year average. The U.S. corn harvest is moving ahead nicely and there is no real weather threats that would provide any major problems for the remaining corn harvest.
U.S. Soybean Harvest
The U.S. soybean harvest is 92% complete. That is slightly behind last year and pretty much right on the 13 year average. The same thing is true for soybean harvest where harvest is marching along nicely. We don’t see any major threats that would cause any problems for the remaining soybean harvest.
Winter Wheat Crop Conditions
Winter wheat crop conditions improved by 1% from 45% to 46% G/E. That is right on the same level of G/E rating from last year which was at 46% G/E. But keep in mind although we’re at last year’s rating we’re at some of the lowest ratings over the past 15 years.
Grain Market News
Soil Moisture Change
Most of Brazil should have soil moisture steady or even improving. Just a very small portion of extreme southern Brazil may be drier than desired. In Argentina, soil moisture is generally expected to remain about steady. Some areas seeing a slight improvement in soil moisture. Some areas seeing a slightly decline in soil moisture. But overall we do not see any major threats over the next week or two. On the right side is the IRI (International Research Institute, Columbia University) multi-model probability forecast. That weather model is hinting that southern Brazil and much of Argentina could see drier than normal conditions in the Dec, Jan, and Feb timeframe. That is the heart of the South American growing season btu keep in mind, current conditions are quite good.
Ethanol Swaps
Swap trades are counter party to counter party. They take place at the CBT and they’re clear through ClearPort. These are over-the-counter trades and it is believed almost all ethanol is being trading through swaps or over-the-counter market. In Aug, Sept, and Oct we were trading around $2.20/gallon but recently the market has exploded to the upside. Ethanol swaps, which is now the best way to associate a value to ethanol, is trading at $3.23/gal which helps explain the tremendous profit margins at ethanol plants.
Ethanol Nearby Futures
This chart is ethanol futures trade on the CBT on the futures exchange. You can see prices have been unchanged at that $2.20 level Aug, Sept, Oct, and now into Nov. It’s clear to see by looking at the volume chart along the bottom, last year volume was pretty normal. Volume has gotten lighter and the last 4 months virtual no volume which is why the price hasn’t changed. Therefore, ethanol futures are no longer a good indication of the value of ethanol. We have to look at an ethanol swap chart or ethanol traded over-the-counter market to get a fair value. We would not be surprised to see the Chicago Board of Trade either alter or eliminate ethanol futures given the fact they no longer reflect a good fair value for ethanol value.
We will likely be using the Ethanol Swap chart going forward to look at the true value of fuel ethanol. Keep in mind, we’re trading at about $3.23/gal as of today.
December Corn Chart
Corn prices remain somewhat range bound but today’s trade was fairly disappointing and that we closed 5-7 cents lower, near the daily low. We still have support from our moving averages and our uptrend line. That support comes in at about $5.60-$5.65. That’s about 5-10 cents below where we closed today. Today’s disappointing close was enough to hook the technical indicators downward which does hint at additional weakness over the next couple of days.
January Soybean Chart
Soybean prices did make a new high for the move today up to $12.61 but the turned around and closed lower at $12.51. Today’s close was somewhat disappointing and a reversal down but we have a lot of chart support where our moving averages come into play. Also the fact that we broke above our downtrend channel would indicate we may have fairly solid support in the $12.30-$12.40 range, 10-20 cents below where we closed today. One day does not make a trend and the technical indicators are still pointed upward. But if beans would close lower again tomorrow, it could very easily start to hook those technical indicators downward. Tomorrow will be a key day as to whether soybeans can recover or will see follow through to the downside.
December KC Wheat Chart
Wheat prices sharply lower today. This market is showing signs of establishing a short-term top. Technical indicators turned lower based on today’s lower close as well. The wheat market is clearly in an uptrend but further correction to the downside does look possible. And we can’t rule out a move back down towards the $8 level.
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