Today’s Prices
Grain markets finished lower today as there was some carryover selling from the big down move we saw on Friday due to the new Covid variant.
Grain Market News
SA 2-Week Precipitation Forecast
The current conditions in South America are mostly favorable but when we look at the forecast over the next 2 weeks southern Brazil looks to be dry and most of Argentina looks to be dry as well. That is the first week of the forecast. The second week of the forecast shows the dryness continuing in southern Brazil and also in Argentina. Although conditions are quite favorable we’ll have to watch this drier weather forecast that’s in place today.
Precipitation vs Average
Brazil looks to be about average in central and northern Brazil but below average in much of southern Brazil. In Argentina, most of their growing region looks to be much below average precipitation over the next week and that could continue into the second week of the forecast as well. The bottom line and take-home points for South American weather is that the current conditions are pretty good. Maybe 10% of Argentina is dry and 15% of Brazil is dry but if the current forecast is correct the area of dryness is going to be expanding over the next 2 weeks.
Grain Market News
Crude Oil
Because of the massive move that we saw on Friday it is worth looking at the outside market charts. It is rare to see a $10 per barrel move in one day on the crude chart but on Friday crude oil was down over $10 per barrel and you can see the huge move on the chart. The good news is that today was an outside day so we did not make a new low and we are higher on the day but nonetheless it was massive move in crude oil on Friday.
Unleaded Gasoline
The gasoline chart is big factor when it comes to grains, specifically related to biofuels. We had a big drop in the gasoline prices on Friday as well but like crude oil, gasoline did bounce back a little bit and had an inside trading day today but we do want to note that gasoline prices and crude oil are down significantly from where they were around the first of the month.
COVID data
This data is from Johns Hopkins University. Globally cases have been increasing consistently for about the last 6 weeks. The good news is that deaths, shown in white, have been about stable. Although we’re getting more cases the fact that a larger share of the global population is vaccinated maybe resulting in less than severe cases and less deaths. In the U.S., after a little bit of a bounce in Covid data we did see a decline in Covid numbers over the past week with U.S. deaths down as well. We will need to monitor very closely the Omicron variant to see if it causes a significant increase in cases or deaths. It’s the hospitalization and deaths that would result in further mandates, travel bans, etc. so again, we’ll be monitoring the data carefully in the weeks and months to come.
Corn: Weekly Export Inspections
Corn inspections 30 mb, down a little from the past 2 weeks and just over half of the level needed to reach USDA’s forecast. Today’s numbers were lightly disappointing, but we’ve mentioned in previous reports, we typically see an uptrend in export inspections from now all the way through winter and into the springtime.
Soybeans: Weekly Export Inspections
Soybean inspections came in at a pretty good 78 mb. What is even more impressive is that last week’s total was raised by over 27 mb. Even though we’re behind, we’re running 22.5% behind the year ago pace and USDA is projecting we’ll end up 9.5% behind, this number continues to shrink and we are catching up to USDA’s estimate.
Wheat: Weekly Export Inspections
Wheat export inspections were up slightly from last week but still very disappointing at just over 9 mb. Today’s export inspection report was considered disappointing for wheat and corn but quite positive for soybeans.
December Corn Chart
Corn prices challenged last week’s highs early today but then we turned around and closed lower. So it was a disappointing close but overall we are still in an uptrend off of the lows posted back in October. Overhead resistances comes in at $5.89. That is last week’s high and then $5.94 if we can get some additional bullish news. Chart support will come in around the $5.65-$5.70 level, the lows from Friday and near the area where our uptrend line comes into play.
January Soybean Chart
Soybean prices on Friday and again today came right down to chart at $12.40 which has held so far. But the down move in prices was enough to turn the technical indicators down as well. If we look at the soybean chart from a longer-term perspective we’re really just stuck in the middle of a range that has been in place over the last 2-3 months. As we enter Dec and the heart of the South American growing season, weather in Brazil and Argentina will become a more important factor from a day-to-day basis.
December KC Wheat Chart
Wheat prices were hit hard on Friday. They rallied sharply today but then turned around and closed lower. Wheat has chart support in the $8.35-$8.40 range with overhead resistance at last week’s high at $8.87.
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