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Today’s Prices
Grain markets finished sharply lower today with outside markets also under pressure due to uncertainly regarding the Omicron variant of COVID.
Grain Market News
Crude Oil
As you can see from this chart, not only has crude oil fallen $21 per barrel but we’ve also broken below our long term uptrending channel. That doesn’t mean this market is going straight down but certainly the market is going to have to heal and mend to turn the trend back up again. We’re not bearish crude oil in the long term but in the near term the market is in a liquidation mode due to the new variant of the COVID-19 pandemic.
Unleaded Gasoline
Similar story with gasoline where prices have fallen 60 cents per gallon in about a months’ time. We’re now at $1.94, below $2 for the first time going back to April. Here again we’ve broken out of the up trending channel that has been in place based on the negative news regarding this new variant.
Natural Gas
Natural gas prices have not been immune, in fact, going from $6.46 down to $4.48 is a tremendous drop. The only good news here is that cheaper natural gas prices could allow for maybe some cheaper fertilizer.
DOW Jones Industrial Average
The stocks market not immune to the selling. The DOW Jones at 34,456 is down over 2,000 points from the highs that were posted less than a month ago. The selling that we saw in the grain markets was not isolated to the grain markets. In fact, it was nearly in all markets across the board. In fact, it wasn’t just in the U.S. It was globally as well so certainly a huge wave of panic type selling.
Grain Market News
SA 2-Week Precipitation Forecast
Areas of central and southern Brazil look much drier in the first week of the forecast. Also, in the second week of the forecast, drier conditions in southern Brazill. Paraguay is also in a dry pocket. Most production is in the eastern half of the country so Paraguay’s production area does look dry not only this week but in the second week of the forecast as well. Uruguay is not a big producer but they look relatively dry over the next 2 weeks. Argentina’s production area looks mostly dry this week and unfortunately for the farmers in Argentina, mostly dry next week as well. Because of the tremendous selling and liquidation due to the story regarding the Omicron variant the South American weather is on hold as far as a market factor at least for the moment but this will become a bigger story if the forecast is correct.
30-Day Precipitation – % of Normal
Here in the U.S. we’ve seen the 30-day precipitation shown as a % of normal well below average in almost all areas except the far northern Plains, along the Canadian border. Now this is not a major factor for crops in the U.S. with the exception of winter wheat which has been planted and the central and southern Plains extremely dry over the past 30 days. That has crop conditions below normal and some concerns regarding how well this crop will be doing from a health standpoint as it heads into dormancy. Some areas in the southwestern Plains have had less than 5% of normal over the past 30 days.
6-10 and 8-14 Day Forecast
Unfortunately for wheat producers the forecast is above normal temperatures and below normal precipitation for the Plains in the 6-10 day and more of the same in the 8-14 day with above normal temperatures and below normal precipitation. This is not a major factor but it will need to be monitored and also keep in mind, the U.S. crop condition rating for U.S. winter wheat was the final rating for the year and we won’t get another rating until late March or early April.
Winter Wheat Crop Condition
We can see that crop rating is 44% G/E. That is the second lowest over the last 14 years. And again, we do not have much precipitation in the forecast so there are concerns the U.S. hard red winter wheat crop will go into dormancy under less than ideal conditions. But this will not be a headline story as we won’t get another rating until late March or early April.
December Corn Chart
Corn prices were hit hard today. We broke below the range that has been in place for about 3 weeks with today’s low at $5.62, breaking through the uptrending line shown by the red arrow. The next levels of chart support will be the 40-day moving average at $5.54 and then the spiked lows that we saw in the Oct crop report at $5.47. At least for the moment the trend looks like it is trying to turn downward and the technical indicators have turned downward as well. Even though this market has been hit hard there is no sign from a chart or technical perspective of any bottoming action at least not yet. We also want to keep in mind, around the Thanksgiving Holiday the market was very strong and there was no sign of topping action and the market is falling. When we say there is no sign of bottoming action, we’re talking about strictly from a chart and technical perspective.
January Soybean Chart
Soybean prices have also turned downward over the last week. Technical indicators pointed downward as well with no sign of bottom in action. The next levels of chart support would be $11.95, the spike lows from October and $11.81 the spike lows from November. That does not mean we’re going that low but nonetheless the market is in a downtrend and chart watchers will be eyeing up to see if the market can head towards those chart points.
December KC Wheat Chart
Wheat prices have been hit hard, down 70 cents over the last 3 days. Today’s low at $8.17 came right down to chart support at the uptrending line and the 20-day moving average. The chart has turned lower on wheat, similar to corn and beans, and technical indicators are pointed lower as well. Certainly, there is no sign of bottoming action, at least not yet, in the wheat market either.
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