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Today’s Prices
Grain prices mostly higher today but the outside markets were mixed as the trade is still trying to determine how to handle the Omicron variant.
Grain Market News
Weekly Ethanol Production
Ethanol production was down significantly from last week and the lowest going back to early Oct. Ethanol production at 1.035 mbd was somewhat disappointing but it is still well above the level needed to reach USDA’s forecast. Year to date, ethanol production is up 7.5% above the year ago level. USDA is projecting ethanol production will only be up 4.4%. It does appear likely that in future government reports they’ll have to raise the corn use for ethanol estimate.
Weekly Stocks of Fuel Ethanol
Stocks of fuel ethanol did increase just slightly to 20.305 mil barrels. This is down 4.4% from last year and well below where we would typically be given fuel consumption as large as it is. In fact, gasoline usage was up 10% from a year ago level yet stocks are well below. Gasoline and crude oil stocks remain tight and stocks of fuel ethanol relatively tight as well.
Grain Market News
World Soybean Oil Basis
This chart shows soybean oil basis levels. Brazil soybean oil basis has risen significantly over the last 3 weeks. Argentina has been rising as well. Good news for the U.S., U.S. soybean oil basis is now the cheapest in the world. This is part of the reason why Brazil may have decided to stay with a B10 blend and not increase it beginning in January.
SA 2-Week Precipitation Forecast
The South American 2-week forecast for Brazil’s primary growing region looks to have good rains to the northern but very little to no rain in the southern half of Brazil in the first week of the forecast. Argentina’s growing area looks to have just very light precipitation. Paraguay with most of their producing region in the east, shows mostly dry conditions and Uruguay looks to be mostly dry as well. The second week of the forecast shows central and southern Brazil mostly dry. There are some rains forecasted for Argentina but nothing heavy. Eastern Paraguay forecasted for only light precipitation and Uruguay only light precipitation. As we mentioned, the northern half of the South American growing region could be pretty good while the southern half of the South American growing region could be in a significant drying trend.
South America: Dec Precip Forecast
Unfortunately for South American growers, the overall pattern for the next two weeks could continue. This map shows the Dec precipitation forecast compared to normal. Southern Brazil, eastern Paraguay, Uruguay, and Argentina all looking to have below normal precipitation. This is about the southern half of the South American growing region. Omicron has clearly been the headline leader within the grain markets recently but South American weather quietly becoming drier and this could become a bigger story in the weeks to come.
Grain Market News
December Corn Chart
Corn prices had an inside day. We’re stuck right on major chart support. We haven’t been able to break through cleanly to the downside but we haven’t been about to bounce in a big way either. It is very possible that the corn market is about to embark on a sideways range at least temporarily until we learn more about Omicron and also about South American weather. If we look at the range that has been in place for about a month now, our current prices are very close to the middle of that range with technical indicators also in the middle of the neutral range but before we get overly bullish we do want to note that the immediate trend did turn downward off of last week’s highs with the technical indicators pointed downward as well so no sign at least not yet of bottoming action.
January Soybean Chart
Soybean prices also in a short-term downtrend. We’re now down 75 cents off the highs from a week and a half ago. Technical indicators pointed downward but still in a neutral range. No sign of bottoming action in the soybean market from a chart or technical perspective but today was an inside day so it was good to see we did not post a new low.
December KC Wheat Chart
Wheat prices down sharply over the last 3 or 4 days. Technical indicators pointed sharply lower as well. Wheat has broken through initial chart support around the $8.20 level with today’s low at $8.10. We’re not expecting a major downtrend but there is no sign of bottoming action at least not yet on the nearby wheat chart.
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