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Today’s Prices
Grain markets finished mixed today as traders are cautious ahead of tomorrow’s USDA Dec crop report.
Grain Market News
U.S. and World Ending Stocks
Weekly Ethanol Production
Weekly ethanol production up sharply from last week to 1.090 mbd. This is a record large level of production for mid-Dec and it up 10% from last year at this time.
Weekly Ethanol Production
This chart shows ethanol production on a continues chart. Following the severe drought of 2012 when prices were high and production was tight, ethanol production declined. And then we increased consistently all the way into the last 2017, 2018, 2019. Ethanol production somewhat leveled off at record type levels. Then following the coronavirus outbreak ethanol production was reduced by almost 50% but did recover nicely in late 2020. But last winter a severe ice storm combined with all-time record cold temperatures all the way down to the Gulf region. But with ethanol production extremely profitable and demand for ethanol very good ethanol production has returned to record type levels and this is good news for the corn market.
Weekly Stocks of Fuel Ethanol
We saw in the previous chart that ethanol production was up sharply, stocks of fuel ethanol were up slightly to 20.4653 mil gallons but that is still a relatively small level of stocks compared to the production and usage we’re seeing right now. Therefore, today’s ethanol production report should be considered supportive for corn prices.
Grain Market News
SA 2-Week Precipitation Forecast
The forecast for the first week of the forecast shows less than normal rain in southern Brazil and Argentina. As we look ahead to the second week of the forecast an even larger dry area with no precipitation in portions of southern Brazil and extremely dry in Argentina with not much at all forecasted for the second week of the forecast. If this forecast verifies, soil moisture will be on the decline and crop stress will be on the increase.
Observed High Temps
Yesterday’s high temperatures show a lot of upper 80’s and low 90’s for Brazil and Argentina. Not extreme heat but we’re seeing more 90’s on a regular basis. Overall, we do not view these temperatures as extremely threatening but as soil moisture dries, temperatures in the 90’s will produce stress. In fact, temperatures are expected to increase even further later next week with low to mid-90’s.
Temperature Anomaly
This map shows the temperature anomaly for the first week of the forecast shows above normal temperatures for Argentina, much of Urugay, much of Paraguay, and portions of southern Brazil. But it’s the second week for the forecast where weather models are indicating even more heat potential in those driest areas.
March Corn Chart
Corn prices did post another new high for the move up to $5.89. It’s only a new high by a penny but nonetheless it keeps the overall short-term uptrend intact. Technical indicators are pointed upward with plenty of room to move and we are trading above all of our major moving averages. We’re above the 10, 20, and 40-day moving averages. So chart and technical signals look pretty good for corn and hinting the first area of overhead resistance would be in the $5.93-$5.96 level. That doesn’t mean that is a top in the market but just indicates that’s the next level of overhead resistance or the next target in the nearby chart.
January Soybean Chart
Soybean prices have been chopping back and forth over the last couple of months in a generally sideways range. But the lows last week did not take out the lows from early Nov. That’s a good sign. If that level can hold it, it might indicate soybeans may be on a gradual uptrend. And if South American weather is threatening, it would be easy to see this market push up towards the upper $12 or $13 range over the next week or so.
March KC Wheat Chart
Wheat prices very reluctant to rally, in fact, wheat was down sharply testing the lows at $8.08 that were posted on Monday morning. We don’t see any confirmation on the chart or technicals that we’ve found a bottom although we’re trading very close to major chart support and technical indicators are getting into the oversold area. Even though there may not be a technical signal of a bottom, this is no place to be making sales in wheat.
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