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Today’s Prices
Grain markets finished mixed today as USDA did not provide any surprises in yesterday’s report and the market is searching for fresh news.
Weekly Prices Summary
Grain Market News
U.S. Corn Monthly Ending Stocks
USDA left its corn ending stocks estimate unchanged at 1.493 bb. That’s the lowest Dec estimate we’ve had over the last 7-8 years. Now it is not a low as the estimate we saw last summer and into the fall at 1.1-1.2 bb but it is still a relatively low stock number and doesn’t leave a lot of room for production losses or demand increases. This will keep the market from seeing any significant collapse as we move through the wintertime months.
U.S. Corn Ending Stocks
Corn stocks at 1.493 bb, projected for Aug 31st next summer, would be up from this year’s ending stocks of 1.236 bb. But it is still relatively low compared to the previous 6 years. This chart shows the same data but is further evidence that corn prices, although we’ll see the market bounce up and down, are not likely to embark on a sustain downtrend until either bigger U.S. or bigger South American crops
U.S. Soybean Monthly Ending Stocks
U.S. soybean ending stocks show USDA left it unchanged from last month at 340 mb. That is above last year’s stocks from this time but it is the second lowest over the last 8 years. We’re no longer projected to be running out of soybeans like we were last spring and into the early summer but stocks are still not burdensome. We would term these stocks as adequate at best.
U.S. Soybean Ending Stocks
Our longer term soybean stocks over the last 18 years does show stocks will be up from last year based on USDA’s current projection but nowhere near the levels we were at the previous 3 years.
U.S. Wheat Monthly Ending Stocks
Wheat stocks increased from last month by 50 mb but it is still the tightest stocks level over the last 8 years and there is really not much room for either increase demand or reduced supplies on the U.S. balance sheet. This is one of the reasons why KC wheat is trading at $8 and Mnpls wheat at $10+. It is because of the overall tight stocks situation.
U.S. Wheat Ending Stocks
Wheat stocks over the past 18 years show 598 mb is USDA’s current estimate. That would be about equal to the lowest stocks we’ve seen over the last 12 years. With tight stocks grain prices are volatile therefore wheat has seen a major pullback of $1/bu in KC wheat over the last couple of weeks. We should expect more volatility in both directions in the months to come.
U.S. Grain Stocks
When we add up corn, soybeans, and wheat together you can see the dramatic drop in stocks 2 years in a row. Even though the marketplace doesn’t seem overly bullish, our stocks next year for corn, beans, and wheat combined are not expected to be a whole lot larger than this year and would still be the 2nd lowest since 2014. Increasing stocks from year to year does not make us wildly bullish but relatively tight stocks should prevent any major collapse in prices until we have proven bigger U.S. or bigger South American crops.
Grain Market News
SA 2-Week Precipitation Forecast
Our 2-week South American precipitation forecast shows the first week with the southern third of Brazil dry as well as portions of Argentina as well. It is not completely dry in Argentina but less than normal rain. The second week of the forecast is even drier. A larger portion of southern Brazil remains dry and a little bit less precipitation in Argentina as well. We want to wrap up with a final comment. It is too early in the growing season to significantly reduce South American potential but the forecast has enough concern or is threatening enough that it definitely bears monitoring very closely over the next few weeks.
March Corn Chart
Corn prices pushed to new high for this move up to $5.94 in the March contract and we’re now right at the previous double top in the $5.93-$5.96 range. That was the initial objective and we’ve mentioned that if South American weather would turn threatening it is possible the prices could move out of that range and push into new highs. Next week’s forecast, Sun night into Mon morning, will likely determine whether or not corn can push into new highs. At least for now the short-term chart is pointed upward. Short term technicals are pointed upward and there is no sign of topping action at least not yet.
January Soybean Chart
Soybean prices posted a new high for the move today up to $12.76 on the Jan chart. The next objective is $12.89. Then the lower $13 range. If the South American weather forecast is threatening as we move into next week don’t rule out prices working toward or maybe a little above the $13 mark. Overall, the trend is still pointed upward. Technicals are pointed upward and there is no sign of topping action in the soybean market as of today’s close.
March KC Wheat Chart
Wheat prices have tested major chart support at the lower end of our up trending channel. Prices fell $1.05/bu in about 2 weeks in KC March wheat and that has driven technical indicators into the oversold level. As of yesterday there was no sign of bottoming action from the chart or technicals but today’s bounce from a low this morning to today’s close at $8.05, prices are now 18 cents off of the low established the last couple of days. There are hints that maybe this market has found a bottom. If so, our consolidation area between $8.20-$8.50 would be the next target for March KC wheat.
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