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Today’s Prices

Grain markets were sharply higher today as outside markets were supportive and the market has likely factored in the rains that are falling in South America.  

Grain Market News

U.S. Dollar Index

A higher U.S. dollar index means that U.S. products are more expensive and it can hurt exports. A lower U.S. dollar index means good news for U.S. exports as it makes out products cheaper to foreign buyers. A rally in the U.S. dollar index from Sep, Oct, and into Nov definitely was hindering our U.S. exports and even though we’re not down sharply, the trend over the last couple of months is a downtrend. We’ve bounced over the past few days but nonetheless we are trending lower off the highs that were established in late Nove. If this trend would continue and we would break out of our pennant formation to the downside, that would be positive for U.S. grain exports.

Gold

Gold is a product that can be used as a hedge against inflation. The gold market has been rallying from some lows seen back in Dec, we’ve seen a significant rally, about $100/oz in the gold market. We’re not exceptionally high but again, it is good news that over the last 30-days the trend in gold has been up and that contributes to the overall commodity index charts which are trending higher as well.

Crude Oil

Energy markets are rallying, in fact, this chart is for crude oil. Crude oil prices hitting almost $88/barrel today. Crude oil has rallied over $25/barrel since early Dec. That is a remarkable rally and we’re now at the highest price for crude oil in 7.5 years. That is certainly supportive for the grain markets, specifically corn and soybean oil.

Unleaded Gasoline

As crude oil rallies so does unleaded gasoline. Unleaded gasoline has rallied $0.60/gal since early Dec. Again, a very huge rally, certainly supportive of the grain market and again, corn and soybean oil specifically.

Natural Gas

Natural gas prices exploded to the upside, hit $6.46 back in Oct. Those prices double in a very short period of time. That was one of the items that contributed to the explosion in the price of Anhydrous Ammonia which natural gas is one of the primary products used to create Anhydrous Ammonia. Natural gas prices collapsed through Nov, Dec, and into the first of the year. In fact, when we hit $3.53 natural gas prices had fallen 45%. In other words, nearly cut in half. Note, it looks like a major bottom was formed and natural gas again is on the rise.

Sugar

The sugar market which is not a primary driver for grain but in Brazil it is very important. Brazil has an extremely larger sugarcane crop which is either used to produce sugar for human consumption or to produce ethanol. The higher price of sugar the more of their sugar crop goes to produce human consumption sugar and therefore does not go into ethanol. Therefore, when sugar prices rise it is a supportive feature for the corn market specifically. Sugar prices had been falling but over the last week they have shot to the upside and broke the downtrend. Sugar prices at $0.19/lb significantly higher than it was a year ago back in January.

Rice

Here again, not a primary item when it comes to the grain markets but it does battle for acres. Rice prices are near their high at 14-15/lb. Compared to a year ago we’re significantly higher and this could add to the acreage battle. High rice prices could attract additional acres. This may be a small piece, but it is a piece of the puzzle for the acres battle as we head through the winter towards the spring planting season.

Cotton

Cotton prices at $124/bale are at a new high as of today. Compared to a year ago, down around $80/barrel, cotton will definitely be battling for acres in the TX region of the 29-county cotton area and also down in the U.S. Delta where MS, AR, and adjacent areas could have an acreage battle with cotton trying to capture additional acres. Today we’re focusing on outside ag market and also the outside financial markets. Tomorrow we’ll take a look at some of the international grain charts and how those markets have been responding over the last couple of months.

Grain Market News

Observed High Temps

Argentina’s growing region had 60’s, 70’s, 80’s for highs in much of Argentina’s belt. That is 30-40 degrees cooler than a week ago. The high-pressure ridge is now centered over northern Argentina, Paraguay, and areas of southwestern Brazil where temperatures still 101-107 degrees. But we do note, and it is important to realize that tremendous cooling has taken place over the last 3-4 days in Argentina’s growing belt.  

SA 2-Week Precip Forecast

In addition to the dramatically cooler temperatures for most of Argentina, additional rain 1-3” of rain especially for southern Argentina in the first week of the forecast. The second week of the forecast offers some lighter to more scattered rains but the rains over the next 7-8 days could be significant. Unfortunately for northern Argentina, southern Brazil, and Paraguay it’ll remain hot for a little bit longer with very little rain. There could be additional crop stress and yield loss in those areas over the next week and then southern Brazil and Paraguay should get some relief in the second week of the forecast. If today’s weather models are accurate. The bottom line for South American is that conditions are improving in many areas but weather is still not ideal and we’re not sure if an improvement in weather will cause an improvement in overall yield potential or just stabilize yield potential for South America as a whole.

March Corn Chart

Yesterday we were in a downtrend. Prices were below our downtrading line and actually challenging a breakout to the downside. Today markets revered and closed sharply higher. In fact, today’s high at $6.14 is now challenging the highs posted 3 weeks ago at $6.17. We’ll need to reconfigure this chart with the downtrend being broken but today’s action very positive and turns the technical indicators back up as well.

March Soybean Chart

The soybean market was trending significantly lower, in fact, sharply lower over the past week. But off of yesterday’s low prices have reversed and have now traded 43 cents higher just since yesterday morning’s low. The turn on the chart has been significant enough to cause a hook in the technical indicators telling us this market certainly showing signs it may want to re-test the previous high at $14.15. When we say re-test the previous highs that doesn’t mean that will be the high. Just the next level that traders may want to challenge.

March KC Wheat Chart

After the market looked like it was trying to turn higher early last week, the market was hit hard late last week to the downside which was somewhat of a surprise. But since yesterday morning prices have reversed in a major way. In fact, today’s high at $8 on the Mar KC wheat is 57 cents off of the low that was posted Friday late into the overnight trade Tuesday morning. The chart has certainly reversed. We’ve broken through the downtrend line. The technical indicators are pointed upward. Even though wheat has rallied over 50 cents in two days, this market over time may be prepared to move even higher.

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