To zoom in on a phone, tablet, or touch screen, place two fingers on screen and move them apart. To zoom out pinch fingers together.

Today’s Prices

Grain markets closed mixed today with soybeans the upside leader.

Grain Market News

July Corn

This chart shows July corn futures. Yellow is this year, 2022, which we got up to 6.34 a bushel. Now we did close at 6.13, so that was a major reversal. But overall, the pattern is somewhat similar to what we seen last year at this time. Last year we peaked out in early February at 5.56 and then had a 45-cent correction at that level down to 5.11. This year we peaked on Monday at 6.34, if we did have a similar correction, we could pull down to the 5.80 level. That where we’ve had major support over the last month or so. But it is worth noting that after the market peaked last year, we traded somewhat at a sideway range as we approached the spring planting season and then the market took off in April/May pushing to new highs. What happens this year will depend on South American final production and if additional losses occur due to potential heat and dryness. Also, what will acres be like this spring in the planting conditions. Will we trade sideways over the next few months or continue to work higher to try to buy additional acres? We wouldn’t be surprised if we see corn start to chop sideway as we wait to evaluate South American weather and the US Spring planting conditions.

July Soybeans

July 2022 hit a peak so far at least today, 15.58 a bushel and closed at 15.30 so that’s 28 cents off the high posted this morning. Since last harvest the prices have responded similar to the way they did last year. Last year we peaked at 14.17 in mid-January and from that peak we had a 1.35 correction. That sounds like a lot but after rallying from the harvest lows to 14.17, rallying a 1.30 correction may sound like a big move, but from the late harvest price of 10.25 to 14.17 prices had rallied 3.90. So, 1.30 correction is only 1/3 of the overall up move. This year we pushed to 15.58 from the late harvest lows of 12.13. That’s 3.45 cents per bushel. If we had a similar correction of a 1.15 per bushel, it cannot be ruled out. But after chopping sideways through late January-mid March then beans di explode to the upside in April/May as the market discussed running out of supply.

Grain Market News

Observed Surface High Temps

After a brief cool down period, temperatures are already starting to warm up. Most of Argentina’s growing region saw temps in the 90s yesterday with 100’s in the northeast towards Paraguay. Brazil’s temperatures were pretty good with mostly 80’s and a few 90’s.

South America 2-Week Rainfall Forecast

The rainfall forecast is dryer today than what was forecast yesterday for Argentina. Argentina shows mostly dry conditions except for some showers in the south this week. Next week looks fairly dry as well except for a few showers in the south or in the eats. Generally, this is dryer than normal over the next 2 weeks. Farmers in southern Brazil and portions of Paraguay are hoping for better rains in the 1^st week of the forecast as the second week is starting to look a little bit dryer Argentina. Over the last couple days, the forecast for Argentina and southern Brazil has gotten dryer and warmer, and therefore is starting to generate additional fear for crop production in portions of South America.

Past 30-Day Precipitation vs. Normal

Rainfall over the past 30 days, we will circle Argentina’s growing area first. Some areas a little above normal due to the rains at the end of January and some areas a little bit below normal. The most significant area of dryness that remains in far northeast Argentina, far southwestern Brazil, and portions of Paraguay.

U.S. Radar 2-2-22 at 6:45 am

The radar this morning showed a wide area of rain, freezing rain, and snow from eastern Colorado to the central plains, all the way north and eastward into the eastern great lakes. A combination of rain, ice, and melted snow is expected to equal a quarter to a half inch across much of the central and western portions of the hard red winter wheat belt. Not a drought breaker but snowfall of 4-6 inches is certainly welcome.

Weekly Ethanol Production

The EIA released their weekly ethanol production report. Ethanol remains strong at 1.041 million barrels per day. That’s up 11.2% from last year. Our year-to-date ethanol production is up 8.8% and that’s well above USDAs target. At this point it looks like we are running at a pace that could easily be 75 million bushels above what USDA is currently projecting for corn use. We don’t think the USDA will make that kind of change ion next week February crop report, but we do believe they will be raising corn use for ethanol by 25-40.

Weekly Stocks of Fuel Ethanol

One piece of negative news with ethanol industry is the fact that our ethanol stocks increased dramatically for the 5^th week in a row up to 25.847 million barrels. That’s a record for this time of the year, only passed by the ethanol stock in the April/May time about 2 years ago. The large stocks of ethanol are somewhat disappointing but with ethanol prices around 40 cents per gallon below the price of gasoline that should encourage additional ethanol usage and possibly additional exports as well.

Ethanol Swaps in Chicago

This is where almost all the physical ethanol is traded is on the swap market, Ethanol is trading for around $2.16 per gallon. Again, that is a substantial discount to gasoline and should promote better ethanol use.

March Corn Chart

Corn prices rallied this morning, we did not take out the high posted on Monday at 6.42. Then the market reversed and closed sharply lower at a significant lower day. From a chart perspective, that’s a very disappointing performance today on the charts and it’s signaling a possibility of further downside risk. The technical indicators also turning lower today based on the lower close. Signals that the corn market may be interested in trading down to that lower 6-dollar range.

March Soybean Chart

Soybeans surged higher today to 15.64, soybeans have rallied over $2 per bushel in 2 weeks. Even though we pulled back and closed at 15.45, 19 cents off the daily high, we were still up double digits on the day. Technical indicators are over bought but no signs of topping action yet. The fact that we closed 19 cents off the daily high means we need to monitor the market closely tomorrow, if there is a down move tomorrow taking out today’s low that could signal the potential correction in the soybean market. This does put the soybean market at risk for a correction for any given moment.

March KC Wheat Chart

Wheat prices have been the weakest leg of the grain market over the last few days. Traders have been buying corn and soybeans and selling wheat. Oday wheat pushed to a new low sown to 7.65 that is 84 cents below where we are trading a week ago. The KC wheat march chart has price support around the 7.60 level and if that doesn’t hold the next target would be the 7.43 mark. Currently the trend on the nearby wheat chart is pointed lower. The technical indicators are also pointed lower, there is no sign that this market has found the bottom, at least not yet.

Grain Marketing Recommendations

Questions or Comments