Closing Market Comments 5-18-2022

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Today’s Prices

Grain prices sharply lower across the board as outside market pressures spilled over and created selling in the grain market.

Grain Market News

KC Wheat minus Corn

The KC wheat is trading at over a $5 per bushel premium to US corn futures.

That means that virtually no wheat is going to be fed unless it is unfit for either human consumption or for blending.

Last year in the April-June timeframe wheat was 50 cents per bushel below the price of corn.

Crude Oil Divided by Corn Price

Back when covid (2020) started crude oil prices tanked and was relatively cheap compared to corn.

Last year at this time in the month of May crude oil was trading at about 9 times the value of corn.

As of today, crude oil is nearly 14 times the value of corn.

As we see this crude oil/corn ratio increase it tells us that corn is relatively cheap compared to the price of energy and in this case the price of crude oil.

Weekly Ethanol Production

Ethanol production held steady at 991 thousand barrels per day, that a little bit below the level needed to reach USDA’s current estimate.

Weekly Stocks of Fuel Ethanol

Stocks dropped this week to the lowest going back to the month of January, ethanol is relatively cheap.

Its over a $1 per gallon cheaper than gasoline which means blenders will be eager to use ethanol as much as possible since it is cheaper.

Prices vs. Last Year

Grain Market News

High Temperatures

Here in the US, we had quite favorable conditions for much of the belt over the last week.

Yesterday’s high temperatures in the 70s and 80s across the heart of the belt, which is good for this time of the year.

It was relatively cool in the northern plains with highs in the low to mid 60s and it was much too hot in the southwestern plains with another day of 100s.

3-Day Observed Precipitation

Over the last 3 days we have started to see increased precipitation including in areas where there hadn’t been rain in over a week.

We started to see rains develop in the northwestern let but more significant rains across the central belt which will start slowing planting progress again.

U.S. Radar

The rain that fell in the central belt are moving eastward and covering most of the eastern belt.

Severe Weather Outlook

Most of the central belt looks to be pretty much clear this afternoon but we do have more rain possible in the central belt tomorrow and then moving into the eastern belt on Friday.

7-Day Precipitation Forecast

The heavy rain could fall anywhere from the central and eastern Iowa area through the southern belt, the delta into the eastern belt.

Mixed news in the northern plains from northern South Dakota, northwest Minnesota, and most of North Dakota. They are expecting some additional rain, the good news is it doesn’t look heavy.

But at this point in the north any rain is unwanted.

July Corn Chart

Corn prices today fell sharply and tested chart support where our uptrend line comes into play and also our 40-day moving average.

If that doesn’t hold the next level of chart support will be last week’s lows at 7.69 per bushel.

We think that the long-term trend will remain up but in the short-term additional back and forth choppy trade is certainly possible.

July Soybean Chart

Soybean prices also in a choppy sideways mode, right now prices are working higher within that sideways range.

Technical indicators look good but today was a disappointing day.

Chart support was right at mid-range in the sideways channel.

July KC Wheat Chart

Wheat prices exploded to new contract highs this week, in fact KC July wheat has rallied nearly $3 per bushel in less than 3 weeks.

Yesterday the market tried to fill a gap that was left in the charts on Monday morning, we filled a good share but not completely.

That gap was down to about 12.92, about another 30 cents below where we closed today.

We also would have significant chart support at the breakout level at 12.59.

Questions or Comments

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