Today’s Prices
Grain markets finished sharply lower for the second day in a row, sharply lower energy markets pushed grain prices lower which trigged additional sale stops.
Grain Market News
Ethanol Profit Margin
Gasoline demand is being reduced combined with the potential for slowing overall demand because of a slowing economy.
We have negative margins in place for the past 5-6 weeks.
Ethanol plants are less excited about buying corn when they can’t make money by running their plants.
US Biodiesel & Renewable Fuel Production
The renewable diesel industry still seems to be on solid footing.
Renewable diesel production, which is shown in blue, is now larger than biodiesel production in tan.
You can see that by looking at the black line, the percent of biodiesel, it was 95-97% of total production 10 years ago and now that is down below 50%.
Estimated Monthly Renewable Diesel Margins
Margins are positive as well for renewable energy.
Over the last 5 years the average margins have been $1.25 per gallon.
We may be slightly below that but still very profitable for producing renewable diesel.
Grain Market News
South American Precipitation Forecast
The weather will still have an impact on our grain markets.
Right now, South American weather is providing a mixed influence.
Argentina is relatively dry for the next couple of weeks.
They are under drought conditions already, so their crop remains under stress.
Some of that dryer weather does push into Paraguay, Uruguay, and south Brazil in the first week.
But Paraguay and southern Brazil even Uruguay may see some better rainfall in week 2 of the forecast.
If that’s the case the drought areas could begin to shrink a little bit.
Most of Brazil’s growing area is doing very well and could have record yields in central and northern Brazil.
Temperature Anomaly
South American weather is still very important in day-to-day changes.
At this point most of Brazil remains in very good shape with temperatures in blue, that’s slightly below normal.
Argentina is significantly above normal temperatures, combined with the dry soils creating stress and potential crop losses.
Observed Surface High Temps
This map shows yesterdays highs and we can see most of Brazil was in the upper 70s to mid-80s which is very favorable.
Argentina not overly hot right now, mostly mid 80s in the south and low to mid 90s in the north.
These temperatures are going to be heating up in Argentina by the end of this week continuing through the weekend and next week.
Vegetation Health Index
Much of Brazil equal to or better than last year.
Argentina is mostly well below last years vegetation health.
7-Day Observed Precipitation
Some good moisture has fallen in portions of the central and western belt over the last week.
The second tier of green is 1-1.5 inches.
So, we have had an inch to 2 inches in much of Nebraska and southeast South Dakota.
We’ve also seen some significant rains in portions of the eastern belt and especially down in the Delta.
Soil moisture is being replenished in some of these areas.
Unfortunately, the southwestern plains have missed out on recent rains again.
30-Day Observed Precipitation
The last 30 days the tan areas are 3 inches, brown is 4+.
So, 3-4 inches plus in portions of the northwestern belt and northern plains, that is good news for those areas.
We have also seen 2-4 inches of rain in most of the eastern belt, 4-6 inches of rain in the Ohio valley, and 5-10 inches of rain in much of the lower Mississippi valley.
Overall, the US drought is seeing reduced in much of the country while drought is still ongoing and severe in the southwestern plains.
30-Day Precipitation % of Normal
The 30-day precipitation shows that we certainly have seen an improvement in the weather pattern.
The weather pattern is allowing for above normal rain in much of the northern plains and northwestern belt.
That includes portions of the Mississippi valley and the Ohio river valley.
The biggest area of concern in the U.S. is the southwestern plains.
March Corn Chart
Corn prices peaked last week and since then the markets have turned sharply lower.
This has turned the technical lower as well.
We have some chart support at the 6.50 level and if that doesn’t hold then 6.35 would be the next target.
There is no sign of a bottom at least not yet.
March Soybean Chart
Soybeans also have turned sharply lower off Fridays highs.
That has turned the technical indicators lower as well.
No sign of bottoming action and the next level of chart support would be around 14.66.
March KC Wheat Chart
Wheat prices also down sharply the last couple of days.
In fact today with a big move down 30 cents at one point, the market is attempting to break through chart support which could open up the door to 8.21.
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