Grain markets finished sharply lower across the board for the second day in a row as Chinese corn cancellation and an extension of the corridor encouraged heavy selling.
Grain Market News
Virtually the entire US corn and bean belt is rain free as of midday today and the rains that do fall over the next week look to be light.
7-Day Observed Precipitation
The forecast shows mostly 1-3 tenths across the majority of the belt.
Heavier rains are projected for the southern and southwestern plains.
Warmer temperatures move south and east in the 6-10 days and continue into the 8-14 days.
We will see a dryer pattern in the eastern belt in the 6-10 and 8-14.
Soil moisture will decline between now and May 30th if the forecast is correct.
Grain Market News
Sea Surface Temperatures
Zero means that the water temperatures or sea surface temperatures are close to average.
Anything a half degree below normal is considered La Nina and anything a half degree above normal or higher is El Nino.
At this time sea surface temperatures are just now entering into the El Nino phase.
No El Nino is created equal they all create different weather scenarios.
In general, El Nino is associated with cooler, wetter conditions across the far southern portion of the U.S.
Cooler, wetter conditions in the south and warmer conditions in the north.
Weekly Ethanol Production
Ethanol production increased to 987 thousand barrels a day, that’s the best out of the last 4 weeks but still below the level needed.
Ethanol margins are estimated to be very profitable at this time.
When it comes to the ethanol industry the sharply lower corn market is certainly beneficial.
Our year-to-date ethanol production is slightly below the target, but we wouldn’t be surprised to see it strengthening with the favorable margins.
Weekly Stocks of Fuel Ethanol
Stocks decline seasonally, you can see a seasonal trend on stocks as we move through April/May and into June.
The good news is the current stocks at 23.198 million barrels are 2.5% below the year ago level.
May Corn Chart
Corn prices down sharply, we had been stuck in a sideways range for three weeks.
Today’s break to the downside caused very aggressive fund selling and a low of 5.54.
Wheat closed at 5.61.
The funds are now building a large short position in the market.
May Soybean Chart
Soybeans are expected to have a volatile trade this season.
Todays break down to 13.32 is a surprise that we would fall this far this quickly.
This has pushed our technical indicators back into the oversold range.
There was no sign of bottoming action today, but we will be watching the next couple of days.
May KC Wheat Chart
Wheat is almost a flip flop of 180 degrees where the market has been rising sharply the past couple of weeks.
We had a reversal today after posting a new high earlier today at 9.18. We turned around and closed at 8.85.
The trend is still upwards for wheat, but today’s reversal down was certainly a negative signal.
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