Another solid day in the grains, as corn, wheat, and soybeans all closed higher. Wheat was the leader today, closing up 14-15 cents in Chicago, and KC closed up 11 cents. Soybeans closed up for the 3rd day in a row, closing up 5 to 6 cents, while corn was able to hold to 2 to 3 cent gains. The outside markets traded mixed, with crude oil up $1.45, gold lost $7, and the dollar index dropped 0.378. The stock markets were up strong, with the Dow Jones up 263 points, and NASDAQ up 245 points.
Wheat has had a 52 cent rally over the past 3 trading days. That’s almost a 10% gain from the recent lows, and has been driven by both cold temps, dry weather, and geopolitical issues. Dryness has developed in parts of Kansas, and crop ratings took a tumble yesterday. Here is a look at the July Chicago wheat daily chart showing the breakthrough and close through the $6.00 level. The $6.00 level was last seen in mid February.
Dryness has been a building concern in Kansas and Oklahoma, while other areas of the Midwest have been able to recharge subsoil moistures. As shown on the 30 day % of Normal Precip Map, some of these wheat areas are at 25% or less of normal precip. The drought maps are showing this region in D1 and D2 drought. This is not only a concern for the 7.7 mln acres of wheat in Kansas, but also 5.7 mln corn, 4.25 mln soybeans, and 3.35 mln acres of sorghum.
Kansas has seen a rapid onset of drought conditions, with 53% of the state in D1-D4 compared to 28.9% the previous week. Compared to last year, Kansas is in much better shape, since they had almost 45% of their state in the D4 stage, the worst kind of drought. . Their drought conditions could improve as some models are calling for rain in the coming 10 days.
In yesterdays crop condition report, Kansas wheat conditions dropped to 36% good/excellent, which was down 7% from the previous week, and down 12% since the first of the month. It appears funds are buying back their shorts, and new longs are being made in the wheat market. Below we show the 10 year week by week crop conditions for Kansas, and this years conditions are well above the disaster of a crop that they experienced last year.
The corn market is finding a little life, as it has also been able to close up 3 days in a row. The wheat rally is helping corn, as well as a wet forecast keeping planters from making good progress. The corn market has been in a sideways trading pattern for 3 months. The July ’24 corn chart is now about 17 cents off the lows from last week, and 30 cents off the February lows.
The latest 6-10 and 8-14 day forecast is showing warm and wet for the Western Corn Belt, and warm and near normal precip for the Eastern Corn Belt. We are hearing planters are running again in portions of Iowa and other states, but heavy rains are once again forecasted for this weekend into next week. The 10 day GFS rainfall forecast has big rains forecasted for Missouri, Iowa, and Illinois. This forecast puts us out to May 3, and may make a few traders nervous if it continues into Mid-May.
That’s all for today. See you here tomorrow.
