The Good: The rains in Canada and the Northern Plains of the U.S. caused wheat markets to move lower today, but corn rallied by nearly 11 cents per bushel to close at US$6.91 per bushel. One would think that corn users, especially ethanol plants would be cutting back on corn consumption. Nothing could be future from the truth as the U.S. reported the highest ethanol output since the last week of January in 2020. U.S. ethanol production last week hit 1.067 million barrels per day. This is the second highest level for the first week in June in the past five years. High prices for DDG’s and ethanol have been driving production higher, despite the high cost of corn.
The Bad: The spring wheat September contract closed the day at US$7.6975 per bushel, which was well off the sessions lows. Spring wheat tested the gap at US$7.40 per bushel mark and rebounded back to finish the day much higher. The spring wheat market was supported by corn prices and a rally in HRW wheat futures. The spring wheat market is still likely to test the downside in the coming days as more rain moves into the Dakota’s and Montana.
The Ugly: The markets felt that the rains in the Northern Plains were improving crop conditions, but the up to date 24 hour precipitation of the state shows that the coverage was far from uniform. The heaviest rains fell in the south western area of the state, which has a limited amount ocrop land (hence the name Badlands of North Dakota). The heavy rains in northeastern North Dakota was very beneficial for the largest wheat producing area of the state. Amounts were mixed in the rest of the state with spotty light amounts of precipitation reported today. This makes the forecast rain on Friday very critical for the main producing areas of North Dakota. The corn and soybean crops in the east central and southeastern areas of the state need to receive rains soon or crops will begin to suffer.