The Good: The demand for ethanol continues to be strong as production last week decreased slightly to 1.087 million barrels a day. The past eight weeks have averaged 1.078 million barrels, which is the largest two month ethanol production period on record. Production declined through the summer as tight corn stocks slowed corn consumption. Production has quickly rebounded since the harvest and has now averaged more than one million barrels a day for 10 weeks in a row. USDA will have increase their current corn ethanol use estimate of 5.25 billion bushels by at least a 50 to 75 million bushels due to strong ethanol production, so far this crop year. Strong corn demand will help make up for the “slow exports” that currently are urrently the prevailing market narrative.
The spring wheat markets were down by 10 to 12 cents per bushel today with the nearby March contract closing at US$10.09 per bushel. It could have been worse as the winter wheat contracts dropped 25 to 27 cents per bushel in Kansas City and 30 to 31 cents per bushel in Chicago. Although the recent weakness in wheat is concerning, spring wheat did not break through the technically important US$10 per bushel level. The pictures from the windstorm (see below) should help remind the market that the 2022 HRW crop is off to a questionable start.
The Ugly: A major windstorm is moving through the Southern Plains and western Corn Belt today. Gusts this afternoon ranged from 50 to close to 80 miles per hour. The strongest gust so far this afternoon was reported in Dodge City, Kansas at 78 miles per hour, while Lamar Colorado reported a gust of 106 miles per hour this morning. Reports from the region indicate that there have been dust storms and damage to buildings and irrigation equipment. Damage to crops will take a while to evaluate, but wheat fields in the region will likely have some “blow out” regions, especially in the driest fields. La Nina winters in the Southern Plains are usually dry with extreme temperature fluctuations.