September corn futures added 61-3/4 cents this week to close at 592. December futures added 60-1/2 cents this week to close at 579-3/4. Weather continues to remain key in the corn market especially as we head into the long Fourth of July weekend. Talk of wetter and cooler outlooks have spurred some long liquidation following Wednesday’s limit higher trade. According to this week’s drought monitor, 38% of the corn area in the US is experiencing drought, this is down from 41% last week but still up from 24% on June 1st. While some of the drought-affected areas picked up rain in the last two weeks, subsoil moisture continues to be a worry of some. For many, this year will be a true test of modern genetics to see how much this corn crop can do with less than normal rainfall.

Export sales were well below expectations this week coming in at only 14,979 tons for the current marketing year and 67,635 for the next marketing year. China also cancelled a prior order of 75,000 tons adding to the weakness in this week’s sales. US corn remains the most expensive corn in the world on the export market. While production issues in Brazil have been a highlight of upward price direction in the last few months, the crop is still expected to come in near 88 million tons down according to StoneX, this is down from an estimated 90 million last month.

Beans post sharp gains this week

August soybean futures added 130-1/2 cents this week to close at 1433-1/4. November futures added 129-1/4 cents this week to close at 1399. China was the featured buyer of US soybeans in the week ending June 24th at 1.1 million bushels of old crop and 42.1 million bushels of new crop. Unknown destinations, most likely China, bought another 18.8 million bushels of new-crop soybeans. The USDA’s Beijing attache increased China’s 2021/22 soybean imports to 102 million tons up from 100 million in their previous forecast but still below the USDA’s official 103-million-ton estimate. Many in the driest part of the ag belt, Minnesota and the Dakotas, need rain soon as their soybean crop is seemingly going backwards due to a lack of perception since planting. Minnesota and the Dakotas planted 2.3 million more soybean acres than last year; the also dry Iowa added 500,000 acres versus last year. This weekend’s forecast model runs will be vital for these areas.

Brazil exported 11.1 million tons of soybean in June, down from 12.74 million last year. Brazil exported 1.8 million tons of soybean meal in June, up 7.3% from last year and down 2.3% from May. The USDA released its Fats & Oilseeds report for May after the close which showed May crush of 173.50 million bushels. This was within pre-report estimates. The daily crush pace was 5.60 million bushels per day.

After suffering six weeks of losses, Class III futures managed to hold small gains on the week, although prices moved notably off the daily highs from Tuesday’s trade. Even though the technical action was not overly encouraging, the fact the market ran out of selling pressure and is trying to build some support is a good start. Class IV prices were lower on the week with the second month August contract falling to $16.00. The second month Class IV contract has not traded in the $15.00’s since the week of April 5th.

The spot trade remains lackluster with the block/barrel average up 3.75 cents on the week, still hanging beneath the $1.55/lb level, while whey prices dropped to their lowest level since early March. Prices are now almost 30% off of their May peak, a 7-year high for the market. Butter prices remain bogged down in the $1.70’s per lb, and powder was down for the 7th week out of the last eight. Next week Tuesday will entail a Global Dairy Trade auction update, and hopefully, it will entail some good news to get spot prices moving. Otherwise, we are well-covered on milk for the time being and can be patient while the markets find some footing.