CORN HIGHLIGHTS:

• The corn market rallied sharply, trading to within 9 cents of last October’s high, following the USDA’s release of yesterday’s Crop Progress report. The report showed a 6% drop in the good to excellent rating to just 55%, a steeper decline than expected and lower than 2012 ratings at this time.
• Some feel the current ratings suggest a yield much closer to 174 bpa versus the USDA’s current estimate of 181.5 bpa.
• The USDA reported that 877k tons of corn were inspected for export, much lower than the 1,170k tons inspected last week.
• The current 7-day forecast continues to look dry for much of the central Midwest, with conditions reportedly the worst since 1988.
• In Illinois, subsoil moisture is reported to be 85% short to very short, 9% higher than in the drought of 2012. Looking toward Nebraska, the NOAA indicated that between 6 and 15 inches of rain would be needed to reduce drought conditions in the region.
• Today’s rally will likely make US export offerings even more expensive on the world market, further hampering new export sales, especially with Brazil in the midst of harvesting their safrinha corn crop, which continues to weigh on the country’s domestic basis and export prices.

SOYBEAN HIGHLIGHTS:

• Soybeans closed sharply higher today, but soy products were a mixed bag as soybean meal rocketed over 6% higher, but soybean oil closed limit down after the EPA biofuel mandate.
• The EPA made their announcement regarding biofuel targets and the 2024 and 2025 blending mandates are lower than had been previously hoped for, which caused the limit down move today in soybean oil.
• Yesterday’s crop progress was a big catalyst for the gains in corn and soybeans today after it was revealed that the good to excellent rating for soybeans fell by 6% to 54%, far below analysts’ expectations. These ratings may continue to decline as the 10-day forecast remains dry.
• Soybean export inspections were poor last week at 6.8 mb, which puts total inspections for 22/23 down 4% from the previous year. The US is struggling to compete with Brazil’s significantly cheaper corn exports.

WHEAT HIGHLIGHTS:

• All three US wheat futures classes closed sharply higher alongside Paris milling wheat futures, which gained as much as 8.25 Euros per metric ton.
• The weather market is still impacting the grain complex, with spillover support from corn and soybeans. Both of those crops saw a decline in condition beyond what the trade was expecting. Compared with last week, corn was down 6% and soybeans were down 5%.
• The most recent Crop Progress report showed what winter wheat harvest is 15% complete vs 20% average. The lag appears to be in the southern plains area where rainfall is causing delays. Spring wheat condition declined (perhaps more than expected) to 51% good to excellent vs 60% last week and 59% at this time last year. The winter wheat good to excellent condition was left unchanged at 38% good to excellent.
• The US Dollar Index trended lower today, offering a boost to the wheat market. Traders did not seem to mind the soft export sales figure of 8.7 mmt.
• According to IKAR, a Russian consultancy, Russian wheat exports are now as cheap as $228 per metric ton FOB. Russia has also said they are unlikely to extend the Black Sea export corridor again.
• Given the weather forecast and recent rally in the grain complex, funds are likely short covering, especially in the wheat market. July Chicago wheat closed higher for the fourth day in a row.

DAIRY HIGHLIGHTS:

• The milk trade found some buying interest on Wednesday as most class III contracts finished up double digits. July added 41c to $15.78 and August gained 34c to $16.63.
• Over the past few weeks, the corn price has rallied roughly $1.40 from it’s May low while soybean meal has added $52.50 per ton over four sessions. This is adding support to the dairy trade.
• Spot cheese blocks gained 2.25c and closed back up to $1.40/lb. Barrels held steady at $1.51/lb.
• Spot butter has been quiet lately. The market price fell 0.25c on Wednesday and closed at $2.3475/lb.
• US milk production in May was up 0.60% from a year ago while cow numbers rose just 13,000 head.

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Author

Bryan Doherty