CORN HIGHLIGHTS:

• Corn futures failed to follow through on Monday’s gains as selling pressure in the wheat market and soybean market spilled over into the corn futures. July corn double-topped Monday’s highs and posted a reversal on the daily charts. The negative price action could lead to additional selling pressure into Wednesday. May corn futures finished its trading life on Tuesday.  May futures closed trade at 453 ¾.
• The USDA crop progress report showed corn planting at 49% complete, in line with analyst expectations.  This was up 13% over last week, but 5% below the 5-year average. Key states of Iowa (-13%) and Illinois (-14%) are behind the 5-year pace and additional slow planting could support the market. Weather models overall are staying on the wetter side but may have holes to provide opportunities to complete planting in some areas.
• The USDA announced a flash sale of corn to Mexico. Mexico purchased 15.9 mb (405,000 mt) of corn split between old and new crop. A total of 135,000 mt for the 23/24 marketing year and 270,000 mt for the 24/25 marketing year. These are routine sales of corn to Mexico and failed to move the market.
• The Brazil Ag agency, CONAB, released their May production expectations this morning. CONAB raised their Brazil corn production estimate to 111.6 mmt, up 672,000 mt from their April estimate. This is still down sharply from last year’s production of 131 mmt as producers have reduced corn acreage overall.
• The Corn market could be a crossroads point as weak price action in the grain market could be signaling a near-term top. The market will be looking for additional news to push prices higher, as the planting pace, at this time, is acceptable.

SOYBEAN HIGHLIGHTS:

• Soybeans ended the day lower and were under pressure from sharply lower soybean oil, but soybean meal was higher which helped offset the losses in oil. July soybeans finished the day just above its 100-day moving average while the November contract remains well above.
• Yesterday’s crop progress report showed that 35% of the soybean crop has been planted which was lower than the average trade guess of 39%. This compares to 25% last week, 45% a year ago, and the 5-year average of 34%. 16% of the crop has reportedly emerged, which compares to 9% last week and 17% a year ago at this time.
• This morning, CONAB released its estimates for the Brazilian soybean crop and revised its number higher to 147.7 mmt. There is now a 6.3 mmt discrepancy between CONAB and the USDA with the USDA’s estimate last week at 154 mmt. With the flooding in Rio Grande do Sul, the USDA’s estimate is likely too high.
• Soybean oil tumbled this morning after the Biden administration announced tariffs on several Chinese products, but used cooking oil was not on the list as was previously rumored. Over the past week, soybean oil had been rallying based on that rumor as the decline in used cooking oil imports would create greater demand for soybean oil.

WHEAT HIGHLIGHTS:

• US wheat futures closed lower across the board, with Paris milling wheat futures also experiencing sharp declines. This downward trend is likely due to profit-taking following a recent strong rally, exacerbated by lower corn and soybean futures.
• Yesterday’s crop progress report indicated that winter wheat conditions remained unchanged at 50% rated good to excellent. However, there was a 2% shift from fair to the poor to very poor category. This discrepancy may be attributed to the difference between HRW and SRW wheat, with the former being rated much lower than the latter. Additionally, 57% of the winter wheat crop is headed, compared to 46% last year and 44% on average. Moreover, spring wheat planting is reported at 61%, well ahead of last year’s 35% and the 48% average.
• Freezing conditions in Russia continue to pose a threat to their wheat crop, with several private estimates now forecasting production below 90 mmt. IKAR has reportedly lowered their projection by 5 mmt to 86 mmt. Dryness in the Black Sea area may also impact both the Russian and Ukrainian crops. Furthermore, excessive wet weather in parts of Europe, particularly France, adds to the bullish outlook on a global scale.
• CONAB has lowered their production estimate of Brazil’s wheat crop by 7% to 9.03 mmt. Lower acreage is cited as the reason for the decline, which itself is likely due to the recent torrential rains and flooding problems in Southern Brazil. For reference, the USDA estimated a 9.5 mmt crop on last Friday’s report.
• According to the Australian Weather Bureau, there is a 50% chance of a La Nina weather pattern developing later this year. This is a bit lower than some other estimates from around the world, including the Japanese Weather Bureau giving it a 60% chance. Regardless, the formation of this pattern should bring more moisture to eastern Australia, but drier conditions to North America.

DAIRY HIGHLIGHTS:

• Spot cheese snapped a streak of five up days in a row on Wednesday by falling 0.125c lower to $1.99375/lb. The market has yet to breach the elusive $2.00/lb level.
• Class III futures initially pushed red following the lower cheese trade, with June falling as many as 51c lower while July fell red by 22c.
• Contracts reversed and saw steady bidding throughout the early afternoon, however, with most Class III contracts finishing nearly 50c off of the intraday lows.
• A 6c higher bid in the spot butter trade to $3.0550/lb likely supported a green close. Butter futures were green across the board as well.
• Spot whey jumped a penny back up to a $0.3950/lb close on no loads traded.

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Author

John Heinberg