July corn futures added 1-3/4 cents this week to close at 684-1/2. December futures added 18-1/4 cents this week to close at 609-3/4. Thursdays USDA WASDE report brought a larger than expected reduction to 2020/2021 corn ending stocks. 75 million bushel increases to ethanol demand and exports adjusted old crop stock to use ratio down to a 25-year low of 7.4%. Exactly one year ago 2020/2021 stocks to use were predicted at 22.5%, the highest since the early 1990s. Weather is currently and will continue to be the main focus of the market in the coming weeks ahead of the historically most volatile USDA report of the year on June 30th with the Planted Acreage and Quarterly Grain Stocks report.

It was reported early on Friday morning that the Biden administration was considering options to help US refiners cope with cost of biofuel blending obligations. To continue to operate, refiners must demonstrate Renewable Fuel Standard (RFS) compliance by turning in credits knows as Renewable Identification Numbers (RINs). For many refineries RINs are the second-largest operation expense, trailing only the cost of crude oil. Previous administrations have also made exceptions to the Renewable Fuel Standard in favor of refiners. These actions in turn have hurt the ethanol industry. Corn use for ethanol has accounted for about a 1/3 of US corn demand in the last two years.

Old crop beans drop sharply

July soybean futures posted their worst week since January this week shedding 75-1/4 cents to close at 1508-1/2. November futures added 3-1/4 cents this week to close at 1438-3/4. Soybean ending stocks came in above pre-report expectations in Thursday’s WASDE report. Ending stocks were raised 15 million bushels to come in at 135 million bushels due to a cut to domestic crush demand. Global soybean stocks were also raised by 1.45 million tons to come in at 92.55 million tons. This was over a million tons above the trade’s pre-report estimate. The spread between old crop July soybeans and new crop November soybeans lost 75-1/2 cents this week shrinking the market inverse.

The US dollar traded sharply higher this week further solidifying the idea the dollar has found a bottom for now. Selling pressure in soybean meal and oil this week added downside to the already heavy soybean market. Weekly price action for front-month soybeans this week is seen as bearish with prices trading above but closing below last week’s price range. Rains across the parched Dakotas and western upper Midwest on Friday compounded the soybean sell-off as well. Front-month soybeans closed this week below the 10-week moving average for the first time.

Spot cheese buyers have shifted their demand tones over the past few spot sessions and have pushed cheese higher three days in a row. Although the futures market hasn’t responded to this rally yet, contract months are starting to stabilize. For the week overall, spot barrels added 5.75c and spot blocks held unchanged. Second month Class III fell 32c lower while third month gained a penny. The market still looks to be a bit skeptical of the shift in cheese buying, but further confirmation of a higher cheese price next week could help turn this oversold market higher. With this week’s close, July class III has been down four weeks in a row. The spot whey market added 2.50c this week.

The Class IV market held pretty steady this week with spot butter adding 1.75c and spot powder jumping 4c. Some pressure for dairy may have come from the fact that soybean meal prices are working lower, back below $400 per ton yet again. The corn market is still pushing higher though, adding a couple cents overall again. Next week, the market will get a look at milk production for May on Friday along with a Global Dairy Trade Auction on Tuesday. The past five GDT auction events have been pretty quiet, with each event moving less than 1% in total. The market will look to see if global prices can hold these strong premiums over the US market.