December corn futures at new contract high

March corn futures gained 20 cents this week to close at 616-1/4. December of 2022 corn futures gained 7 cents to close at 565-1/4. Lower estimates for Brazil corn production could result in higher US exports this season. US export sales to date are already anticipated to exceed current USDA projections and just overnight, the US sold another 9.75 million bushels to China for the current 2021/2022 crop year. Ethanol production was up though higher energy and corn prices cut into ethanol producer margins last week. Ethanol stocks are up but still below the same week last year. Informa has estimated that corn acres will drop to 90.4 million acres versus the 93.4 million in the USDA’s most recent WASDE report and more in line with last year’s 90.7 million acres, with a corresponding rise to soybean plantings. This projection for lower 2022 production has helped the December contract push to a new high of 566-1/4.

Soybeans push back above $14

March soybean futures rallied 44-1/2 cents this week to finish at 1414-1/4. New crop November 2022 soybean futures were up 23-1/4 cents to close at 1316-1/4, just 8-3/4 cents below the new contract high of 1325 made this week. Even though soybeans ended the week on a down day, the March futures posted a bullish weekly reversal to finish at its highest weekly close on the contract and remain above the 5-week moving average. The May, July and November contracts hit new contract highs. The surge in soybean oil prices and another record high for palm oil futures gave support. News that the USDA’s attaché in Brazil lowered its estimate for the country’s soybean production to 136 million metric tons (mmt) compared to 139 mmt projected by the USDA in last week’s WASDE report. There was also talk of at least one private analyst lowering their Brazil soybean production estimate below 130 million mmt that may have been the catalyst for Thursday’s sharp price increase. Profit-taking and weekly export sales, that came in on the low end of expectations, weighed on the market today.

Wheat prices spike on Russia/Ukraine conflict

March CBOT wheat futures traded 38-1/2 cents higher this week to finish at 780. March KC wheat futures were up 48-1/4 cents this week and closed at 793-1/4. March Minneapolis spring wheat futures closed at 936, up 57-3/4 for the week. European wheat prices have been under pressure, and this weighed on the US markets. Wheat prices took a big leap higher this week as tensions rose between two of the world’s largest wheat producers. With more than 100,000 Russian troops at Ukraine’s border, Washington warned on Wednesday that an attack could come at any moment. An invasion could disrupt commercial shipping in the area. Ukraine has exported 16.6 mmt of wheat (610 million bushels) so far this season.

February Class III Milk Down Six Days in a Row

Nearby Class III milk futures are going through a correction as the market takes out premium from the months closer to the spot cheese price. This week, February milk fell five days in a row by a total of $1.50/cwt. The fact that cheese wasn’t able to push over $2.00/lb and has since reversed back to $1.81/lb is keeping pressure on futures. The block/barrel average cheese price fell 13c total this week on steady selling pressure. The Class III market is still receiving an overwhelming amount of support from multi-year high butter prices, multi-year high Class IV prices, high feed costs, and tighter milk production, but a lower US cheese price will make it hard for the market to hold these levels. The front month January contract and the second month February contract are now more in line and are just 25c apart after Friday’s close. The Class III trade had a pretty neutral session on Friday.

Class IV milk futures closed the week into new multi-year highs as the butter bidding hasn’t slowed. Spot butter jumped another 3.50c on Friday on a whopping 18 loads traded. This takes spot butter to $2.9350/lb as the market looks set to test the $3.00/lb level. Global demand for butter and strong US exports are driving the move. Rounding out the spot trade, spot powder added a half cent to $1.8150/lb, while whey was steady at $0.80/lb. Possible volatility could come next week in the form of the USDA US Milk Production report. The report will be released on Monday at 3pm. There is also a US Cold Storage Report on Monday as well.