- The corn market fought the trend in other grains and finished the day with moderate gains, led by the July contract. July futures were pushed higher by short covering and buying into the bull spreads, with the market watching the weather forecast for the Midwest over the next couple weeks.
- Strong selling in the wheat market and a fading soybean market throughout the session limited the corn market’s upside on the day as prices slipped off session highs.
- Weather models are showing predicted warmer temperatures and limited rainfall over the core of the Corn Belt into early June, as a high-pressure ridge is developing over this region. Weather forecasts after Memorial Day will be keys for potential precipitation to develop around the June 5-6 window.
- Ethanol margins remain strong, but corn usage for ethanol production is still behind the required pace to reach the USDA target. The weekly ethanol report saw production slip to 983,000 barrels/day, down from last week and last year’s levels. A total of 96.8 mb of corn was used last week for the ethanol grind, down from 99.9 mb from last year.
- Private Brazil Crop Analyst, Agroconsult, raised their projection for the second crop Brazil corn harvest to 102.4 MMT, which is up 11% from their last projection and well above both USDA and CONAB current projections, as the overall condition of the Brazil second crop corn remains strong.
- Soybeans ended the day mixed with the front month July higher, but all deferred contracts lower, with additional pressure coming from the decline in soybean meal.
- Soybean meal led soybeans lower today, but soybean oil moved higher despite another decline in palm oil. Higher crude oil has been supportive as Saudi Arabia hints at production cuts.
- Tomorrow’s Export Sales report is not expected to be very friendly for soybeans, as Brazil’s cheaper offers get scooped up on the global market. If this trend continues, the USDA will likely decrease US exports and increase the carryout.
- China is attempting to use fewer soy products and corn in favor of wheat for feed needs, which is weighing on soybean meal, but Brazil’s recent shipments of soybeans to Argentina to be crushed has hurt prices as well. The bullish thought was that the US would pick up some meal export business from Argentina due to their poor crop.
- KC futures led the wheat complex lower today. While most of the Midwest looks drier for the next 10 days or so, parts of Oklahoma and Texas are getting good moisture. Though this moisture is perceived largely as negative, it may be too little too late to help the crop, and there is some concern that it may cause some quality issues.
- The Illinois Wheat Association crop tour came out with a record-breaking 97 bushel per acre yield for Illinois SRW crop, versus the USDA’s estimate of 78 bpa.
- The US Dollar Index continues to trend higher, nearly reaching the 104 level today, and because it tends to have an inverse relationship with the wheat market, it may have contributed to today’s weakness.
- China has imported 6 mmt of wheat during the first four months of the year. This is up 61% from last year as they want to use more feed wheat versus corn and soybeans, with most of it sourced from Australia.
- Russia continues to dominate world wheat exports, with FOB offers cheaper than the US that are reportedly as low as $245 per ton.
- Cheese sellers aggressively offered the block market 7.50c lower Wednesday, dropping the price to $1.5775/lb on 2 loads traded.
- The offering in cheese took nearby Class III milk futures from green to red. June Class III was down 18c to $16.37 while July fell 12c to $16.82.
- Spot whey caught a bid, recovering 1.75c to $0.2775/lb on 9 loads traded.
- Class IV milk remains steady and at a premium to the Class III months. June Class IV settled today at $18.17/cwt.
- Feed costs are mixed. Weather premium is being added to the corn market while soybean meal keeps dropping. Front month SBM hit a low of $400.70 on Wednesday.
Total Farm Marketing and TFM refer to Stewart-Peterson Group Inc., Stewart-Peterson Inc., and SP Risk Services LLC. Stewart-Peterson Group Inc. is registered with the Commodity Futures Trading Commission (CFTC) as an introducing broker and is a member of the National Futures Association. Stewart-Peterson Inc. is a publishing company. SP Risk Services LLC is an insurance agency. A customer may have relationships with all three companies. TFM Market Updates is a service of Stewart-Peterson Inc. Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition.