The CME and Total Farm Marketing offices will be closed
Monday, May 29, 2023, in observance of Memorial Day

CORN HIGHLIGHT

• Fund short covering pushed corn prices strongly higher to end the week, as weather forecasts for the heart of the Corn Belt are a concern into the first week of June.
• Weather models are showing above-normal temperatures and limited rainfall over the core of the Corn Belt into early June as a high-pressure ridge has developed over this region. Evaporation rates will stay high next week, which has the potential to damage the early-stage corn crop.
• Weather forecasts after Memorial Day will be key for potential precipitation to develop around the June 5-7 window. The grain markets could have a high amount of volatility based off those forecasts given the recent rally and the positioning of the Managed money funds in the corn market.
• The cash corn market stays supportive as end-users are pursuing supplies given a potential weather issue. The National Corn Index closed Friday at $6.25 with July Futures at $6.04, a discount to the index, reflecting the cash market strength.
• Demand will likely be a limiting factor as weekly exports remain poor, and the recent price rally will only add more premium to U.S. corn price versus the cheaper Brazil supplies coming online.

SOYBEAN HIGHLIGHTS:

• Soybeans ended the week on a strong note along with higher soybean meal and oil. July beans posted a 30-cent gain on the week, while November gained 14 cents. Higher crude oil and palm oil prices were supportive as well.
• The entire grain complex got a boost today from talk of dry weather that may continue into the beginning of July, but the European weather models are calling for moderate showers in some of the Corn Belt. We will get a clearer weather picture within the next two weeks.
• While soybean meal found some much-needed technical support, soybean oil got a boost from palm oil, which had its third consecutively higher close. There is concern for drought in Malaysia and Indonesia this coming year, which may impact their production.
• Argentina will be exporting approximately 5.4 mmt less soybean meal in the coming year due to their drought-ravaged crop, and there is still hope that the US will pick up some of that export business.

WHEAT HIGHLIGHTS:

• The poor US HRW crop, as well as dryness in Russian spring wheat areas, are supportive factors. However, the wheat market was likely pulled higher today, mostly by spillover from corn and soybeans; the US Midwest weather forecast looks warm and dry for the next two weeks or so, and the market may be putting in some weather premium ahead of the 3-day weekend.
• Nearby contracts were weaker relative to the deferred in K.C. wheat futures today. This may be indicative of the recent rains in the panhandle areas versus supply concerns down the road, given the overall poor conditions in the southern Plains.
• There are reports that Russia may not extend the Black Sea export deal on July 17 unless demands are met regarding their grain and fertilizer exports. This may have been reflected in higher Matif wheat futures today, even though French wheat is rated 93% good to excellent.
• Taiwan flour millers are reported to have purchased 56,000 mt of US milling wheat overnight.
• The US Dollar Index continues to trend higher, and though wheat posted gains today, the rising Dollar Index may limit upside potential going forward.

DAIRY HIGHLIGHTS:

• June Class III milk futures finished the week lower for the fifth week in a row. Pressure stems from a sluggish spot whey and cheese market.
• Despite bouncing nearly 10c off the lows earlier in the week, the spot cheese market retreated back lower by week’s end. Sellers continue to be aggressive at these multi-year low price levels.
• The USDA reported this week that US April cheese in storage was down 1%, while butter inventories were up 9.8% from last year.
• The US spot whey price finished the week up a penny to $0.2750/lb despite hitting a new all-time low earlier in the week.
• Weekly dairy cow culling for the week ending 5/13 was up 3.1% YoY.

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Author

Bryan Doherty