TFM Daily Market Summary 06-05-2024

CORN HIGHLIGHTS:

  • For the seventh consecutive session, corn prices traded lower, caught in the selling of the entire grain market. The price action remains very disappointing as July corn closed through the 440 price point, and December corn crossed through the 460 barrier. Market momentum points to a further test of the April lows and possibly to the February lows from earlier in the year.
  • Weekly ethanol report showed strong production of fuel last week. Ethanol production moved up to 1.072 million barrels/day last week, which was a 9-week high. Ethanol stocks were 23.052 million barrels. This was the lowest since December 15, 2023. The corn used for the week in ethanol production was estimated at 106.40 million bushels, which is still trending ahead of the USDA required pace.
  • USDA will release weekly export sales on Thursday morning. Export demand will be a key variable to price support in the weeks ahead.  Last week, US exporters sold 810,000 mt of old crop corn and 188,000 mt of new. Sales will need to stay near the 1.0 mmt totals to help support prices.
  • Money flow is working against grain markets as managed funds are rebuilding their net short position in corn. Estimated on Wednesday morning, the funds are pushing 160,000 net short contracts of corn. In February, the fund grew their short positions to 340,000 short contracts.

SOYBEAN HIGHLIGHTS:

  • Soybeans ended the day lower after a day of mixed trade which saw the July contract higher by as much as 13 cents at one point before fading into the day. This makes the seventh consecutive lower close, and July futures are down 81 cents from the May high. Soybean meal ended the day higher while soybean oil was lower.
  • Funds are thought to have been adding to their short position for at least the past five days and are estimated to have sold an additional 27,250 contracts in that time frame. This will be confirmed in Friday’s Commitment of Trader’s report.
  • In Brazil, the soybean harvest is virtually complete. However, on Tuesday, reports indicated that an estimated 2.5 million metric tons of soybeans may have been lost due to flooding in Rio Grande do Sul. The USDA’s last estimate of 154 mmt is likely too high.
  • Significant selling pressure is coming from the speed of soybean planting and concerns that a number of acres will be switched from corn to soybeans due to lingering wet weather. The USDA’s last estimate for soybean acreage was 86.5 million acres in the US, and a higher number could cause additional selling pressure.

WHEAT HIGHLIGHTS:

  • The wheat complex suffered another blow in today’s trade. After trading higher in the overnight session, sellers emerged when the day session reopened, pushing the markets lower. Harvest pressure and a 1.64% decline in Matif wheat likely added to the negativity
  • Russia’s SovEcon lowered its forecast for Russia’s wheat crop (the world’s top wheat exporter) from its previous estimate of 82.1 mmt to 80.7 mmt. As of last month’s WASDE, the USDA’s current estimate stands at 88 mmt. By comparison, Russia produced 93 mmt last year and 104 mmt the previous year.
  • Reuters reported that Sinograin, China’s state-owned stockpiler, is expected to expand wheat purchases, possibly by as much as 8.1% in a move to achieve self-sufficiency regarding staple grains. The move comes at a time when world wheat stocks are falling.
  • For the season that began July 1, the EU’s wheat exports have fallen 5% year over year and totaled 28.2 mmt as of June 2 versus 29.6 mmt last year, according to the European Commission.
  • In a statement from India’s agriculture ministry, the country’s 23/24 wheat output is expected to rise to 112.9 mmt from last year’s 110.6 mmt.

DAIRY HIGHLIGHTS:

  • The block/barrel cheese average closed 2.25c lower today to close at $1.9025/lb. With the spot trade at risk of going back below $1.90/lb, milk futures took out some premium on Wednesday.
  • There were no bids during the spot cheese barrel trade.
  • Class III and IV futures had sharp down days. Second month III lost 72c to $20.15 while second month IV fell 33c to $21.65.
  • Market conditions had been leaning overbought with August and September Class III having five consecutive up days, so a correction was expected.
  • The USDA’s Dairy Products report for April said the US total cheese output was 1.19 billion pounds, up 1.80% above April 2023. Butter production grew 5.30% year-over-year.

 

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.

Author

John Heinberg

Sign up to get daily TFM Market Updates straight to your email!

back to TFM Market Updates