CORN HIGHLIGHTS:

• The corn market used unchanged crop ratings and a Derecho event across the corn belt to trigger some short covering and positive money flow into the corn market on Tuesday.
• The USDA released its latest round of crop ratings on Monday afternoon. The current corn crop was rated 68% good to excellent, unchanged from last week, and down 1% from expectations. The crop is still 11% better than last year at this time. As the strong ratings continue, there are whispers that the current yield projections are too low, with talk the national corn yield could be 183-184 bushels/acre this fall.
• A strong line of thunderstorms moved from Eastern Iowa to Central Indiana on Monday night. The storm path was deemed a Derecho event with strong winds up to 80-90 mph. The market sitting on a large short position likely covered some short in the prospects of potential damage to the corn crop that could have occurred. Any news from the storm will be a wait and see approach.
• Despite the possible wind damage, areas around that region also received additional rainfall, which helps during the key pollination window. Weather concerns other than extremes are likely past the point of impacting the corn crop nationally.

SOYBEAN HIGHLIGHTS:

• Soybeans staged a bit of a recovery following yesterday’s steep decline, with the November contract rallying to as much as 12 cents higher, while old crop August reached 18 ½ cents higher. While the new crop contracts closed the day with small gains, August maintained its strength as the cash market continues to reach for supplies to keep pipelines full.
• The soybean crop’s good to excellent rating remained steady at 68% from last week in this week’s Crop Progress report, which remains the highest rating since 2020, and compares to last year’s 55% G/E rating. 51% of the crop is blooming versus the 5-year average of 44%, while 18% is setting pods.
• ABIOVE, a trade group representing Brazilian crushers, raised their production estimate for Brazil’s 23/24 soybean crop by 0.7 mmt to 153.2 mmt, in line with the USDA’s current estimate of 153 mmt. Both estimates remain well above the Conab projection of 147.34 mmt.
• Strong storms moved through the Midwest Monday night with diminishing strength as they moved south and east. While some structural damage was reported, the extent of any crop damage remains unknown. Temperatures are expected to fall back to normal to below normal through the end of the month, with rain over the next week favoring the southern half of the Midwest.

WHEAT HIGHLIGHTS:

• After making an attempt to rally, wheat closed modestly lower in all three classes. This is despite a turnaround in Paris milling wheat futures that managed a slightly positive close for both September and December contracts, though still leaving yesterday’s chart gap yet to be filled. Selling pressure for US wheat was likely the result of another increase to the US Dollar, harvest pressure, good spring wheat conditions, and an export market dominated by Russia.
• According to yesterday afternoon’s crop progress report, winter wheat is 71% harvested, well above last year’s 53% pace and the 62% average. Additionally, spring wheat conditions improved 2% from last week to 77% good to excellent. This is well above 51% at this time last year and is also the highest rating since 2019. Furthermore, spring wheat is 76% headed versus 59% a week ago, 82% last year, and 78% on average.
• Russian wheat export values continue to be the world’s cheapest. This continues to limit upside movement for US futures prices. Egypt is tendering for wheat, and Russia was said to be the lowest offer at $226 per mt FOB. The results of that tender are expected at some point today.
• In southern Brazil, the planting and development of the winter wheat crop are behind schedule due to recent heavy rains, though drier conditions are expected for the rest of the week. Additionally, frosts and dry conditions are also a concern for the wheat crop in Argentina.
• Asian wheat importers are said to have increased their buying over the past few weeks as global wheat prices have declined. Those purchases are set to be sourced from eastern Europe, however, and the US is expected to miss out on the business. As much as 1 mmt of wheat purchases have been locked in from Russia, Ukraine, Romania, and Bulgaria for August-September shipment.

DAIRY HIGHLIGHTS:

• Tuesday’s Global Dairy Trade auction saw the GDT price index rise 0.40%, with increases in both the butter and the cheese markets.
• Spot cheese had its first up day in four sessions, recovering 1.375c to $1.87625/lb. This compares to the GDT cheese price of $1.91/lb
• The turnaround in cheese brought buyers back into the dairy trade. August Class III added 5c to $19.74 while September was up 4c to $20.30.
• Trading volume was a bit on the light side on Tuesday as just 1,186 contracts traded total in both class markets. From a technical standpoint, the market is going through consolidation.
• August 2024 Class IV milk held steady at $21.52 on no contracts traded.

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Author

John Heinberg