CORN HIGHLIGHTS:

• The corn market added weather and war premium to its value on Tuesday as prices pushed through resistance, triggering strong money flow into the corn market.
• Technically, the corn market traded through Monday’s reversal high, which likely triggered additional buying and short covering in the market.  The strong close has the corn market looking at the 100-day moving average as the next level of resistance.
• The USDA released its weekly crop ratings, and the US corn crop was rated 55% good/excellent, up 2% from last week and above market expectations. The corn crop improved, supported by recent rainfall in areas of the Corn Belt.
• Weather forecasts have turned significantly drier over the next couple weeks, and temperatures are moving to a warmer trend. Despite recent rainfall, 64% of the corn crop is in drought, and needs timely rainfall, and the warmer, drier conditions are timed with the pollination timetable, which could limit potential yield.
• Russia officially leaving the Ukrainian Grain Export deal and the attack on the Odessa port in the Ukraine added additional buying strength to the corn and wheat markets on the session.

SOYBEAN HIGHLIGHTS:

• Soybeans ended the day higher along with both corn and wheat but slipped from their earlier highs. Soybean meal had early gains but ended only slightly higher in the front two months and lower in the deferred contracts, while soybean oil gained over 3% in Aug.
• Today marks the fifth consecutively higher close for soybeans in a market that is mainly being driven by weather which is forecast to be hot and dry over at least the next two weeks, along with the cancellation of the grain deal which will impact sunflower meal and oil exports out of Ukraine.
• The forecast analysis released today is expecting hot and dry conditions over the next 10 days, and early August is expected to produce much of the same weather. Late August is more difficult to forecast due to tropical cyclones and cooler air out of Canada, and this period will be critical for pod filling.
• Brazilian soy exports reached 8.8 mmt in July compared to 7.0 mmt the same month a year ago as demand from China picks up, and Brazil maintains the competitive advantage with prices far below offers from the US.

WHEAT HIGHLIGHTS:

• Both September Chicago and KC wheat briefly traded limit up at 60 cents higher, 730-3/4  and 887-1/4,  before closing just below. News broke mid-morning that Russia stated as of July 20th any Black Sea vessel en route to Ukraine would be considered carriers of military cargo. With the recent closure of the export corridor, this further heightens tensions and is adding war premium to the market.
• In addition to the statement by Russia, it was reported that a Russian missile attack destroyed 60,000 tons of grain in the port city of Odesa, Ukraine. This added fuel to the fire, with more support for the wheat rally.
• The US Dollar index is beginning to trend higher again and is back above the 100 level (at the time of writing). By some technical indicators it could also be considered oversold, meaning that it could be due for a correction higher, which may lead to more pressure on the already struggling export market down the road.
• Paris milling wheat futures gapped higher, with the front month September contract gaining 19.25 Euros per metric ton. This is a massive jump and is likely tied to the Russia / Ukraine news as well and is the highest close for that contract since April.
• Aside from today’s headlines, US Midwest weather looks warm and dry for the next week or two, which should provide support to the grain markets as a whole. The second week of the forecast also brings hotter temperatures, with the potential for 90 degrees and higher in many spots.

DAIRY HIGHLIGHTS:

• The dairy market paused on Wednesday, but is holding onto recent gains well. August Class III is up $0.63 this week while September has added $0.52. 
• The block/barrel cheese price has been bid higher in 8 out of the last 10 sessions. The price came up another 0.375c today to post a $1.5250/lb close. 
• Spot butter, powder, and whey all saw no change to their price on Wednesday.
• The Class IV market saw no contracts trade in the first five contract months. Each closed unchanged, while September fell 5c to $17.97.
• The USDA will release the June data in tomorrow’s Milk Production report.

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Author

John Heinberg