CORN HIGHLIGHTS:

• The corn market added weather and war premium to its value for another session on Wednesday, as prices pushed through resistance, triggering strong money flow into the corn market.
• Increasing tensions in the Black Sea region helped trigger short covering. A second attack on the Odesa port in Ukraine may have damaged some wheat supplies, and an announcement by the Russian Defense ministry regarding ship traffic in the region to be treated as military supply ships triggered a limit higher move during the day in wheat futures, helping support corn prices as well.
• Weather forecasts have turned significantly drier over the next couple weeks, and temperatures are moving to a warmer trend. Weather models have moved potential rainfall out of the forecast or pushed the potential further south on maps.
• Technically, the corn market traded through the 100-day moving average on Dec futures and may be targeting the 200-day moving average at $5.75. The strong close will likely lead to additional buying and short covering in the market.
• Demand remains a concern and the USDA will release weekly export sales on Thursday morning. Expectations for corn export sales to stay at a slow pace, which will now be limited by the recent price rally.

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:

• Milk surged for the second straight day with 1,468 contracts trading Friday in the second month Class III contract.
• Spot barrels were bid up 7 cents with no offers, sellers have taken a bullish tone with more possible upward price momentum next week.
• The spot butter price closed at a 2023 high, settling Friday’s trade at $2.5825/lb.
• This week’s GDT Index fell, milk production stagnant YoY on a declining herd, Cattle on Feed showed YoY inventories down and placements up.

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Author

John Heinberg