CORN HIGHLIGHTS:

• Triggered by better-than-expected crop ratings and improved weather forecast, sellers stayed active in the corn and grain markets on Tuesday. As prices broke going into today’s close, September corn futures posted a new contract low.
• The USDA released the next round of crop ratings on Monday afternoon. The US corn crop is rated at 68% good to excellent, up 1% from last week and 2% above expectations. Improvement was seen in the Corn Belt across all major corn producing states. These are the highest rating since 2020 and have analyst forecasting an above trendline yield potential corn crop this fall.
• Adding to the selling pressure in the corn market were improved weather forecasts. The forecasted heat for the Midwest was shifted more to the west, and rainfall potential was increased in the forecast for the Corn Belt for early August. After next week, temperatures are expected to moderate, and trend below normal into the middle of the month.
• Despite already holding a large net short position in the corn market, managed funds are adding to that position, as the momentum and technical picture favor sellers in the market.
• Demand concerns still weigh heavily on the corn market. Current new crop corn export sales are paced as one of the softer starts in the last decade for this time frame. With the potential supply picture looking heavier, the key to supporting prices will be triggering some demand to work through that supply.

SOYBEAN HIGHLIGHTS:

• Soybeans ended the day lower for the third consecutive day as good weather conditions continue to encourage funds to steadily sell grains. While soybeans and its products have been steadily slipping lower, soybeans have fallen by a larger percentage which has improved processor margins. Today, soybean meal closed lower while soybean oil settled mixed with the September and October contracts higher and the December contract lower.
• Yesterday, the USDA released its Crop Progress report which showed the good to excellent rating in soybeans falling by one point to 67%. 77% of the crop was blooming which compares to 65% last week and the 5-year average of 74%. 44% of the crop was setting pods versus 29% last week and the average of 40%. The central and eastern Corn Belt typically saw conditions improve while the western Corn Belt saw declines in ratings.
• Friday’s CFTC report showed funds buying back 22,091 soybean contracts as of July 23 which left them net short 163,659 contracts. Since then, it is estimated that funds have sold an additional 25,500 contracts in just the past two trading days.
• Last week, a sale of 264,000 mt and another of 510,000 mt of soybeans were reported to unknown destinations for the new crop marketing year. There is a good chance that those soybeans were bought by China as the recent selloff has put US beans between an 18- and 22-dollar discount out of the Gulf when compared to FOB beans in Brazil.

WHEAT HIGHLIGHTS:

• All three US wheat futures classes posted losses alongside corn and soybeans. After two-sided trading, September Paris milling wheat futures also closed lower for the sixth consecutive session.
• According to yesterday afternoon’s Crop Progress report, the winter wheat harvest advanced 6% to 82% complete, which is above last year’s pace of 77% complete and the 82% five-year average. Additionally, spring wheat conditions declined 3% to 74% good to excellent. While this drop was more than expected, it remains the highest rating since 2018. Furthermore, that crop is 96% headed (in line with average) and is 1% harvested compared to a 3% average.
• Freezing conditions threaten Argentina’s main wheat-growing regions. According to the Rosario Grains Exchange, the 24/25 crop is already suffering from drought, prompting a reduction in the planted area estimate by 2.9% to 6.7 million hectares. Now, temperatures of negative four degrees Celsius are expected in the northern Buenos Aires province, and the cold, dry weather has caused crop death.
• Ukraine’s Agrarian Policy and Food Minister, Taras Vysotsky, has reported that domestic wheat consumption has dropped from 8 mmt to just over 6 mmt per year. Additionally, Ukraine is expected to produce 21 mmt of wheat in 2024, with 15 mmt designated for export.

DAIRY HIGHLIGHTS:

• Class III futures were up nicely today as the August contract pushed to $20.71 and the soon-to-be second month September closed at $21.71.
• Spot whey gained 5 cents to close at $0.62/lb on three trades, its highest point since April 2022. Spot cheese was up less than a penny with a $1.96875/lb finish.
• Class IV milk futures were mixed but the August, October, and November contracts closed green. Class III has bridged the gap with many Class IV contracts.
• Both spot butter and powder closed higher with gains of 1.50 cents and 0.75 cents, respectively.

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Author

John Heinberg