CORN HIGHLIGHTS:

• Selling pressure is weighing on the grain markets, with corn prices melting lower over the past two sessions. The prospects of improved yields and producer selling of old crop supplies limit the market’s upside.
• Ethanol for production last week slipped 3.8% week over week to a daily production of 1.067 million barrels per day. This total is still up 4.3% over last year’s levels. The amount of corn used for the week was estimated at 105.91 million bushels, which is slightly below the pace to reach the USDA marketing year target.
• Weather forecasts remain non-threatening for corn production. Long-range forecasts into mid-August are targeting cooler than normal temperatures. Rainfall looks more limited for the corn belt, but the cooler temperature should ease some plant stress.
• The USDA will release weekly export sales on Thursday morning. New exports sales are expected to range from 100,000-400,000 mt for the old crop and 475,000 – 1.0 mmt for the new crop. With only a few weeks left in the 23/24 marketing year, the focus will likely be on new crop sales.
• On Monday, the USDA will release the August crop production report. With the higher-than-average crop ratings, expectations for corn yield are to be over 182 bushels/acre, up from trendline of 181 bushels/acres from previous reports. The increase in potential production is limiting the market’s rally potential.

SOYBEAN HIGHLIGHTS:

• Soybeans ended the day lower for the second consecutive day, as the USDA’s WASDE report approaches on Monday, and traders anticipate a bearish reaction. The weather has been bearish for soybeans and corn, and while exports have ticked up, it has not been enough to incentivize funds to exit their short positions. Soybean meal was lower today, but soybean oil was higher as it followed the move in crude oil.
• Trade estimates for Monday’s WASDE report have started coming out, and the average yield is being pegged at 52.5 bpa, which would be up from last month’s 52.0 bpa. Production is estimated to come in higher as well at 44.72 billion bushels which would be up from 44.35 bb last month.
• The trade estimates that the USDA will lower Argentine soybean production to 51.0 mmt, down from 52.0 mmt last month. In Brazil, soybean production is also expected to decrease to 151.8 mmt from 153.0 mmt last month. Meanwhile, world soybean ending stocks are projected to increase to 128.3 mmt from 127.8 mmt last month.
• The 7-day forecast doesn’t hold anything too concerning, with normal temperatures and rain expected. A La Nina pattern had previously been expected to cause hot and dry conditions this summer, but so far that has not been the case and has affected grain prices negatively.

WHEAT HIGHLIGHTS:

• Wheat closed lower across the board today. The US dollar continues to recover from its recent steep selloff, maintaining pressure on the grain complex. From a technical standpoint, all three US wheat classes have lost upward momentum; daily stochastics are near the middle of the range and close to sell crossovers for both December Chicago and Kansas City futures.
• Egypt has announced a record wheat tender at 3.8 mmt, with delivery starting in October and ending in April. This may have provided some early support to the wheat market. However, given the uncertainty of wheat prices, freight costs, and logistics that far out, exporters may be hesitant to commit to offers. The deadline for offers is August 12, so time will tell what happens. For reference, Egypt typically imports about 5-6 mmt of wheat per year.
• SovEcon has reduced its production estimates for Ukrainian corn and wheat, citing hot and dry weather that has limited yields. The wheat projection is now at 19.7 mmt, compared with 20.4 mmt last month. Additionally, the yield is now estimated at 4.2 tons per hectare, down from 4.4 last year.
• According to the European Commission, EU soft wheat exports as of August 4 have reached 2.18 mmt since the season began on July 1. This is down from 3.57 mmt for the same time frame last year. The top importing nations of this wheat include Nigeria, Egypt, and Morocco.

DAIRY HIGHLIGHTS:

• Class III futures ended the trading day with the majority of contracts green; the second month contract of September gained 56 cents to close at $20.80.
• Spot cheese was able to gain 5.25 cents to close at $1.95750/lb. Blocks gained 6.5 cents to close at $1.9650/lb and barrels gained 4 cents to close at $1.95/lb.
• Spot Whey lost 0.75 cents to close at $0.59/lb. It has been unchanged or lower for four trading days after hitting a two-year high.
• Class IV futures did not have much movement today with it being a light day of trading volume. The second month contract of September remained unchanged at $21.69.
• It was a slow day for spot butter with no loads being traded and ended the day unchanged at $3.1025/lb. Spot powder ended the day down 0.25 cents to close the day at $1.23/lb.

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Author

John Heinberg