- Corn futures ended the week under selling pressure as the USDA Crop Production report still forecasts overall heavy corn supplies for the 2023-24 marketing year. December corn closed the day losing 9 cents and was 10 cents lower on the week. Most importantly, Friday’s price action was weak, with December closing 20-1/4 cents off the session high.
- The USDA lowered projected yield to 175.1 bushels/acre on the August Crop Production report this morning, but the drop in production was offset by demand adjustments. The USDA removed 75 mb from old and new crop export demand, and 25 mb from new crop feed usage to maintain a carryout at 2.202 billion bushels for the next marketing year, about 40 mb above expectations.
- Concern for market participants is that yield projections could work higher in future reports as August weather has become more crop friendly, and that has been reflected in improved crop ratings in key corn producing states. Illinois corn crop ratings have improved for 6 consecutive weeks, likely adding to yield potential.
- Export news is still lacking overall, but Mexico has been a key buyer of US corn. Last week, Mexico bought 421,000 MT of new crop corn, and on a morning flash sale announcement added an additional 143,000 MT this week.
- Weather forecasts remain non-threatening overall, but a warmer drier trend at the end of next week may have some impacts on corn stress in the southern Corn Belt.
- Soybeans traded both sides of unchanged today, beginning the day lower but gaining directly after the USDA report. In about the last hour of trading, prices slipped and soybeans, soybean meal, and oil all closed lower.
- The WASDE report was fairly neutral with most estimates coming in as expected. The USDA lowered their expected soybean yield to 50.9 bpa, slightly below the average trade guess, and 23/24 ending stocks were pegged at 245 mb, a little less than expected.
- Soybean production is forecast at 4.21 billion bushels, down 2% from the previous year. The yield estimate of 50.9 bpa would be up 1.4 bushels from 2022, and the area harvested for soybeans in the US is forecast at 82.7 million acres, unchanged from the previous forecast but down 4% from 2022.
- Soybean sales to China have improved slightly and another sale of 9.9 mb was reported earlier this week, but new crop soybean sales are far less than a year ago at only 338 mb compared to 577 mb a year ago. Last week’s soymeal exports were decent, and soybean oil demand has been good.
- For the week, November soybeans lost 25-3/4 cents, December soybean meal lost 9.0, and soybean oil lost 1.30 for December.
- The USDA pegged 22/23 US wheat carryout at 580 mb, in line with the trade expectation of 579 mb and unchanged from July. As for 23/24, the USDA came up with 615 mb, above the trade expectation of 594 mb, versus a 592 mb carryout in the July report. The USDA estimated all US wheat production at 1.734 bb, down from 1.739 bb in July. The trade was looking for 1.740 bb.
- Despite thoughts that India’s wheat production might be cut on today’s report, it was kept unchanged from July at 113.5 mmt. Russian production was also unchanged at 85.0 mmt.
- Russian wheat export FOB prices have risen to $255 per ton, but this is still cheaper than most other origins, keeping pressure on the US export front.
- According to the US Climate Prediction Center, the El Nino weather pattern is expected to persist though the US winter and into 2024. If accurate, this could lead to drier conditions in India and Australia, ultimately limiting their wheat production.
- All three US wheat futures classes could be considered oversold on stochastics. This does not necessarily mean that a bottom is in, but it could mean that one is close.
- As of August 8th, about 52% of the US spring wheat crop is said to be in an area of drought.
- Class III averages for Q3 and Q4 found gains this week along with, Q3 for Class IV, spot butter, and the block/barrel average.
- Spot whey and powder markets continue to weigh on milk prices as both products ended lower for the week, well off 2023 highs.
- Also keeping milk markets from moving higher are disappointing export numbers from Tuesday’s report.
- Spot milk offers seemingly overnight have gone from abundant to sparse, pushing offers from well below class to reports of +$2/CWT for spot loads.
- Culling within the dairy sector continues at a brisk pace as cattle prices remain historically strong, up 7.4% YoY for the week ending 7/29.
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